We believe that creating new formal theory in management science is a great opportunity. The reason is not so much that we take position in the ongoing discussion if management science should be formal theory or verbal theory (we believe, it should be both), but we argue that disparate strands of management science can be integrated if we find better formal foundations. The ultimate goal of management science should be to provide tools and insights how creative, competitively healthy, and robust organizations can be build. We point out below why we think formal theory is one major contribution to achieve this.
In our own work, we currently focus on modeling unawareness, and interaction with asymmetric awareness the condition when one interacting party 'sees' possibilities that the other doesn't. This modeling has the potential to join the 'knowledge based theories' in management science (which are hardly formalized at all) with theories that emerged from neoclassical economics.
Furthermore, the scientific subfield 'organization science' of management science that emerged in the second half of the last century is using, in our view, too little formal theory. Organization science picked up thoughts of Herbert Simon: Scholars started exploring how actual firms make decisions, given that they do not know the set of relevant choice alternatives and outcomes. Organization science asks important questions, such as how complexity affects the learning of organizations, how organizations create (business) environments, and how they adapt to new environments. These questions can only be studied rigorously, if sufficient formal foundations are laid.
We contribute to this by studying the following questions: How do firms interact, when they are still exploring yet unknown business environments? Observing the current strategic practice of successful global firms like Apple and Google suggests that shaping new business environments is a process over time that often starts with a new insight on the future nature of a business, not only a technological innovation.
The innovators 'see' how value can be captured and how the architecture of business models in the industry can be changed and shaped.
We work on new formal expressions of knowledge, and its strategic use to shape the evolution of a business field. A subquestion is how business models, and their evolution, can be modeled. One promising new formal structure in this regard may emerge out of a combination of Kripke's model of possible worlds with unawareness structures. Interactive knowledge structures that emerge from our research can be applied to a game theoretical analysis of interaction of firms in emerging industries.
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