I have read the ongoing debate regarding "Our troubled discipline" with interest. I can't tell you how invigorating it has been to observe a discipline challenging itself in this way. And while I am hardly a qualified expert, I offer the following for your consideration.
A seminal work in the field of organizational theory, oft cited as a foundation for behavioral strategy, is the 1963 book by Cyert & March, "A Behavioral Theory of the Firm". I suspect most of you reading this now have read it and, if not, certainly know of it. Early on in the book Cyert and March (1963:34) assert: "To what extent is it arbitrary, in conventional accounting procedures, that we call wage payments "costs" and dividend payments "profits" rather than the other way around? Why is it that in the beginning there was a manager and he recruited workers and capital? For the development of our own theory we make two major arguments. First, the emphasis on the asymmetry [by which Cyert and March mean the goals/welfare of the entrepreneur over the employee's] has seriously confused the understanding of organizational goals. The confusion arises because ultimately it makes only slightly more sense to say that the goal of a business is to maximize profit than to say its goal is to maximize the salary of Sam Smith, Assistant to the Janitor." I would further argue that corporations are an institution form legitimized by society and, as such, are privileged users of society's resource. In return, corporations are expected to utilize society's resources better than (or at least as good as) other, alternative uses. Is this best measured by return to owners alone? Adopting Cyert and March's concept of a coalition between the entrepreneur and the employee, aren't we ignoring a major part of the equation by focusing only on the providers of financial capital? Shouldn't human capital figure into this as well?
After almost 30 years as first an executive in the IT industry and then as a partner in a major management consulting firm I can emphatically say I observed, first hand, one thing for certain. Companies that focus on financial measures alone lose out in the long run. They lose to companies that take a more balanced perspective, by focusing on human capital as well. This may not show up directly in financial measures, but, at a minimum, firms that focus exclusively on these measures under perform their potential. Call it social loafing, call it human capital slack ... whatever. These companies don't get it all from their employees. The underutilized potential in such companies can be staggering to observe. (As an aside, when I was an MBA student at Harvard we were required to watch an old movie for our first year course in <st1:place w:st="on">OB</st1:place>, "12 O'clock High" starring Gregory Peck. The issue Peck faced was to turn around an underperforming WWII <st1:country-region w:st="on"><st1:place w:st="on">US</st1:place></st1:country-region> bomber squadron; his specific charge was to find out what 'maximum performance' means and to get it. This struck me as, ultimately, the ONLY goal of strategic managers; the lessons from that class discussion have stayed with me these 20 some years. It is what motivated me to return to doctoral studies, and what I hope to contribute to in some way.)
Perhaps what we need to do is to rethink what the primary DVs for the study of strategic management really are. Have we all been overly seduced by the accountants and, perhaps, to a lesser extent, the economists at the cost of marginalizing our impact? Does the study of strategic management need a paradigm shift? Did Cyert and March provide us a glimpse at the answer some 30 plus years ago?