Choice Interactions and Business Strategy

35 Pages Posted: 28 Dec 2002

See all articles by Pankaj Ghemawat

Pankaj Ghemawat

University of Navarra, IESE Business School; New York University (NYU) - Leonard N. Stern School of Business

Daniel Levinthal

University of Pennsylvania - Management Department

Date Written: October 2002

Abstract

Strategists have tended to explain sustained performance differences across firms in terms of two types of interactions among choices: cross-sectional interactions and longitudinal ones. We explore the interplay between these two sorts of forces first in a qualitative manner drawing on case of the case of the Vanguard Mutual Fund. We then develop a graph-theoretic generalization of the NK model of Kaufman (1993) in order to examine these questions in a more structured manner. We use this structure to examine, through simulation, how fully articulated a strategy or set of policy choices must be to achieve a high level of performance, and how feasible it is to offset past strategic mistakes through tactical adjustments (instead of alignment). Our analysis highlights the role of asymmetry in the interaction of strategic choices and in particular the degree to which choices vary in terms of being influential, contingent, or autonomous from other choices.

Suggested Citation

Ghemawat, Pankaj and Levinthal, Daniel A., Choice Interactions and Business Strategy (October 2002). Available at SSRN: https://ssrn.com/abstract=353661 or http://dx.doi.org/10.2139/ssrn.353661

Pankaj Ghemawat (Contact Author)

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

New York University (NYU) - Leonard N. Stern School of Business ( email )

Suite 9-160
New York, NY
United States

Daniel A. Levinthal

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States
215-898-6826 (Phone)
215-898-0401 (Fax)

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