A practical guide for making theory contributions in strategic management
Richard Makadok | Richard Burton | Jay Barney
1. Introduction
In the field of strategic management, a lot of question like: What drives the performance? Why do some
organizations succeed and other fail? Researches have to answer these questions using theories and
ideas. But what makes a good theory? Where do they come from? And why is theory needed?
In this essay a concrete question will be addressed: How exactly can one make a theoretical contribution
to strategic management research? In this essay a taxonomy (classification) of approaches will be
explained. How to make a theoretical contribution will be explained in two ways; first, as a guide for
making theory, and second, as a way of identifying areas of work that may require additional theory. The
taxonomy will, first as a guide, offer approaches by disassembling theory into its component ingredients
and explore ways to adjust, improve or recombine these components. Secondly, as a tool to identify
underexplored areas where a opportunity of making theoretical contribution is possible. It does so by
breaking theory down into eight constituent elements.
2. Taxonomy of contributions to theory
Theory is an abstraction and simplification of reality. The characteristics for theory are accuracy,
simplicity and generality. Although these are desirable characteristics, it is generally considered to be
impossible for a theory to achieve all three fully.
The taxonomy looks as followed:
1. Inputs : strategic research questions
2. Modes of theorizing (How?)
3. Levels of analysis (Who?) or Phenomena (Where?)
4. Causal mechanism (Why?)
5. Constructs/Variables (What?)
6. Boundary Conditions (When?)
7. Outputs : explanations, predictions, etc.
Points 2 through 6 are the so-called Levers of theorizing process.
Theory can be provocative, from existing theory, or imaginative, questioning of received wisdom. Most
new theory may change only one or two elements of theory. Despite their limited scope, these kinds of
theory can be very important for the evolution of a field. To identify the potentially important
theoretical contributions, theory has to be decomposed into its component parts as seen in the
taxonomy. These components correspond to the classic 6Ws, who, what, when, where, why and how.
2.1. Input – Research question
A research question is the main input into the theorizing process. Without a research question, there is
nothing to theorize about. A way of making contribution to a theory is by changing an existing research
question or applying an existing theory to address a different question. Finding a good research question
is often the most difficult aspect of new theory. A good research question is broad enough to interest a
wide audience, yet narrow enough to be answerable.
, 2.2. Lever 1, mode of theorizing: How?
The mode of theorizing is the intellectual process by which a theory's main input, the research question,
gets transformed into its outputs. It is the lever that defines how we theorize. This first lever can be
pulled in at least five different directions
a. Inductive vs. deductive
Deductive theory starts with a set of general assumptions from which specific observable implications
are logically deducted. Inductive theory starts with specific observations, and relies on comparisons
between them to infer possible generalizations
b. Process-based vs. variance-based
Process modeling aims to explain how a particular entity changes over time, whereas variance modeling
aims to explain why entities differ from each other.
c. Static vs. dynamic
Static theories examine how a system and its parts behave under a steady-state equilibrium where all of
the forces affecting it are in balance, whereas dynamic theories examine how a system and its parts
move under the influence of forces that push it toward, away from, or between equilibria.
d. Formal vs. informal
Informal theories rely on the natural language of verbal reasoning and are therefore accessible to a
broad audience, whereas formal theories rely on the rigorous languages of logic, mathematics, and
simulation and therefore may be challenging for audiences without specialized training to understand.
e. Analytical vs. numerical
Within the realm of formal theory, analytical methods like game theory derive exact results but can only
be used for models with relatively few parameters in order to maintain tractability, whereas numerical
methods like simulation can handle much more complex models with a larger number of parameters but
yield only approximate results whose causality may be more difficult to interpret.
2.3. Lever 2, Level of analysis: Who?
The strategic management field is defined by a concern for understanding the heterogeneity of overall
organizational performance, this does not mean that all strategy studies are focused at the organization
level of analysis. Research at other levels of analysis can still have important implications for overall
performance, so strategy studies have also focused at both higher levels of analysis (e.g., alliance, joint
venture, market, industry, field, institution, or nation) and lower levels (e.g., division, department,
transaction, team, or individual).
2.4. Lever 3, Phenomenon: Where?
The phenomenon is the lever that defines where our theory is relevant, that is, the context of the
theory. Any given theory may be relevant in multiple contexts, with implications for multiple
phenomena. Since organizations are complex system with parts that affect and connect to each other,
