The problem of unobservables in strategic management research

Article Abstract:

The controversy surrounding the issue of how to address unobservable constructs has been brewing for the most part of the 20th century. Logical positivists argue that one cannot be absolutely certain that unobservables exist. Therefore, they contend that theories containing unobservables should not be assessed based on their correspondence to reality. Instead, they should be judged based on their instrumental value as tools for the making forecasts about systemic behavior. On the other hand, the realists counter that theories with unobservables that are supported by scientific proof have a correspondence in reality. Consequently, they believe that it is possible to make statements about the truth value of these theories. This debate has significant implications for the strategic management field because most theories in this area contain unobservables. An analysis supporting the view of realists is made.

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Risk measures in strategic management research: auld lang syne?

Article Abstract:

Empirical studies involving risk appearing in strategic management publications between 1980 and 1995 were reviewed to determine the role played by the most commonly used measures of firm and business-level risk in strategy research. The review focused on two such measures, namely, simple variance or its variance and beta or its derivatives from the Capital Asset Pricing Model (CAPM). The results indicate a decrease in the number of studies using CAPM and mean-variance measures of risk. This trend may be attributed to researchers' disenchantment with traditional risk measures and their openness to new models of risk. A more disturbing possibility is that scholars are losing interest in risk because there is no consensus about the domain of risk and the methodologies most appropriate for its study.

Methods, Risk assessment, Risk (Economics)

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