The Fascinating Psychological Microfoundations of Strategy and Competitive Advantage

Abstract

This article puts forth an agenda for the psychological study of strategy and competitive advantage. It centers this agenda within the microfoundations program, a program originating within strategy that seeks to understand firm heterogeneity and competitive advantage by examining individuals and their interrelationships. The article first reviews key theories and frameworks in strategy by taking a functionalist view, that is, by starting with a focus on organizational criteria (operational performance, organizational performance, competitive advantage). It then discusses the importance of resources and how psychology may contribute to an understanding of these resources. Organizational psychology and organizational behavior research that links to higher-level outcomes or resources is reviewed next. The article concludes with questions that we believe will fascinate scholars of organizational psychology and organizational behavior as well as with implications for practice. We hope this article helps stimulate a paradigmatic shift in organizational psychology and organizational behavior, as their theories and findings are much more strategic than is currently appreciated.

Microfoundations of dynamic capabilities for innovation: a review and research agenda

“…The critical question demanded by the dynamic capabilities literature concerns the precise means by which an organisation can continuously renew its resource base and develop new capabilities (Al-Aali and Teece, 2014). The argument developed in this paper holds that understanding macro-level phenomenon with reference to other macro-level phenomenon offers something of a conceptual cul-de-sac, providing little insight on the nature of managerial intervention required (Abell et al, 2008;Ployhart and Hale, 2014). Instead, this paper attempted to trace the key processes, which may facilitate in fostering the type of behaviours underpinning dynamic capabilities for innovation.…”

“…These include embracing multiple levels of analysis to understand the aggregation and interaction of micro and macro levels (Ployhart and Hale, 2014), exploring the emergence of capabilities (Barney and Felin, 2013), and critically, directly incorporating the role of employees in the dynamic capabilities framework. More critical analysis might consider the factors likely to bridge or perpetuate the gap between intended and enacted strategy.…”

“…In an effort to better appreciate the internal dynamics of innovation, research from these related literatures emphasises the role of both managerial strategies and employee behaviour in fostering innovation (Wendelken et al, 2014). The architecture of HRM (Becker and Gerhart, 1996) may serve as a central means of capturing the managerial intent informing how dynamic capabilities can be built and innovation outcomes realised (Barney and Felin, 2013;Ployhart and Hale, 2014).…”

“…Viewing dynamic capabilities as higher-order organisational capabilities that are the consequences of particular complex processes and activities rather than being embodied in the activities themselves affords a clearer understanding of the nature of dynamic capabilities and how they can be developed. The logic of microfoundations addresses the key questions that lie at the nexus of individuals and organisations, with a particular focus on relationships and interactions (Ployhart and Hale, 2014). The microfoundations of dynamic capabilities are the organisational innovation strategies and innovation climate which are employed through human resource management interventions.…”

Fostering employees' proactive strategic engagement: Individual and contextual antecedents

“…We concentrate on white-collar workers in knowledge-intensive contexts because for such workers (rather than blue-collar workers) engaging in the strategic process may be considered especially relevant. Building on the organisational behaviour literature on proactivity (Parker and Collins, 2010) and on the micro-foundations of strategy perspective (Coff and Kryscynski, 2011;Ployhart and Hale, 2014), our research adds to the understanding of building up employee engagement in strategy as a firm's strategic resource. We thus respond to calls for investigating the micro-foundations of an organisation-wide strategy process (Stieger et al, 2012;Barney and Felin, 2013).…”