From Theory Of The Firm Towards Strategic Management Theory

The article tackles the theoretic development and implications of three main approaches to the theory of strategic management, i.e. transaction cost theory, Michael Porter's theory, and competence-based theories. Transaction cost and competence-based theories stem from theory of the firm - a discipline that explains the emergence and behaviour of firms, and which has been developed as a critique of the neoclassical microeconomic theory. On the other hand, Porter's approach to strategic management stems from the theory of industrial organisation and claims that competitive advantages are predominantly seized by the firms that recognise attractive industries and obtain a strong position within them. In spite of different starting points, it is argued that Porter's approach can be treated as an integrative theory that implicitly embraces several characteristics of the transaction cost theory and competence-based theories. The affirmation of competence-based theories, which has been observed during the nineties, can be explained in terms of their stronger empirical grounding. The final part of the article deals with several implications of the tackled theoretical developments and emphasises a need for development of complex and dynamic microeconomic models.