Paradoxes in the RBV?

28 May 2006 at 8:24 am 7 comments

| Nicolai Foss |

One of the hallmarks of pomo (postmodernist) "discourse" (or "conversation") is the indiscriminate use of the word "paradox." In management, organizational scholars are particularly prone to use the p word. I have sat in countless seminars and witnessed several conference presentations where the presenters declared some paradox to exist, in theory, in practice or in both. I have never been successful in my attempts to argue that upon closer inspection (better analysis) the postulated paradoxes usually vanish.

In terms of management journals, one of the pomo strongholds is unfortunately one of our leading journals, the Academy of Management Review.  I am pretty much behind in my reading of AMR. But  this morning I opened the January 2006 issue, and performed my usual vain search for articles that cited my works. I quickly found Lado, Boyd, Wright and Kroll's "Paradox and Theorizing Within the Resource-based View."

The authors claim to use "paradox in the logical sense to address epistemological issues surrounding RBV logic, such as unfalsifiability, tautology, and infinite regress" (p.117).  They argue that they embed their understanding in a non-traditional view of science (in contrast to those — such as Foss (1996; "Knowledge-based Approaches to the Theory of the Firm," Org Science) — who allegedly holds "… that the presence of paradox within a theory undermines its scientific utility" (Foss 1996 says no such thing)).

Their non-traditional view, however, turns out to be Imre Lakatos' methodology of scientific research programmes, a now largely defunct methodology that was very popular with economic methodologists in the 1980s and the beginning of the 1990s.

So, what are the asserted paradoxes and "logical conundrums" in the RBV (which "reflect the paradoxes of RBV epistemology" and which has "worried" Foss (1996) (no, there was no such worry in this paper))? 

One concerns causal ambiguity. The alleged paradox is that in theory causal ambiguity may help sustain competitive advantage, but in practice it may hinder leveraging the sources of competitive advantage.  A paradox? Not at all. There is nothing paradoxical about saying that there are simply certain sources of sustainability that are difficult to manage.

Here is another alleged paradox, according to Lado et al. The RBV, it is argued, argues that there are no rules for riches; yet, it is asserted by RBV theorists that the RBV can be used to gain competitive advantage. A paradox? Not at all, provided one understands a little about asymmetric information and its implications.

I shall not bore the reader by more examples. The above should suffice to indicate that when writers (at least in management) talk about "paradox," one's first reaction should be that they are really just talking about insufficiently deep or sophisticated analysis,  but trying to be hip by using fashionable pomo lingo. Lado et al. argue that "paradox" prompts scientific development. However, there is really nothing strange in this, as the alleged "paradoxes" are recognized by scholars to simply represent unfinished analysis.

Entry filed under: - Foss -, Management Theory, Methods/Methodology/Theory of Science, Strategic Management. Tags: .

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7 Comments Add your own

  • 1. simon  |  28 May 2006 at 2:19 pm

    Great Post … an excellent example of “scholarship” that fails to provide insight on any thing but on the nature of mediocrity.

    First let me star by saying that the RBV theory has weaknesses that are worthy of discussion but the ones these authors bring to readers are not even close.

    Prof. Foss the article you note is an excellent example of why the field Strategy is in disrepute. The authors do not offer any material insight into theory or practice. They merely deconstruct a theory with the tools they learned in a PhD seminar. It is sad that the authors do not even understand the subject they are deconstructing.

    With that said it is hard to take the paper seriously when the authors have to spend so much time getting to a definition of paradox (a couple of pages). The authors also do a truly superficial (i.e., PhD seminar paper level) job presenting the “latest” in falsification thinking (i.e., Lakatos and his superior falsification approach is very weak not to mention outdated).

    When the authors finally get to RBV and its “paradoxes” they completely foul-up. We are first told that the theory’s key elements are not easily measured and that this is bad. The authors suggest that this is sign of a “bad” theory. Any student of science knows that many theories emerged long before they were measurable (genetics and DNA) and that operationalizing a theory to test is real work. The task of the researcher is to find ways to measure and test. Next the authors tell us about infinite regress conundrum. Pure nonsense! The authors are either disingenuous or thick.

    RBV has been both operationalized as a theory and tested. Its conceptual foundation is reasonably robust. The testing side of the theory has not been as well grounded. This problem stems from one of the key difficulties in studying OT – sample. It is very hard to theory test in this field. With that said the paper in no way raises this issue.

    In summary, I think the paper offered by Lado, Boyd, Wright and Kroll offers no material insight into strategy, philosophy of science or methodology. It is an example of “scholarhip” devoid of merit.

  • 2. Bo Nielsen  |  30 May 2006 at 1:10 pm

    hmmm..

    1. Nicolai, while I appreciate your comments about what seems to be a poor understanding of your work and arguments, I am not sure that you are not talking about the same thing? In your view, paradoxes do not seem to exist (or do they? and if so what are they?) – rather all the examples you give are what you call “unfinished analysis” – but it would seem that Lado et al. and others also argue for more work to be done in RBV and other fields based on what they call paradoxes – that is to resolve these paradoxes – same thing?

    While you may be correct in your assessment of the poor use of the word paradox in management research, I personally use paradox much less restricted than Lado et al (and with less need for long explanations) – my simple definition is: “A seemingly contradictory statement that may nonetheless be true” – if you apply this definition to paradox you will find that BOTH you and Lado et al can be right – a paradox??

    Simon: While you may be correct in your “attack” of the Lado et al. paper, I would urge you to provide more depth in your critique – and, more importantly (and Nicolai will probably agree) provide us with an alternative view. Here are some examples of your criticism that needs futher development:

    a) “RBV theory has weaknesses that are worthy of discussion but the ones these authors bring to readers are not even close” – well then tell us which ones do!
    b) “It is sad that the authors do not even understand the subject they are deconstructing.” – who says this? Who has the authority and knowledge to make this argument – sounds inherently like your personal opinion – subjective and therefore flawed as it may be..
    c) “the authors tell us about infinite regress conundrum. Pure nonsense! The authors are either disingenuous or thick.” – while I am not sure what the last sentence means, I think that infinite regress is valid to a certain extent: Rational choice theory has to be complemented by psychological theories in order to explain behaviour (see Nelson and Winter,1982). While I see potential problems with its current application in economics, I do think that it is more than a purely theoretical issue: economists may be forced to study more psychology if the infinite regress problem turns out to be significant. Moreover, the use of the term rational about certain types of behaviour (with the implicit moral implications of this label), may turn out to be mistaken (See R. Hardin’s book “One for All”). studying these issues we may also improve our understanding of economic fluctuations and investment which rely strongly on theories of the formation of expectations.

    SO – perhaps it is a paradox (!) that it is so easy to critisize others work while it is so difficult to improve upon this very same work. Or maybe it is a conundrum? Or maybe it is ironic as Alanis Morissette would say…

  • 3. simon  |  30 May 2006 at 10:05 pm

    Bo-

    fair enough …

    I owe a criticism of RBV … You by the way are holding me to a higher standard than you do the authors of the paper who offer no theory or empirical test …. With that said I would echo the logic laid out by Mathews (2006) for a more robust and comprehensive framework … That is, the theory could more fruitfully address disequilibrium dynamics …

    My issue with the use of post modern techniques to critique theory can only be responded by – over hermeneutic interpretations … I would suggest the authors present an empirically falsifiable logic rather than employ philosophy of science rhetoric. I must take exception to your comments concerning the definition of paradox in the paper given that this is the bulk of this paper’s heft … It is not robust and falls under its own weight as noted by Foss.

    On the infinite regress question, I must also take exception with your conclusions. The point that we break the infinite regress occurs when we operationalize the constructs. A theory test easily cuts through the infinite regress … we move from a concept to concept world to a variable to variable world … one can then build an isomorphic logic to connect variables to concepts (never perfect I admit) … It is the authors of the papers who are struggling with the problem given their theoretical approach. I would submit again the authors do not understand the RBV theory or even the scientific method if they think their work is a theoretical venture or a true critique of the theory (it is of course a conceptual and possible a theatrical venture).

  • 4. Nicolai Foss  |  31 May 2006 at 3:29 am

    Bo,
    I believe very strongly that I am talking about exactly the same things as the authors I criticize do.
    I do indeed think that most alleged paradox evaporate on closer analysis. I also think that most management writers use the word in a sloppy manner and in order to be hip. I think the authors I criticize talk about things that aren’t paradoxes — so why call it paradoxes? I also think they are talking about very well known problems, merely re-labelling these, and arguing that scientific progress (in the RBV) is problem driven. All of which is well-known. In sum, I don’t think they make a strong contribution.

    BTW, Nelson and Winter whom you cite in support of the position that psychological theories should complement RC theories say virtually nothing about individual choice (as I have argued in my contribution to the Nelson and Winter Festchrift; ICC 2003).

  • 5. Bo Nielsen  |  31 May 2006 at 11:42 am

    Simon: you state: the theory could more fruitfully address disequilibrium dynamics … while I may agree in principle, could you provide some examples of how this may be done?

    AMR is unfortunately not concerned with the real art of theory building but rather suggest that applying existing theories and scientific jargon to “new” conceptual areas constitutes new theory. I think we can all agree that this paper is not well written and does not contribute much in terms of RBV – HOWEVER – it did make Nicolai read and think and write in this blog and thus perhaps it has fulfilled a greater purpose. A critique that is not really a critique in its substance yet enables us to further the discussion about RBV etc. – a paradox?

    Nicolai – your point is well taken – a simple search on the words “paradox and management” in scholar.yahoo gives close to 100.000 hits!!

  • 6. siimon  |  31 May 2006 at 7:52 pm

    Bo-

    Your comments again are fair.

    The primary issue I have is that the authors do not recognize that the issues they raise do not offer either theory development or testing. Thus, not productive.

    I will also say that I am exaggerating when I say the authors do not understand RBV. They likely do … the issue is they are NOT productively move us forward in their reviewed and published paper …

    Again you fairly ask me to elaborate (which I will do so later)

  • 7. artee bhugun  |  20 September 2009 at 1:51 pm

    i wld to knw how is it possible to carry out a training need analysis using an RBV as a part o a methodolgy

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