Penn State

Marc Orlitzky - Associate Professor of Management, Penn State Altoona

Book Title: Strategizing, Disequilibrium, and Profit

Author: John A. Mathews

Book Description:

Professor Mathews's relatively short yet important book recalibrates the mainstream strategic management literature, which has typically focused on (Ricardian) rent-seeking, only possible in departures from perfectly competitive equilibrium, in other words, in the context of market imperfections. In contrast, Mathews puts (Knightian) profit-seeking under conditions of uncertainty front and center, with the entrepreneur as the main agent of economic growth. These ideas are largely consistent with the market process as conceptualized by economists of the Austrian School (e.g., Hayek, Kirzner, Mises). In addition, several chapters synthesize Porter's value chain concepts (activities), RBV (resources), and the dynamic capabilities perspective (routines) in an interesting and novel way.  Contrary to many orthodox conceptualizations in organizational economics, strategizing is not portrayed as an economizing, or efficiency-seeking, exercise, but instead as the entrepreneurial search for competitive advantage and innovation in the context of disequilibrium.  Mathews illustrates the implications of his re-conceptualization of strategic management for evolutionary dynamics in the economy as a whole and a dynamic competitive forces framework, which is sorely needed in a field that, as Professor Hambrick (2004) so aptly notes, is "quickly growing cold."

More broadly, this book reminds us that, instead of burdening business with socialist-collectivist mandates through the front door (e.g., heavy-handed government regulations and taxation) or through the back door (e.g., corporate social responsibility), we ought to return to a view of the private sector and free markets (rather than crony capitalism) as the true engines of economic growth. Thus, secure property rights and economic freedom are the best public policy for prosperity.


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