On strategic trade-offs: does the principle of energy conservation explain the trade-offs law?

DOI

10.1108/MRR-09-2016-0214

Document Type

Journal Article

Publication Date

1-1-2017

Publication Title

Management Research Review

Volume

40

Issue

11

First Page

1163

Last Page

1174

ISSN

20408269

Keywords

Cumulative capabilities, External trade-offs, Internal trade-offs, Law of energy conservation, Performance frontiers, Strategic trade-offs

Abstract

Purpose: The purpose of this paper is to reaffirm the suggestion that there are at least two distinct types of laws of trade-off that affect all firms and, in doing so, to contribute toward resolving the persistent trade-off debate in the literature. Design/methodology/approach: Conceptual study using implicit deductive reasoning. Findings: Two types of trade-offs are identified: “internal” can be understood following the dictates of the law of diminishing returns, while “external” can be modeled using the principle of energy conservation. Research limitations/implications: New insights are provided by discussing the impact of both laws of trade-off on the resource-based view of the firm, on new capabilities such as sustainability and innovativeness and on key strategic choices. Practical implications: The study explains why trade-offs occur and outlines contextual factors that determine the “strength” of the trade-offs. Originality/value: To the best of the authors’ knowledge, no previous study has attempted to investigate the topic of strategic trade-offs on the basis of the principle of energy conservation.

Open Access

Green Accepted

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