Niklas Lars Hallberg

Uncertainty, Judgment, and the Theory of the Firm

The effects of a truly uncertain future are more far-reaching than what has traditionally been assumed in transaction cost economics. Uncertain governance choices require that agents exercise judgment in the absence of other means of estimating the payoffs associated with complex combinations of transaction attributes, contractual contingencies, and governance structures. Judgments are made on an experimental basis to incrementally improve actors’ heterogeneous cognitive representations of the contractual landscape. I argue that uncertain governance choices are subject to specific decision-biases that interact with the potentially corrective function of current organization and asymmetries in actors’ access to decision-supporting systems. These asymmetries may affect the contracting parties’ preferences over differential governance structures. Specifically, by overestimating individual unbiased rationality and disregarding how access to decision-supporting systems may affect governance choice, transaction cost economics runs the risk of underestimating the degree of vertical integration in actual firms. (Less)

Changing assumptions and progressive change in theories of strategic organization

A commonly held view is that strategic organization theories progress as a result of a Popperian process of bold conjectures and systematic refutations. However, our field also witnesses vibrant debates or disputes about the specific assumptions that our theories rely on, and although these debates are often decoupled from the results of empirical testing, changes in assumptions seem closely intertwined with theoretical progress. Using the case of the resource-based view, we suggest that progressive change in theories of strategic organization may come about as a result of scholarly debate and dispute over what constitutes proper assumptions—even in the absence of corroborating or falsifying empirical evidence. We also discuss how changing assumptions may drive future progress in the resource-based view.

What is value and how is it managed

Abstract The meaning of the notion of value, as well as associated concepts such as value creation and value appropriation, has been subject to much confusion in marketing and management. This article builds on a rich tradition in economics to untangle some of the ambiguities surrounding these concepts. First, it is argued that a rigorous approach to analyzing value must be based on a subjectivist notion of value related to the perceived needs and preferences of consumers. Second, it is suggested that the value-price-cost (VPC) framework in economics may constitute an effective, yet simple, model for understanding how value is created and appropriated by different actors. Third, it is argued that multilevel issues related to buyer-supplier relationships, stakeholder management and the formation of firms should be addressed using a symmetrical model that allows for freeform bargaining between the involved actors. The article closes with implications for specific debates in management.

Untangling Infinite Regress and the Origins of Capability

We argue that strategic management in general—and capability theory in particular—suffers from problems of infinite regress that can be traced to an unsatisfactory specification of initial conditions. We argue, first, that this has led to an overemphasis on path dependence, experience, and history, without sufficient attention on initial conditions: more proximate, decision-oriented punctuation points that can be used for better theoretical explanation. Second, we show how the initial conditions of theories are often not distinctively different from what is being explained, which prevents theory from providing credible specifications of causal mechanisms. Third, we highlight how the regress problem has led to a relatively casual borrowing of concepts from neighboring disciplines, which has created a mismatch between the aims of management theory and relevance to practice. We suggest research heuristics for how to deal with infinite regress problems, in order to develop more rigorous and relevant theories of capability and strategic management.