The Role of Assumptions in Management Research
| Nicolai Foss |
A striking difference between economics and (most) management research is that while economists are obsessed with the role of assumptions in theorizing, management scholars as a rule don’t seem to spend much time on assumptions, at best tucking them away under “boundary conditions,” and, in general, having rather little patience with “assumptions discussions.” In particular, the eyes of management scholars of the more descriptive (“phenomenological”) stripe glaze over from boredom or inattention when the issue is raised.
Major economists (Samuelson and Friedman come immediately to mind) have written famous methodological papers on assumptions. A significant portion of what passes as “economic methodology” is taken up with the nature and status of assumptions. Prominent philosophers have written on the role of assumptions in economics (e.g., Alan Musgrave, Daniel Hausman). However, I know of not a single paper in management research dedicated to the issue.
And yet, management scholars do theorize. Theorizing means constructing some kind of model, some kind of simplified “parallel universe” — which logically must entail making assumptions. (Obviously, management scholars explicitly influenced by economics are quite conscious about all this). In fact, assumptions as extreme as many found in economics can be found in management research, such as assumptions that employees are perfectly docile; organizations do not have any incentive conflict; or that resources are, as a starting point for analysis, completely homogeneous. Much of the dynamics of dispute in management research in actuality revolves around such assumptions. Therefore, the lack of explicit attention to assumptions in management research is puzzling.
This and other issues are discussed in a new paper by Niklas Hallberg and myself, “Symmetry and Theoretical Isolation in the Resource-based View: Treating Product Markets Like Factor Markets.” We build on the methodological work of Finnish philosopher Uskali Mäki and examine the role of assumptions in the resource-based view. We show how the RBV to a large extent has borrowed the economics practice of making highly “asymmetrical” assumptions (e.g., agents are highly ignorant about some variables and completely informed about other variables, leaving little in between; see this paper for the case of contract theory). Notably, the treatment of markets in the RBV is highly asymmetrical, factor markets being treated as highly imperfect, product markets being treated as perfect. We argue that one way in which the RBV can make progress is by relaxing such asymmetrical assumptions.
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