Strategy-making in novel and complex worlds
Subtitle: the power of analogy
By: Giovanni Gavetti, Daniel A. Levinthal, Jan W. Rivkin
Contributors: Levinthal, Daniel; Rivkin, Jan W.; Harvard Business School. Division of Research
Series: Working paper / Division of Research, Harvard Business School -- 05-010; Working paper (Harvard Business School. Division of Research) -- 05-010
Publisher: Division of Research, Harvard Business School
Published: 2004
Place of publication: Boston
Language: eng
Number of pages: 46
Description: We examine how firms discover effective competitive positions in worlds that are both novel and complex. In such settings, neither rational deduction nor local search is likely to lead a firm to a successful array of choices. Analogical reasoning, however, may be helpful, allowing managers to transfer useful wisdom from similar settings they have experienced in the past. From a long list of observable industry characteristics, analogizing managers choose a subset they believe distinguished similar industries from different ones. Faced with a novel industry, they seek a familiar industry which matches the novel one along that subset of characteristics. They transfer from the matching industry high-level policies that guide search in the novel industry.
Notes: Includes bibliographical references.