By Nick Argyres and Jackson Nickerson*
Oliver E. Williamson did not set out to contribute to the field of strategic management. Yet through his research and devoted teaching of Ph.D. students, he transformed the field.
Before Williamson, strategy scholars had long known that choices involving organizational structures, vertical integration, and interorganizational relationships, are important strategic decisions that affect organizational performance. Not until Williamson developed his transaction cost approach, however, did strategy scholars learn how much light economics can shed on these choices, and how many testable predictions it can generate.
Ultimately, Williamson’s transaction cost economics can be credited with putting the economic theory of the firm at the heart of strategic management. This move produced critical implications for many corporate strategy phenomena, including mergers, acquisitions, divestitures, and diversification; interfirm contracts and collaborations including alliances, joint ventures and franchising; the organization of R&D, innovation, and entrepreneurship; knowledge management including the organization of problem-solving; organizational adaptation and change; and foreign investment. And, this list is only partial. A telling marker of Williamson’s influence on the strategic management field is that, while he only published two papers in the Strategic Management Journal, the field’s primary journal, he is one of the top two most-cited scholars in the field.
Williamson’s view on strategic management is that as between strategizing and economizing, the latter is more fundamental. Without an economizing choice of governance, firms would be unable to make the co-specialized investments needed to create and capture value; they would face ex post mal-adaptation hazards such as hold-up -- hazards that undermine strategies relying on such investments. Williamson maintained that economizing greatly improves organizational performance, and therefore increases the likelihood of firm survival in competitive environments.
Williamson once took exception to being described by his Dean as an excellent teacher. Instead, he remarked, “I describe myself not as a good teacher but as a conscientious teacher, and I enjoyed working with all of these [Ph.D. students].” This conscientiousness manifested in his willingness to quickly and thoroughly read and comment on everything students handed to him. “What is going on here?” is one of the comments Williamson’s strategic management Ph.D. students remember all too well. When the same question was put to his students about Oliver’s impact on them and their research, a clear picture of their advisor emerged. With one voice, his students describe his ever-present spirit of inquiry and intellectual curiosity, high degree of integrity and intellectual honesty, open-mindedness and a willingness to challenge orthodoxy, and relentless demand for research excellence. These values shaped their research, who they are as scholars, and are a testament to another vital pathway through which Oliver Williamson has and will continue to shape the field of strategic management: his students.
*Nick Argyres is the Vernon W. and Marion K. Piper Professor of Strategy. Jackson Nickerson is the Frahm Family Professor of Organization and Strategy. Both are at Washington University in St. Louis and graduated with Ph.D’s from Berkeley as Oliver Williamson’s students in 1993 and 1997, respectively.