Foundations
Theory-based view of strategy
ION Management Science Lab
In the digital era, the source of competitive advantage is grounded on how managers make low-frequency/high-impact decisions under uncertainty.
This means they must be good at identifying and solving decision problems that are “visions for the future” or represent significant performance improvements.
Better decision-making implies reducing decision errors and improving the quality of decisions. The “scientific approach” to decision-making is a proven method to reduce decision errors and improve decision quality. It consists in using theories and experiments to engender better beliefs about future states and base managerial decisions on them.
Verticals
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1
Capital Structure Strategy
Capital structure decisions are low-frequency/high-impact decisions that are often made without specific data. Strategists find it difficult to make capital structure decisions aligned with their purpose and supportive of their business strategy.
IMSL studies these decisions, how they affect firms’ performance, their relationships with the competitive strategy and the evolution of the financial service industry, in particular the rise of private capital (private equity, venture capital and private debt).
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2
Innovation Strategy
Innovation decisions are low-frequency/high-impact decisions that can’t coast on existing data. They concern the envisioning of new markets and technologies. IMSL studies these decisions, how the application of the scientific approach (theories and experiments) can improve them, and how the availability of data shapes the creation of new markets and technologies, in particular the rise of machine learning and generative AI.
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3
Human Capital Strategy
CEO successions, top management or other key human capital hiring decisions are low-frequency/high-impact decisions that are highly uncertain and have wide performance effect variation. IMSL investigates the role of theories and experiments in framing and making such decisions, highlighting the interdependence between theories about the future of the firm and theories about the CEO, top management team or other key human capital. Board of Directors and key human capital match in ways that can contribute to the design and implementation of theories thus contributing to knowledge growth.
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4
M&A & Alliances
M&As are low-frequency/high-impact decisions that firms make based on assumptions. IMSL studies these decisions as grounded in “theories-of-value” that explain how and why firms source and select specific sets of target firms. We conjecture that M&As have better performance the more decision-makers can develop and articulate a theory about how business combinations will create value in the future.