A New Tool for Resurrecting an Old Theory of the Firm

It’s one of the oldest most fundamental ideas in management theory: that executives should understand how the many distinct functional components of a firm -- production distribution product mix human resources -- interrelate to achieve the proper fit. In recent years however this notion of comprehending the ”part-whole” relationship of the firm fell out of favor as thinkers turned to other concepts -- such as relying on core competencies to attain competitive advantage. Now two professors in Wharton’s management department Daniel A. Levinthal and Nicolaj Siggelkow say it is time to once again address the part-whole concept. Without this systemic way of looking at companies the researchers note firms run the risk of engaging in compartmentalized thinking that can work to their disadvantage. The two scholars have addressed issues related to firm positioning and the part-whole relationship of the firm in a number of papers and articles.

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