Introductory Chapter: Recent Advances, New Perspectives and Applications on Strategic Management

1. Introduction

The past 50 years have witnessed increasing efforts by academics and practitioners globally to deepen the understanding of the nature, sources, and determinants of strategic management practices and theories [1]. Research seeks to map, measure, and expand our understanding of how strategic initiatives are integrated into the economic system. Initially influenced by foundational theories [2], this field has grown from a specialized focus at the edges of economics and sociology into a major area of interest encompassing economics, sociology, and social psychology. Over time, the study of strategic management has become more comprehensive and sophisticated [3]. This chapter aims to provide a concise overview of the key insights that have emerged from this body of research.

Our method for this swift review focuses on presenting some ‘stylized facts’ that have emerged from the study of strategic management. The term ‘stylized fact’ refers to a key summary of empirical observations, offering a simplified representation that holds true in most cases, though not universally. By highlighting ‘stylized facts’, it is possible to gain a broad overview of a field without being overwhelmed by intricate details, allowing for an emphasis on major trends while setting aside minor specifics. This approach, coupled with a narrative review [4] allows us to propose seven outcomes of recent advances in strategic management.

Another useful approach for analyzing a research field involves understanding the ‘hard core’ of a ‘progressive’ research area. Such a field welcomes new discoveries, innovative experiments, fresh data, novel methods, and more accurate predictions. At its center is a set of core ideas that most experts in the field agree upon. These core ideas can often be expressed as ‘stylized facts’, summarizing the shared general knowledge within the field. These statements capture fundamental concepts accepted by the research community. However, the core is not fixed and may evolve as new insights emerge [5, 6, 7].

These stylized facts are widely recognized within the strategic management field and remain largely uncontested. Beyond this established knowledge, we explore cases where new insights have questioned or modified existing facts, such as the shift from viewing the firm as the central strategic actor to adopting distributed or collaborative approaches to strategy development. These emerging perspectives challenge traditional views and create opportunities for new research directions.

2. Strategic management and growth of the firm

In the early 1980s, new growth theories emerged to better integrate strategic management into growth analyses [8, 9]. These theories introduced models highlighting the informational properties of strategic ideas, their non-rival nature, and their potential for reuse. These models showed that strategic initiatives contribute to growth primarily through spillover effects, where strategic practices and concepts spread to new contexts with little or no cost to the recipient [10].

Later, some researchers sought to evaluate more precisely the impact of major strategic shifts, including the adoption of digital technologies and the Information and Communications Technology (ICT) revolution, on productivity [11]. In the 2000s, research broadened to include firms’ investments in intangible assets, such as R&D, organizational changes, and marketing, and to link these investments to economic growth. Surveys tracking company expenditures on these intangible resources allowed for estimations of the proportion of productivity growth attributable to strategic investments. Results indicated that nearly two-thirds of productivity growth from 1999 to 2006 could be traced to these intangible investments. This evidence emphasized the crucial role of strategic management in fostering economic growth, evaluated alongside changes in capital and labor quality [12]. It also renewed interest in quantifying the contribution of strategic initiatives to economic progress, leading to the advancement of refined growth accounting methods to measure these impacts more accurately.

Stylized fact 1: Strategic management plays a major role in productivity growth.

3. Combinatorial power of strategic management

The concept of strategic management can be understood as involving ‘new combinations’ of existing elements [13]. Most strategic initiatives do not consist of entirely original concepts but are instead innovative arrangements of familiar components. The main challenge for strategists lies in uncovering creative new combinations rather than inventing something wholly unprecedented [14]. This does not mean that new technologies, methods, or organizational practices never enter the field; however, they often do so by recombining existing elements in novel ways.

Strategic advancements are rarely isolated events; they build upon prior ideas, experiments, and lessons learned. This illustrates that changes in even a single component can enable individuals or organizations to devise new systems or significantly enhance performance by reorganizing the relationships between different elements [15, 16].

This combinatorial perspective suggests that the pace and direction of strategic progress in any industry or sector are largely influenced by the potential for new combinations [17, 18]. When opportunities for recombination are exhausted, the rate of strategic innovation may decelerate. Yet, the potential for such recombination is immense, surpassing the space for entirely original creations [19]. The near-endless array of possible combinations can continuously generate new and valuable strategies, processes, and services [20]. Although there may be concerns that strategic opportunities are waning, this perspective often overlooks the expansive potential inherent in recombination. Significant breakthroughs in combining existing elements can trigger chains of related strategic developments [21, 22, 23].

Stylized fact 2: Most strategic management advances involve new combinations of existing elements, bodies of knowledge, or methodologies.

4. Pervasiveness of strategic management

It is often assumed that strategic management is primarily concentrated in a few advanced, high-technology sectors [24, 25]. However, research has shown that the pace and nature of strategic initiatives vary significantly across different industries, with some sectors adopting new products, processes, and services more quickly than others [26, 27]. Metrics such as R&D investments, the level of skilled labor, and indicators of industry dynamism, including new firm entries and exits of existing firms, are commonly used to assess this pace. The potential for strategic recombination also plays a crucial role in influencing the rate of strategic innovation.

Despite perceptions that certain sectors dominate strategic management, studies reveal that strategic practices permeate the entire economic system. The notion of ‘creative destruction’ associated with strategic transformations is not confined to high-tech sectors; it is present across diverse industries, regardless of their traditional classification [28, 29]. The variability in the pace of strategic initiatives between sectors should not overshadow the capacity for strategic management to drive transformation throughout the economic system.

Even sectors considered traditional or slow-moving are capable of significant strategic evolution through the adoption of new products, processes, or organizational practices [30]. This widespread applicability underscores the integrative and systemic nature of strategic management, which facilitates cross-sectoral growth and adaptation. Research in strategic processes indicates that while the pace of strategic change may differ, its presence is essential and pervasive, contributing to ongoing industry development and renewal [31].

Stylized fact 3: Strategic management is pervasive throughout the economic system.

5. The pace of strategic management

The rate of strategic change differs across industries and time periods, but a fundamental characteristic of strategic management is that most transformations are evolutionary [32, 33]. These changes typically involve incremental enhancements to existing products, processes, and services. While radical strategies may capture attention due to their significant impact, most corporate investments and managerial activities are directed toward incremental strategies, focusing on small-scale improvements that optimize current assets. The development of entirely new strategies or products is costly and uncertain, leading organizations to often prioritize enhancements of existing structures. Firms typically exemplify this by consistently refining their offerings, supported by robust investments in branding, manufacturing facilities, dedicated R&D teams, and supply chains [22, 34]. The high cost associated with maintaining these assets generally incentivizes firms to adhere to established methods unless external pressures or substantial opportunities necessitate change. Consequently, low-risk, short-term strategic initiatives that build on existing investments are frequently prioritized.

Incremental strategic actions can lead to significant outcomes. Continuous improvement practices in production facilities, for example, may aim for consistent efficiency gains over time, leading to considerable productivity increases. Enhanced operational procedures can cumulatively drive substantial performance improvements. Such incremental efforts underscore that even small, steady advancements can have a notable impact on economic output in the medium term [35].

However, the importance of incremental strategies does not diminish the influence of more radical strategic shifts. Radical strategies, characterized by significant changes in cost-performance dynamics, can give rise to new industries and spur a sequence of subsequent incremental developments. Research shows that such fundamental strategic changes are infrequent, and only a limited number of industries experience substantial disruptions in market leadership. This suggests that many professionals may not encounter radical strategic shifts within their industry over their careers. The most significant radical strategies are those with broad applicability across sectors, known as transformative strategies [36, 37].

The challenge for organizations lies in the unpredictability of radical strategic changes [38, 39]. Forecasts often fail to anticipate these shifts, which are qualitative in nature, reshaping rather than merely enhancing existing methods. As a result, while large firms may be responsible for a significant portion of groundbreaking strategies, they frequently find it difficult to leverage these changes successfully. Firms heavily invested in incremental improvements may struggle to respond to radical shifts, constrained by their focus on existing customer needs, reluctance to undermine current assets, or resistance to altering established business models and practices [40].

Stylized fact 4: Most strategic change consists of evolutionary, incremental adaptations of existing strategies, products, and processes, while radical and revolutionary shifts are rare and largely unpredictable.

6. Strategic management is relational

Early studies in strategic management often centered on narratives featuring heroic leaders or inventors who were credited with driving breakthroughs single-handedly [41, 42]. Prominent figures who spearheaded major industrial advancements embodied this individualistic perspective, with such leaders depicted as working in isolation, fiercely guarding their innovations, and frequently engaging in disputes over ownership and priority. Although this portrayal highlighted transformative impacts, it overlooked the collaborative nature of strategic development.

Research has shown that the ability of individuals to produce valuable strategic ideas is significantly shaped by their social capital—the access to resources and support within their networks. This applies to teams and organizations as well; those that engage effectively with partners, suppliers, and other stakeholders enhance their strategic potential and increase the likelihood of capturing value from new initiatives.

The relational aspect of strategic management is also apparent in how value is generated and recognized. A strategic initiative by itself does not create value; it becomes valuable through the reactions and demands it garners from consumers and businesses. Early adopters play an essential role in disseminating strategic changes, making their participation vital for building momentum and validating new ideas.

Effective implementation of strategic initiatives often requires close coordination with suppliers and other external parties. Collaboration ensures that critical components and partnerships are in place, regulatory standards are met, and the broader ecosystem supports the strategic effort. Firms may also need to work with competitors and academic institutions to foster new strategic fields, building acceptance and fostering a supportive community [43, 44].

In addition, organizations frequently engage with external user communities to bolster and sustain their strategic efforts. These communities can contribute valuable input and modifications that are incorporated into future updates, exemplifying a cycle of collaborative growth and development.

Stylized fact 5: Strategic management is relational and typically involves collaboration between multiple parties.

7. Unpacking creativity, invention, and strategic management

To understand strategic management, researchers have explored how creativity and novelty emerge from individuals [45, 46, 47]. Creativity is typically defined as the ability to generate ‘novel’ and ‘useful’ ideas and is considered an expression of one’s inherent skills and abilities. The human mind is recognized as a powerful tool for creative thought, with everyone possessing the potential for creative output, though some individuals are more inclined to achieve strategic breakthroughs. This tendency can be influenced by biological factors but is more significantly shaped by personal experiences, education, and effort.

Research into strategic leaders and thinkers has focused on the psychological and environmental factors that affect their capacity for developing creative ideas. Findings indicate that individuals with strong intrinsic motivation or self-drive often produce more impactful creative contributions. Additionally, the perception of a supportive organizational climate is crucial in motivating individuals to generate and share valuable ideas. Empathetic leadership, which allows for the acceptance of failure and fosters a safe space for exploring non-traditional approaches, is also essential for encouraging creative team efforts [48].

While creative ideas lay the groundwork for strategic initiatives, creativity alone does not always lead to practical strategies or plans. Many innovative ideas lack immediate applicability and do not evolve into actionable strategies. Therefore, creativity serves as an essential input in the development of strategic solutions, which must be novel enough to offer competitive advantages or open unique market opportunities. However, only a portion of these strategic concepts succeed in being executed and delivering organizational benefits.

The rarity of effective strategies lies in their execution. An innovative idea is tested through its transformation into an implementable strategy that produces value. This phase requires not only innovative thinking but also the ability to adapt and apply ideas effectively to capture value. The strategic management process thus involves progressing from ideation and invention to practical implementation and value realization.

Stylized fact 6: Creativity is essential for strategic development, as innovation is to strategy, yet these concepts represent distinct elements within the strategic management process.

8. Strategic management, big data, and AI

Recent advancements in technology have transformed strategic management by introducing big data and Artificial Intelligence (AI) as critical components. The integration of these technologies has allowed organizations to enhance decision-making processes, forecast trends, and develop adaptive strategies with unprecedented accuracy [49]. Big data, defined by its volume, variety, and velocity, provides a foundation for in-depth analyses that inform strategic choices. AI complements this by enabling predictive analytics, machine learning models, and automation, which can identify patterns and optimize processes that are beyond human capabilities.

Strategic management has evolved to incorporate these technologies not merely as tools but as central elements in crafting competitive advantages. Organizations that effectively harness big data and AI can gain deeper insights into consumer behavior, market conditions, and operational efficiencies. This technological integration facilitates real-time decision-making, allowing firms to pivot strategies swiftly in response to dynamic market changes. Moreover, the application of AI-driven algorithms supports the development of proactive and personalized strategies, enhancing customer engagement and operational scalability.

The influence of big data and AI extends beyond operational efficiencies to strategic foresight and innovation. AI-driven simulations and scenario planning enable firms to explore potential outcomes and mitigate risks before they materialize. This capability supports a more agile and informed approach to strategic planning, fostering resilience in an increasingly complex economic landscape.

However, the adoption of big data and AI in strategic management presents challenges, including data privacy concerns, ethical considerations, and the need for substantial investment in technology and expertise [50]. Organizations must navigate these challenges while balancing innovation with responsible practices.

Stylized fact 7: The integration of big data and AI in strategic management enhances decision-making and adaptability, positioning organizations for competitive advantage but also posing new challenges.

9. Conclusion

The collection of the seven ‘stylized facts’ presented in this chapter reflects the multifaceted nature of strategic management and its evolution over time. These facts illustrate that strategic management encompasses both incremental and radical changes, extends across diverse industries, and relies heavily on relational interactions. The incremental nature of most strategic changes, the rarity of radical shifts, and the significant role of collaboration all highlight the complexity inherent in developing and executing strategies effectively.

Moreover, the integration of modern technologies like big data and AI, and the emphasis on sustainable development, reveal how strategic management adapts to new challenges and opportunities [51, 52]. Theories of the firm now include broader considerations that align with stakeholder interests and sustainable practices, demonstrating the field’s responsiveness to social and environmental imperatives. These elements are not just trends but essential aspects that shape strategic outcomes and long-term resilience.

Taken together, these seven ‘stylized facts’ underscore that while strategic management evolves and adapts, its core principles remain interconnected. The field continues to grow more sophisticated, incorporating new theories, technologies, and societal values. Understanding these fundamental truths helps organizations navigate complex environments and positions them to create enduring value.