What Are Microfoundations?

Abstract

In the extant organizational, management, and strategy literatures there are now frequent calls for microfoundations. However, there is little consensus on what microfoundations are and what they are not. In this paper we first (briefly) review the history of the microfoundations discussion and then discuss what microfoundations are and are not. We highlight four misconceptions or “half-truths” about microfoundations: 1) that microfoundations are psychology, human resources, or micro-organizational behavior, 2) that borrowed concepts constitute microfoundations, 3) that microfoundations lead to an infinite regress, and 4) that microfoundations deny the role of structure and institutions. We discuss both the partial truths and the misconceptions associated with the above understandings of microfoundations, and we argue that questions of social aggregation and emergence need to be center stage in any discussion of microfoundations. We link our arguments about microfoundations and aggregation with closely related calls for new areas of research, such as “behavioral strategy” and the domain of multilevel human capital research. We discuss various forms of social aggregation and also highlight associated opportunities for future research, specifically the origins of capabilities and competitive advantage.

Keywords: microfoundations, aggregation, emergence, organization theory, strategy

JEL Classification: D2, L1, L2