Strategy, Problems and a Theory for the Firm

Organization Science, Forthcoming

26 Pages Posted: 8 Oct 2015

See all articles by Teppo Felin

Teppo Felin

University of Oxford - Said Business School

Todd Zenger

University of Utah

Date Written: October 6, 2015


In this paper we develop the outlines of a theory for the firm, in response to von Hippel and von Krogh’s (2015, henceforth Hippel-Krogh) critique of the problem solving perspective as a theory of value creation. Hippel-Krogh argue that (a) problems and solutions cannot always be separated as they often emerge as problem solution or need-solution pairs that are discovered serendipitously, and (b) deliberately formulating or choosing a single, fixed problem restricts the firm from accessing the vast array of external problem solvers and restricts the firm from valuable reformulations of the problem and “rich landscape search.” While Hippel-Krogh raise interesting and important arguments, we claim that they miss what is most central about the problem solving approach: the comparative, organizational and strategic aspects of the theory. But, their critique is also important as it draws attention to a critical void in the problem solving perspective, namely, the need to develop a firm specific theory of value creation.

We argue that a theory for the firm links problem solving with a broader theory of value creation, thus responding to the concerns raised by Hippel-Krogh. We discuss how firms theorize the process of value creation by articulating an overall architecture and bundle of problems around which it uniquely needs to organize and govern in order to create value. We provide two brief, informal examples (Starbucks and Apple) to illustrate our points, linking these examples to the need-solution landscape proposed by Hippel-Krogh. In all, we provide a broad sketch and outline of a theory of value creation as it relates to problem finding and problem solving while concurrently responding to points raised by Hippel-Krogh.

Keywords: strategy, innovation, problem solving, governance

JEL Classification: 031, 032

Suggested Citation

Felin, Teppo and Zenger, Todd R., Strategy, Problems and a Theory for the Firm (October 6, 2015). Organization Science, Forthcoming, Available at SSRN:

Teppo Felin (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain


Todd R. Zenger

University of Utah ( email )

David Eccles School of Business
1655 East Campus Center Drive
Salt Lake City, UT 84112
United States
801 585-3981 (Phone)
801 581-7939 (Fax)

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