You are here

Economic Foundations of Strategy

Economic Foundations of Strategy

August 2004 | 272 pages | SAGE Publications, Inc
"Economic Foundations of Strategy uniquely contributes to the strategic management discipline by discussing and integrating the most important theoretical approaches in strategic management research. The book articulates the essence of these theories creatively and eloquently. Currently, our field lacks a scholarly book that brings together these theoretical building blocks of strategic management research.  Mahoney's book is a superb guide for doctoral students and scholars who are entering the discipline of strategic management.  I conjecture that this book will become a must-have guide for seasoned strategy researchers as well... scholars from related disciplines such as industrial organization economics, international business and organization would also want to have a copy of this phenomenal guide… It was a pleasure to read this book." -- Yasemin Y. Kor, University of Delaware

Economic Foundations of Strategy provides not only the essential basic tenets of strategy, it also shows the inter-relationships of five major theories of the firm: the behavioral theory; transaction costs theory; property rights theory; agency theory; and dynamic resource-based theory.  Even though technological, organizational and institutional change advances breathlessly, the theories of the firm provided in this research book are durable principles that have stood, and the author maintains will continue to stand, the test of time.  Economic Foundations of Strategy emphasizes the complementarities among these five theories of organization, and the potential for integrating these theories in the evolving science of organization.  Applications of these theories to business practice are emphasized throughout the book.  

Key Features:   • Provides an integrative approach -Covers economics (e.g., transaction costs, property rights and agency theory); -Covers finance (e.g., real options theory) -Covers organization theory (e.g., the behavioral theory of the firm); and -Covers modern strategic management theory (e.g., dynamic resource-based theory).   • Connects "Know-why" and "Know-how" -Covers the theoretical material deeply enough to be of use to advanced students -Connects this research to business applications to be of use to those interested in business practice

Anne Huff
Editor's Introduction
Oliver E. Williamson
Chapter 1 Behavioral Theory of the Firm
Chapter 2 Transaction Costs Theory
Chapter 3 Property Rights Theory
Chapter 4 Agency Theory
Chapter 5 Resource-based/Dynamic Capabilities
Chapter 6 The Theoretic Building Blocks of Organizational Economics

Excellent book, but not enough to be a textbook for the whole course.

Mr Roberto Cordon
International Management, Franklin College
June 3, 2014

The book offers a comprehensive review of contemporary theories of the firm. As it is suitable for the comparison of the governance versus the competence perspective in strategic management, we will add it to our course reading list.

Ms Heidi Guenther
Department of Business Administration, University of Hamburg
December 11, 2012

A superb theoretical overview of business foundations. Best in its class. Of great value for MA level, esp. seminar work.
Rather not suitable for BA level classes.

Dr Artur Ochojski
Strategic and Regional Studies, University of Economics in Katowice
March 12, 2012

It condenses current thought and research in the area of strategy. Not too many books available for PhD students. This book does a great job at fulfilling this need.

Mr Harold Rivera
business, Unad Floridia
September 2, 2011

A well written text on economic strategy.

Dr Farhang Morady
Department of Psychology, Westminster University
October 12, 2010
Key features
  • Helps clarify the theoretical foundations of management strategy
  • Identifies five theories of particular importance to the strategy field, and outlines the contributions of particularly influential works in each area
  • Helps find answers for these five questions regarding key issues in strategy using economic theory:
  1. How can organizations operate efficiently (Behavioral Theory of the Firm)
  2. How can firms minimize costs? (Transaction Costs Theory)
  3. How can firms create and allocate wealth? (Property Rights Theory)
  4. How can firms align individual self-interest? (Agency Theory)
  5. How can resources be acquired, developed and deployed to improve the likelihood of survival and profitable growth? (Resource Based Theory with its' off-shoots, Dynamic Capability Theory and Real Options Theory of the Firm)