Question

how have outside perspectives influenced the development of the strategic management field?

Answer 1

Outside perspectives have been able to influence the development of strategic management field essentially due to three theoretical perspectives: Resource based theory, Industrial organization theory and the contingency theory. Let’s discuss these theories in detail:

1. Industrial Organization theory: This theory is based on the micro-economic view which states that a particular industry environment has influence on the firm. So if the firm needs to prosper and survive, it is required to adapt to the influences of the industry. Firm's profitability and growth opportunity is linked to the industry. Hence, it is required for a firm to select in which industry it should compete.
2. Resource Based Theory: As per this theory, it states that a firm's performance is based on how it utilizes its resources. It states that although environmental factors impacts firms but it is the resources which helps in creating unique competence for the firm. Resources can be tangible or intangible.
3. The contingency theory: As per this theory, it states that a strategy would be successful if it is aligned to firm's mission, vision, resources and its competitive environment. It states that performance of a firm is dependent on its strategic choices and environmental forces.