Strategy and Institutional & Organizational Economics

By Jackson A. Nickerson and Brian S. Silverman

The field of strategy draws on several cognate disciplines, with the goal of addressing one overarching question: Why are some firms able to obtain sustainable competitive advantage (i.e., consistently higher profits than competitors)? In the 1990s, this motivating question for the field was codified into four fundamental subsidiary questions (Rumelt, Schendel & Teece 1994):

  1. How do firms behave? Or, do firms really behave like rational actors, and, if not, what models of their behavior should be used by researchers and policy makers?

  2. Why are firms different? Or, what sustains the heterogeneity in resources and performance among close competitors despite competition and imitative attempts?

  3. What limits the scope of the firm? Or, what is the function of or value added by the headquarters unit in a diversified firm?

  4. What determines success and failure in international competition? Or, what are the origins of success and what are their particular manifestations in international settings of global competition?


This post is the abbreviated version of an article written for the "Our field" section of, which can be fully read here.