Treatment Effects in Managerial Strategies

43 Pages Posted: 4 Oct 2021 Last revised: 2 Aug 2022

See all articles by Jorge Guzman

Jorge Guzman

Columbia University - Columbia Business School; NBER

Date Written: September 1, 2021


A manager makes a choice to improve their firm's performance. Only a choice that is both profitable for their firm and unprofitable to competitors creates a competitive advantage. This paper formalizes these type of `strategic' choices under the Rubin Causal Model. Three new objects are defined: the strategic treatment effect (the benefit predictable from a firm's characteristics), the strategic determinant function (a mapping of characteristics to strategic treatment effects), and strategic coherence (the importance of resource interactions in strategic treatment effects). Under unconfoundedness, they can be estimated from high-dimensional observational data. I present an application estimating the benefit from choosing venture capital as early-stage financing versus other forms of capital. For equity outcomes, there is no average treatment effect of early-stage VC, but there is significant strategic heterogeneity: some entrepreneurs can benefit substantially from raising early-stage VC, while others are negatively affected. This heterogeneity is predictable from founder, industry, and location characteristics. The role of strategic coherence in this choice is moderate.

Keywords: strategy, causal inference, strategic management, entrepreneurship

Suggested Citation

Guzman, Jorge, Treatment Effects in Managerial Strategies (September 1, 2021). Available at SSRN: or

Jorge Guzman (Contact Author)

Columbia University - Columbia Business School ( email )

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New York, NY 10027
United States

NBER ( email )

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