Single, Double, and Triple Loop Organizational Learning

Single, Double, and Triple Loop Organizational Learning

Key Terms

  • Learning
  • Organizational Learning
  • Chris Argyris
  • David Schon
  • Peter Senge
  • Single Loop Learning
  • Double Loop Learning
  • Triple Loop Learning
  • Quadruple Loop Learning
  • Error Correction
  • Feedback Loop
  • Gregory Bateson
  • Action Learning
  • Cybernetic Loop
  • Reflexivity
  • Reflection and Learning
  • Systems Thinking
  • Cause and Effects
  • Organizational Adaptability
  • Organizational Culture
  • Theory In Use Models I and II
  • Action Science
  • Ed Schein
  • Levels of Learning
  • Planning as Learning
  • Cybernetics
  • Second Order Cybernetics
  • Third Order Cybernetics
  • Perceptual Flaws
  • Cognitive Learning
  • Hierarchical Planning
  • Management Control Systems
  • Management Planning and Control Systems
  • Planning and Control Systems
  • Manufacturing Planning and Control Systems
  • Advanced Planning Systems (APS)
  • Balanced Scorecards
  • Strategic Management
  • Social Learning
  • Learning to Plan, Planning to learn
  • Deutero Learning
  • Meta Learning
  • Explicit Knowledge
  • Tacit Knowledge

Single and Double Loop Learning

Source: Deradicalization through Double-Loop Learning? How the Egyptian Gamaa Islamiya Renounced Violence

Argyris and Schon thereby start with the assumption that “all deliberate action ha[s] a cognitive basis, that it reflect[s] norms, strategies, and assumptions or models of the world.”21 These mental models work as a “frame of reference” which determine expectations regarding cause and effect relationships between actions and outcomes.22 According to Argyris and Schon, organizational learning becomes necessary when there is an “error,” a mismatch between intended outcomes of strategies of action and actual results; consequently, they define learning as the “detection and correction of error.”23 This correction of errors happens through a continuous process of organizational inquiry of varying depth. Argyris and Schon distinguish two types of learning:24 In single-loop learning systems, the detection and correction of error connects the outcome in a single loop only to strategies of action whereas the governing variables remain unchanged. In double-loop learning systems, a double feedback loop “connects the detection of error not only to strategies and assumptions for effective performance, but to the very norms which define effective performance.”25 Hence, double-loop learning modifies the governing variables underlying objectives.

Single-loop learning to increase the effectiveness of actions is the dominant response to error and ingrained in routine procedures in any organization. Unfortunately, due to organizational inertia and a tendency to become defensive when confronted with failure, organizations have a tendency to produce learning systems that inhibit double-loop learning that would question their objectives and governing variables.26 Single-loop learning systems are characterized by attempts to increase effectiveness without questioning norms underlying objectives. When organizations initiate change to curb activities under existing norms, a conflict in the norms themselves can emerge. For example, requirements for change can come into conflict with the requirement of predictability.27 Argyris and Schon suggest that in order to double-loop learn, leaders must first recognize the conflict between conflicting requirements itself. They must become aware that they cannot correct the error by doing better what they already know how to do. They must engage in deep organizational inquiry: in this process the focus has to shift from learning concerned with improvement in the performance of organizational tasks to inquiry through which an organization explores and restructures the values and criteria through which it defines what it means by improved performance.28 This is often inherently conflictual. Double-loop learning can namely be inhibited when norms are undiscussable within organizations. That leaders may be unaware of the conflict between conflicting requirements may be one reason why norms become undiscussable within organizations, leading to a double-bind situation for individuals. If they expose an error, they question covert or unquestionable norms. If they do not expose an error, they perpetuate a process that inhibits organizational learning.29 Individuals thus face lose/losepage6image1381222848

STUDIES IN CONFLICT & TERRORISM 5 situations in which the rules of the game are not open to discussion.30 Commonly,

organizational norms also make the double binds themselves undiscussable:

Such procedure means that the very information needed to detect and correct errors becomes undiscussable. If one wanted to design a strategy to inhibit double-loop learning and to encourage error, a better one could not be found.31

Argyris and Schon conclude that organizations have a tendency to produce learning systems that inhibit double-loop learning as it would question their objective and norms.32 Double binds indicate such single-loop learning systems. Does the lack of cognitive abilities, as well as perceptual flaws, explain why individuals become locked in double binds, and why learning in organizations becomes inhibited? According to Argyris and Schon, the problem lies with organizational defenses that lead to a lack of error perception, rendering errors uncorrectable. Defensive organizational routines come into play when threatening or embarrassing issues arise, preventing lessons from being learned.33 Defensive routines – such as sending mixed messages or being overly diplomatic – are frequently activated when they are most counterproductive. Defensive routines can create binds:

On the one hand, […] [p]articipants are not supposed to bypass errors. Moreover, the bypass is undiscussable […] On the other hand, if the errors, their undiscussability, and the cover-ups surface, the participants are subject to criticism … 34

Defensive routines therefore prevent members of organizations from discovering the root causes of the problem and lead to paradoxes because individuals design inconsistencies of meaning and camouflage them by producing mixed messages: “to be consistent, act inconsistently, and act as if that is not the case.”35 A second consequence is that people start creating attributions to make sense of other peoples’ actions – attributions which are frequently wrong but remain unquestioned. As a result, reactions lead to unintended consequences. So why do people create consequences that contradict their intentions?36 Argyris and Schon consider that people are responsible for their actions, and that individuals who deny responsibility usually put the blame on others.37

In contrast, in double-loop learning systems productive reasoning takes place, following a logic that is not self-referential, where people take responsibility, acknowledge when there is a mismatch between intention and outcome, share awareness of organizational dilemmas, engage such conflicts through inquiry, and decrease double binds.38 In this second learning loop, the focus shifts from learning how to better accomplish tasks within a given frame of reference to learning what to do by questioning the frame of reference itself.39 In other words, while single-loop learning focuses on improving what an organization already does, or “doing the things right,” double-loop learning is concerned with what organizations ought to do, or “doing the right things.”40 However, Argyris and Schon find only limited empirical evidence for double-loop learning systems and remark that it depicts an ideal type that can be approached, making it possible to speak of organizations learning in a more or less double-loop way.41 The dynamics described above explain how double-loop systems become inhibited and how people hide their responsibility by blaming the environment for their inability to double-loop learn. Argyris and Schon also address intervention strategies that help organizations approach double-loop learning. One tool is the drawing of a diagnostic map describing how the organization learns. Such a map, they suggest, can help with predictions if certain changes were to be implemented,42 and can be used to depict alternative scenarios and their consequences.

Single Loop Learning

Source: Wikipedia

Double Loop Learning

Source: Wikipedia

Single and Double Loop Learning

Triple Loops of Learning

Source: The origins and conceptualizations of ‘triple-loop’ learning: A critical review

Many scholars have considered the concept of organizational learning as a dichotomy. In its basic, primary form they have described it as action oriented, routine and incremental, occurring within existing (mental) frameworks, norms, policies and rules. In the face of profound change in organizational environments, these scholars argue that a qualitatively distinct, secondary form of learning is necessary. This aims to change the (mental) frameworks, norms, policies and routines underlying day-to-day actions and routines (Cope, 2003).

This dichotomy has been expressed in a variety of terms: single-loop and double-loop (e.g. Argyris and Schön, 1974); lower-level and higher-level (Fiol and Lyles, 1985); first-order and second-order (Arthur and Aiman-Smith, 2001); exploitation and exploration (Levinthal and March, 1993; March, 1991); incremental and radical (Miner and Mezias, 1996); and adaptive and generative learning (Senge, 1990). Although these dichotomous terms stem from different perspectives on organizational learning, a reasonable consensus seems to have been established that they refer to comparable learning processes and outcomes (Argyris, 1996; Arthur and Aiman-Smith, 2001; Miner and Mezias, 1996). Thus, as defined by Argyris (1999: 68), single-loop learning occurs ‘whenever an error is detected and corrected without questioning or altering the underlying values of the system’, and double-loop learning occurs ‘when mismatches are corrected by first examining and altering the governing variables and then the actions’.

A number of authors have conceived of a further type of organizational learning, for which the most prominent term is ‘triple-loop’ learning (Flood and Romm, 1996; Isaacs, 1993; Romme and Van Witteloostuijn, 1999; Snell and Chak, 1998; Swieringa and Wierdsma, 1992; Yuthas et al., 2004). Typically, this is described as additional to, and metaphorically at a ‘higher’ or ‘deeper’ level than, primary and secondary forms of learning, the metaphor implying that this level has greater significance and profundity. Yet, in spite of its perceived importance, conceptualizations of this form of learning do not always make clear how it differs from, or relates to, primary or secondary forms. Scholars of organizational learning might look first to Argyris and Schön; significantly, though, we have established that whilst triple-loop learning has been inspired by Argyris and Schön, the term does not appear explicitly in their published work.

Within this we explore the original work of Argyris and Schön, and of the anthropologist and cybernetician Gregory Bateson, the major influences cited by authors who propose these conceptualizations. This enables us to make a theoretical contribution through identifying three distinct conceptualizations of triple-loop learning. These are:

A. a level beyond, and considered by proponents to be superior to, Argyris and Schön’s single-loop and double-loop learning;

B. an equivalent to Argyris and Schön’s (1978, 1996) concept of ‘deutero-learning’;

C. a proposed third level inspired by Bateson’s (1973)1 framework of levels of learning (specifically ‘Learning III’).

We discuss why these conceptualizations should be regarded as distinct from each other, and highlight some implications for practice.

Source: The origins and conceptualizations of ‘triple-loop’ learning: A critical review

Source: Levels of learning: hither and whither

Source: Coping with Uncertainty in River Management: Challenges and Ways Forward

Source: TOOL | Single, Double and Triple Loop Learning

Quadruple Loops of Learning

Source: Policy learning and crisis policy-making: quadruple-loop learning and COVID-19 responses in South Korea

Levels of Learning

Source: The origins and conceptualizations of ‘triple-loop’ learning: A critical review

Org. Culture, Learning, Performance

Source:A Configuration Model of Organizational Culture

Source:A Configuration Model of Organizational Culture

Source:A Configuration Model of Organizational Culture

Source:A Configuration Model of Organizational Culture

Source:A Configuration Model of Organizational Culture

Source:A Configuration Model of Organizational Culture

Source:A Configuration Model of Organizational Culture

Source:A Configuration Model of Organizational Culture



Source: Approaches for Organizational Learning: A Literature Review

Management Planning and Control Systems

Source: Performance management: a framework for management control systems research

Hierarchical Production Planning and Control

Source: A bibliography of Hierarchical Production Planning

Production Planning and Control Systems

Source: Google Images

Strategic, Tactical, and Operational Decisions

Source: Hierarchical Production Planning / Bitran/Tirupati/1989

My Related Posts

Steps to an Ecology of Mind: Recursive Vision of Gregory Bateson

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Feedback Thought in Economics and Finance

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Hierarchical Planning: Integration of Strategy, Planning, Scheduling, and Execution

Hierarchy Theory in Biology, Ecology and Evolution

Jay W. Forrester and System Dynamics

Production and Distribution Planning : Strategic, Global, and Integrated

Key Sources of Research

Triple-loop learning : theoretical framework, methodology & illustration

(An example from the railway sector)

Guillaume BarbatPhilippe BoigeyIsabelle Jehan

Dans Projectics / Proyéctica / Projectique 2011/2-3 (n°8-9), pages 129 à 141

What is Social Learning?

Author(s): Mark S. Reed, Anna C. Evely, Georgina Cundill, Ioan Fazey, Jayne Glass, Adele Laing, Jens Newig, Brad Parrish, Christina Prell, Chris Raymond and Lindsay C. Stringer

Source: Ecology and Society , Dec 2010, Vol. 15, No. 4 (Dec 2010) Published by: Resilience Alliance Inc.

Stable URL:

The learning organization and the level of consciousness 

Ricardo Chiva

Policy learning and crisis policy-making: quadruple-loop learning and COVID-19 responses in South Korea

Sabinne Leea, Changho Hwangb and M. Jae Moonc

aAssociate Research Fellow, Korea Institute of Public Administration, Seoul, South Korea; 

bAssistant Professor, Dong-A University, Busan, South Korea; 

cCollege of Social Science, Yonsei University, Seoul, South Korea

2020, VOL. 39, NO. 3, 363–381

“A systemic approach to processes of power in learning organizations: Part I – literature, theory, and methodology of triple loop learning”,

Robert L. Flood, Norma R.A. Romm, (2018)

The Learning Organization, Vol. 25 Issue: 4, pp.260-272,
Permanent link to this document:

“A systemic approach to processes of power in learning organizations: Part II – triple loop learning and a facilitative intervention in the “500 schools project””,

Robert L. Flood, Norma R.A. Romm, (2018)

The Learning Organization,
Permanent link to this document:

A Mighty Step: Critical Systemic Interpretation of the Learning Organization

Robert Louis Flood and Hanne Finnestrand

The Oxford Handbook of the Learning Organization Edited by Anders Ragnar Örtenblad

Print Publication Date: Dec 2019
Subject: Business and Management, Organizational Theory and Behaviour
Online Publication Date: Jan 2020 DOI: 10.1093/oxfordhb/9780198832355.013.11

Click to access A-Mighty-Step-Critical-Systemic-Interpretation-of-the-Learning-Organization.pdf


“Guest editorial”,

Max Visser, Ricardo Chiva, Paul Tosey, (2018)

The Learning Organization, Vol. 25 Issue: 4, pp.218-223,
Permanent link to this document:

Learning from the future meets Bateson’s levels of learning

Alexander Kaiser

Institute for Information Business, Vienna University of Economics and Business, Vienna, Austria

The Learning Organization Vol. 25 No. 4, 2018 pp. 237-247

The origins and conceptualizations of ‘triple-loop’ learning: A critical review

Paul Tosey, Max Visser and Mark NK Saunders

Management Learning 2012 43: 291

originally published online 2 December 2011 DOI: 10.1177/1350507611426239

The online version of this article can be found at:

Click to access The-origins-and-conceptualizations-of-triple-loop-learning-A-critical-review.pdf

Why aren‟t we all working for Learning Organisations?

Professor John Seddon and Brendan O‟Donovan


Click to access why-arent-we-all-working-for-learning-organisations.pdf

The Culture of Learning Organizations: Understanding Argyris’s Theory through a Socio- Cognitive Systems Learning Model

Laura Friesenborg

University of St. Thomas, Minnesota

Thesis PhD 2013


Michael Mitchell, School of Geography and Environmental Studies, University of Tasmania

Rural Society · June 2013

Shifting from Unilateral Control to Mutual Learning

By Fred Kofman

The executive mind and double-loop learning


Available online 6 February 2004.

Organizational Dynamics
Volume 11, Issue 2, Autumn 1982, Pages 5-22

Problem-Solving as a Double-Loop Learning System 

by Jeff Dooley
© 1999 Adaptive Learning Design

chris argyris: theories of action, double‐loop learning and organizational learning

Double Loop Learning in Organizations

Chris Argyris
Harvard Business Review
No. 77502

Harvard Business Review (September 1977)

Click to access Chris-Argyris-Double-Loop-Learning-in-Organisations.pdf

Single-Loop and Double-Loop Models in Research on Decision Making

Author(s): Chris Argyris

Source: Administrative Science Quarterly, Vol. 21, No. 3 (Sep., 1976), pp. 363-375 Published by: Johnson Graduate School of Management, Cornell University Stable URL:

A Primer on Organizational Learning

By Olivier Serrat


Modes of Organizational Learning

by Soren Eilertsen, Ph.D., with Kellan London, M.A.

Click to access single_and_double_loop_learning.pdf

The origins and conceptualizations of ‘triple-loop’ learning: A critical review

July 2012

Management Learning 43(3):291-307

Paul Tosey
Max Visser
Mark NK Saunders‘triple-loop’-Tosey-Visser/ea24da54380dc3cabdac74deb6cc57132a470c8a

TOOL | Single, Double and Triple Loop Learning

Good Communication That Blocks Learning

by Chris Argyris

Harvard Business Review 1994
Reprint 94401

Click to access Chris-Argyris-Good-Communication-that-Blocks-Learning.pdf

Double loop learning in organizations

By uncovering their own hidden theories of action, managers can detect and correct errors

Chris Argyris

Harvard Business Review September-October 1977;response-content-disposition=inline%3B+filename%3DDouble_loop_learning_in_organizations.pdfu0026amp;Expires=1627165288u0026amp;Signature=GOY4COga2LJKGnc3XAB5ge8ybpWvBBmeO779XhTzktEKTrIQREbkh9V8apE6z2QMCT2vufBoTq1NSSHNDJj0GGXu66VeCS8D37cTi-onZECbPUF5wXZ7Oa2U5Ih54fN-muWcED9BKEmV4G0e7kF3kDeAWrCs0jX5zC63JnOOvAyRL0ZjCcDGeF2~7T7WeNSnNZBKFJZW49tXy~LjhoRil2s7HBZxYI-Fjjp~fylKpDgDRZnfouPkCSnLU1rpeQBQOgrPnb8qmF0Bl6APCc-edECHKgsDYYBiqViUQ4epMm1yZbCSeUlYV6ODDm1dzWbfarwnOtRBnGWozuUbTYwIYg__u0026amp;Key-Pair-Id=APKAJLOHF5GGSLRBV4ZA

Analyzing the loops and taking the steps on the journey toward a learning organization

Simon Reese

University of Maryland University College, Seoul, Korea

The Learning Organization Vol. 24 No. 3, 2017 pp. 194-197

DOI 10.1108/TLO-01-2017-0004

N-loop learning: part II – an empirical investigation

Bernard L. Simonin 

The Learning Organization

ISSN: 0969-6474

May 2017

N-loop learning: part I – of hedgehog, fox, dodo bird and sphinx

Bernard L. Simonin 

The Learning Organization

ISSN: 0969-6474

Article publication date: 10 April 2017

Challenges of the levels of learning

Nataša Rupčić 

The Learning Organization

ISSN: 0969-6474

Article publication date: 14 May 2018

Deradicalization through Double-Loop Learning? How the Egyptian Gamaa Islamiya Renounced Violence

Carolin Goerzig

To cite this article: Carolin Goerzig (2019): Deradicalization through Double-Loop Learning? How the Egyptian Gamaa Islamiya Renounced Violence, Studies in Conflict & Terrorism, DOI: 10.1080/1057610X.2019.1680193

To link to this article:

Systems Thinkers

  • Magnus Ramage
  • Karen Shipp


Reframing Conflict: Intercultural Conflict as Potential Transformation

Beth Fisher-Yoshida

Journal of Intercultural Communication No.8, 2005

Developing the Leader’s Strategic Mindset: Establishing the Measures

John Pisapia, Daniel Reyes-Guerra, and Eleni Coukos-Semmel,

Kravis Leadership Institute, Leadership Review, Spring 2005, Vol. 5, pp. 41-68

What is Social Learning?



Mark S. Reed

Anna Clair Evely

Georgina Cundill

Ioan Fazey

The social learning discourse: Trends, themes and interdisciplinary influences in current research.

Environmental Science and Policy, 25, 157-166.

Strategic Learning


University of Oxford
Saïd Business School, Room 30.015 Park End Street
Oxford, OX1 1HP
United Kingdom +44(0)1865 288844

The Palgrave Encyclopedia of Strategic Management

David Teece and Mie Augier (eds.)

The Overview on Evolution of Learning Organization Theories

Sara. Ghaffari,1 Dr. Ishak. Mad Shah,2, and Jeveria Fazal3

Universiti Tecknologi Malaysia,

Modes of Knowing and Modes of Coming to Know Knowledge Creation and Co-Construction as Socio-Epistemological Engineering in Educational Processes

Markus F. Peschl

Constructivist Foundations

Volume 1 · Number 3 · Pages 111–123

Constructivist Foundations 1(3): 111–123.

Triple-loop learning as foundation for profound change, individual cultivation, and radical innovation: Construction processes beyond scientific and rational knowledge.

Peschl M. F. (2007)

Constructivist Foundations 2(2-3): 136–145.

A Configuration Model of Organizational Culture **

Daniel Dauber1, Gerhard Fink2, and Maurice Yolles

SAGE Open 1–16
DOI: 10.1177/2158244012441482

Exploring adaptability through learning layers and learning loops

Löf, Annette 

Umeå University, Faculty of Social Sciences, Department of Political Science.


Kolb’s Model of Experiential Learning: A framework for Collaboration

Dr. Michael Manning

CAAHE Academics Conference October, 2011
Austin, TX

Click to access KolbsModelofExperientialLearning.pdf


Daniel Dauber, WU -Vienna University of Economics and Business (

Gerhard Fink, WU -Vienna University of Economics and Business (

Maurice Yolles, Centre for the Creation of Coherent Change & Knowledge (C4K) (

Cross-disciplinary collaboration and learning. 

Pennington, D. D. 2008.

Ecology and Society 13(2): 8. [online] URL:

Barriers to organizational learning: An integration of theory and research

Jan Schilling1 and Annette Kluge

International Journal of Management Reviews (2009)

doi: 10.1111/j.1468-2370.2008.00242.x

Organizational learning in complex world

Agnieszka Dziubińska

Faculty of Management, University of Economics in Katowice, POLAND, Katowice, 1 Maja street 50,
E-mail: agnieszka.dziubiń

Click to access 87-246-249.pdf

Coming to a New Awareness of Organizational Culture ,

Schein, Edgar H., 

Sloan Management Review, 25:2 (1984:Winter) p.3

The Real Relationship Between Organizational Culture and Organizational Learning

Fumie ANDO

School of Business Administration, Nanzan University

Annals of Business Administrative Science Vol.1, No.2 (July 2002)

A Review of the Concept of Organisational Learning

By Catherine L Wang & Pervaiz K Ahmed

Working Paper Series 2002 Number WP004/02

ISSN Number ISSN 1363-6839

Catherine L Wang

Research Assistant
University of Wolverhampton, UK Tel: +44 (0) 1902 321651

Professor Pervaiz K Ahmed

Chair in Management
University of Wolverhampton, UK Tel: +44 (0) 1902 323921

Double-Loop Learning, Teaching, and Research


Chris Argyris

Performance management: a framework for management control systems research

David Otley􏰆

Management Accounting Research, 1999, 10, 363􏰀382

Article No. mare.1999.0115

Management Control Systems: A Historical Perspective

  • January 2010

Jordi Carenys


Peter Lorange

Michael S. Scott Morton

1974 MIT

Double-loop learning

From Wikipedia, the free encyclopedia

Approaches for Organizational Learning: A Literature Review **

Dirk BastenThilo Haamann

First Published August 12, 2018

A bibliography of Hierarchical Production Planning

Click to access A_BIBLIOGRAPHY.PDF



Camille M. Libosvar

Laboratory for Information and Decision Systems 

January 7. 1988


Massachusetts Institute of Technology Cambridge. Massachusetts



August 1977

Technical Report No. 135
Work Performed Under
Contract N00014—75—C—0556, Office of Naval Research
Multilevel Logistics Organization Models
NR 347—027
M.I.T. OSP 82491
Operations Research Center
Massachusetts Institute of Technology
cambridge , Massachusetts 02139

“Hierarchical Production Planning”

Gabriel R. Bitran*t Devanath Tirupati**

MIT Sloan School Working Paper #3017-89-MS

May 1989

*Sloan School of Management, Massachusetts Institute of Technology Cambridge, MA 02139

**Department of Management, The University of Texas at Austin

tThis research has been partially supported by the Leaders for Manufacturing Program.


Arnoldo C. Hax and Harlan C. Meal

May 1973


Hierarchical Production Planning: A Single Stage System

Gabriel R. Bitran, Elizabeth A. Haas and Arnoldo C. Hax

Operations Research
Vol. 29, No. 4, Operations Management (Jul. – Aug., 1981), pp. 717-743 (27 pages)
Published By: INFORMS
Operations Research

Hierarchical planning systems — a production application

Hax A.C., Bitran G.R. (1979)

In: Ritzman L.P., Krajewski L.J., Berry W.L., Goodman S.H., Hardy S.T., Vitt L.D. (eds) Disaggregation. Springer, Dordrecht.

  • Publisher Name Springer, Dordrecht
  • Print ISBN 978-94-015-7638-3
  • Online ISBN 978-94-015-7636-9

Hierarchical Production Planning: A Two Stage System


Gabriel R. Bitran

Elizabeth A. Haas

Arnoldo C. Hax

Analytical Evaluation of Hierarchical Planning Systems


Balliol College, Oxford, England


University of Pennsylvania, Philadelphia, Pennsylvania

L. JANSEN, 8. J. LAGEWEG, J. K. LENSTRA Mathematisch Centrum, AmsterdamThe Netherlands


Erasmus University, Rotterdam, The Netherlands

(Received December 1979; accepted March 1981)

Click to access RR-84-04.pdf

Deutero-Learning in Organizations: A Review and a Reformulation


Max Visser

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Portfolio Planning Models for Corporate Strategic Planning

Portfolio Planning Models for Corporate Strategic Planning

Key Terms and Ideas

  • Business And Its Policy
  • Concept of Strategy
  • Strategic Management
  • Vision, Mission, Objectives And Goals
  • Environment Analysis And Diagnosis
  • Strategic Advantage Analysis
  • Corporate Strategy
  • Michael Porter’s Generic Strategies
  • Formulation Of Functional Strategy
  • Types Of Strategies
  • Diversification Strategies For Companies
  • Turnaround, Retrenchment Divestment, And Liquidation Strategies For Companies
  • TOWS Matrix Analysis
  • BCG Matrix
  • Ansoff’s Matrix
  • ADL Matrix
  • The General Electric Model
  • Porter’s Five Forces Model
  • Mckinsey’s 7’s Framework
  • Value Chain Concept Analysis
  • Business And Investment Level Strategy
  • Vertical Integration And Strategic Alliances
  • Acquisitions And Joint Ventures
  • Tailoring Strategy Analysis
  • Industrial Environment Analysis
  • Strategic Change Management
  • Strategies For Competing In Globlizing Markets
  • Corporate Culture and Leadership
  • Strategic Control System
  • Matching Structure And Control Analysis
  • Strategy implementation And Control
  • Business Process Reengineering And Benchmarking
  • TQM, Six Sigma
  • Management And Contemporary Strategic Issues

Analytical Methods for Startegic Planning and Analysis

Image Source: The Strategic Development Process

Strategic Choices and Decisions

  • Product Portfolio (SBU Level) – What products should we sell/make?
  • Business Portfolio (Corporate Level)- What Businesses should we be in?

Analytical methods for Corporate Portfolio Planning

  • GE/Mckinsey Nine Cell Matrix
  • BCG Growth Share Matrix
  • Shell/Directional Policy Matrix DPM
  • ADL Strategic Conditions Matrix
  • Ansoff Matrix
  • Hofer/Schendel Matrix
  • and many other variants

BCG Growth Share Matrix

Image Source: BCG Matrix: Portfolio Analysis in Corporate Strategy


Image Source: Group Map

GE/McKinsey Nine Cell Matrix



Shell/Directional Policy Matrix


ADL Matrix

Image Source: ADL Matrix (Portfolio Management)

Ansoff Matrix


Hofer/Schendel Matrix


My Related Posts

Strategy | Strategic Management | Strategic Planning | Strategic Thinking

The Origins and History of Management Consulting

Hierarchical Planning: Integration of Strategy, Planning, Scheduling, and Execution

Profiles in Operations Research

History of Operations Research

Shell Oil’s Scenarios: Strategic Foresight and Scenario Planning for the Future

Art of Long View: Future, Uncertainty and Scenario Planning

George Dantzig and History of Linear Programming

Key Sources of Research

Strategic planning : models and analytical techniques :

Dyson, Robert G.

Chichester, West Sussex, England ; New York : Wiley, c1990.

Strategic Portfolio Planning Systems.

In: Multinational Strategic Planning. Palgrave Macmillan, London.

Channon D.F., Jalland M. (1978)

The Strategic Development Process

Robert G. Dyson, Jim Bryant, John Morecroft and Frances O’Brien

Why you’ve got to put your portfolio on the move

July 22, 2020 |


The Corporate Portfolio

JANUARY 01, 1977 By Bruce Henderson

The Product Portfolio

JANUARY 01, 1970 By Bruce Henderson

BCG Classics Revisited: The Growth Share Matrix

JUNE 04, 2014 

By Martin Reeves, Sandy Moose, and Thijs Venema

What Is the Growth Share Matrix?


Enduring Ideas: The GE–McKinsey nine-box matrix

September 1, 2008 | Article

Enduring Ideas: Classic McKinsey frameworks that continue to inform management thinking

July 1, 2008 | Article

Corporate Portfolio Management:

Appraising Four Decades of Academic Research

by Michael Nippa, Ulrich Pidun, and Harald Rubner

Academy of Management Perspectives

Not dead yet: the rise, fall and persistence of the BCG Matrix

Problems and Perspectives in Management, Vol. 15, Iss. 1, pp. 19-34,

Dag Øivind Madsen

Date Written: March 27, 2017

Product and portfolio analysis

An Empirical Comparison of Standardized Portfolio Models

Jerry Wind

Vijay Mahajan

Designing Product and Business Portfolio

Jerry Wind

Vijay Mahajan

Effects of portfolio planning methods on decision making: experimental results

J. Scott Armstrong
University of Pennsylvania,

Roderick J. Brodie
University of Auckland,

Manage Beyond Portfolio Analysis

HBR 1984

Comparison and Usage of the Boston Consulting- portfolio and the McKinsey-portfolio

Portfolio Analysis Models: A Review

Udo-Imeh, Philip T Edet, William E. Anani, Rajunor B.

Strategic Product Portfolio Management:

A Focus on the Bio-Pharmaceutical Sector and Roche

Strategic Analysis through the General Electric/McKinsey Matrix: An Application to the Italian Fashion Industry

BCG Matrix


The directional policy matrix—tool for strategic planning


Long Range Planning


Corporate Strategy: Portfolio Models

Eli Segev

International Thomson Pub., 1995 – Business & Economics – 188 pages

Ansoff Matrix

Product Strategy Tools – GE/McKinsey Portfolio Matrix

Methods of strategic analysis and proposal method of measuring productivity of a company

Wasilij Rudnicki



Cranfield School of Management

Application of ADL Matrix in Developed Industrial Companies

  • October 2009

Samir Ži

Tonči Mikac


Arnoldo C. Hax and Nicolas S. Majluf

WP #1493-83 October 1983

BCG Matrix: Portfolio Analysis in Corporate Strategy

ADL Matrix (Portfolio Management)


Malcolm B. Coate


August 1982


Samir Žic, Hari Hadžić, Milan Ikonić

The directional policy matrix — a new aid to corporate planning

Available online 19 June 2002.

Prepared by a Member of the Editorial Board from Material published by Shell International Petroleum Company Limited

Strategic Management and Business Policy: For Managers and Consultant

by B Hiriyappa

GE McKinsey Matrix

Expert Program Management

Global Trends, Scenarios, and Futures: For Foresight and Strategic Management

Global Trends, Scenarios, and Futures: For Foresight and Strategic Management

There are a few Institutions which do general long term trends and scenario analysis.

  • Atlantic Council
  • UK MOD
  • Shell International
  • HP
  • EY
  • WEF

There are many institutions both public and private which do issue or industry specific scenarios, trends, and futures analysis.

  • Water
  • Food
  • Energy
  • Climate Change
  • Globalization
  • Urbanization
  • Governance
  • Security
  • Technology
  • Demographic
  • Industry specific
  • Nationalism
  • Protectionism
  • Healthcare
  • Human Development

Why do Scenarios?

Its a way to internalize an organization’s external environment. By doing so, managers and leaders can future-proof their strategy.

Image Source: If only we knew. With scenario planning, we do. Here’s how to prepare better for the next crisis

Image Source: Global Business Network


Image Source: Megatrends 2020 and beyond /EY Mega Trends

The article below was published in MIT Sloan Review.

The World in 2030: Nine Megatrends to Watch

Where will we be in 2030? 

I don’t usually play the futurist game — I’m more of a “presentist,” looking at the data we have right now on fast-moving megatrends that shape the world today. But a client asked me to paint a picture of what the big trends tell us about 2030. And I’d say we do have some strong indications of where we could be in 11 years. 

The directions we go and choices we make will have enormous impacts on our lives, careers, businesses, and the world. Here are my predictions of how nine important trends will evolve by 2030 — listed in order roughly from nearly certain to very likely to hard to say

Nine Global Trends on the Horizon

Demographics: There will be about 1 billion more of us, and we will live longer. The world should reach 8.5 billion people by 2030, up from 7.3 billion in 2015. The fastest growing demographic will be the elderly, with the population of people over 65 years old at 1 billion by 2030. Most of those new billion will be in the middle class economically, as the percentage of citizens in dire poverty continues to drop (a rare sustainability win). Even as the middle swells, however, the percentage of all new wealth accruing to the very top of the pyramid will continue to be a major, and destabilizing, issue. That said, the other megatrends, especially climate change, could slow or change the outcomes here.

Urbanization: Two-thirds of us will live in cities. The urbanization of our populations will increase, creating more megacities as well as small- and medium-size metropolises. Countervailing forces will include a rising cost of living in the most desirable cities. The effects will include the need for more big buildings with better management technologies (big data and AI that makes buildings much more efficient), and we will need more food moved in from where we grow it to where we eat it — or rapidly expand urban agriculture.

Transparency: Our world will become even more open — and less private.It’s hard to imagine that the trend to track everything will be going anywhere but in one direction: a radically more open world. The amount of information collected on every person, product, and organization will grow exponentially, and the pressure to share that information — with customers and consumers in particular — will expand. The tools to analyze information will be well-developed and will make some decision-making easier; for instance, it will be easier to choose products with the lowest carbon footprints, highest wages for employees, and fewest toxic ingredients. But all these tools will shatter privacy in the process.

Privacy Policy

Climate Crisis: The climate will continue to change quickly and feature regular, extreme weather everywhere. Yes, there’s still uncertainty about how everything will play out exactly, but not about whether the climate is changing dramatically and dangerously. Significant inertia in both atmospheric and economic/human systems allows for a more confident prediction of what will happen in just 11 years. The Intergovernmental Panel on Climate Change (IPCC) has made clear how critical it is to radically alter the path of carbon emissions to hold the world to 1.5 degrees Celsius of warming. But that’s not likely to happen with current levels of commitment in global governments: The important Paris climate accord of 2015, in theory, agrees to hold warming to 2 degrees Celsius. But in practice, what countries have committed to so far will only hold us to no more than 3 degrees of warming. By 2030, we are very likely to already be at or approaching the 1.5 mark. 

The results of climate change will be unrelenting. Many highly populated coastal areas will be in consistent trouble, as sea levels rise. The natural world will be much less rich, with drastic to catastrophic declines in populations of many species and major to total losses of ecosystems like coral. Droughts and floods will stress global breadbasket regions and shift where we grow major crops. The Arctic will be ice-free in the summer (this will allow ships to move freely in this region, which is technically good for shorter supply chains but a Pyrrhic victory at best). Between seas, heat, and shifts in water availability, mass migrations will likely have begun. By 2030, we will have much better clarity on how bad the coming decades after that point will be. We will know whether the melting of the major ice sheets will be literally inundating most coastal cities, and if we’re truly approaching an “Uninhabitable Earth” in our lifetimes. 

Resource Pressures: We will be forced to more aggressively confront resource constraints. To keep volumes of major commodities (such as metals) in line with economic growth, we will need to more quickly embrace circular models: sourcing much less from virgin materials, using recycled content and remanufactured products, and generally rethinking the material economy. Water will be a stressed resource, and it seems likely that many cities will be constantly in a state of water shortage. We will need more investment in water tech and desalination to help. 

Clean Tech: The transformation of our grid, our roadways, and our buildings to zero-carbon technology will be surprisingly far along. Here’s some good news: Due to continuing drops in the cost of clean technologies, renewable energy is dramatically on the rise, making up more than half the global new power capacity every year since 2015. By 2030, effectively no new additions of generating capacity will come from fossil-fuel-based technologies.Electric vehicles will be a large part of the transportation equation: While estimates about the share of EVs on the road by 2030 range from the teens to nearly 100% (assuming early retirement of internal combustion engines), nearly all sales of new vehicles will be EVs. This will be driven by dramatic reductions in the cost of batteries and strict legislation banning fossil-fuel engines. We will also see an explosion of data-driven technologies that make buildings, the grid, roadways, and water systems substantially more efficient.

Technology Shifts: The internet of things will have won the day, and every new device will be connected. Proponents of the “singularity” have long projected that by around 2030, affordable AI will achieve human levels of intelligence. AI and machine learning will plan much of our lives and make us more efficient, well beyond choosing driving routes to optimize traffic. Technology will manipulate us even more than it does today — Russian interference in U.S. elections may look quaint. AI will create some new kinds of jobs but will also nearly eliminate entire segments of work, from truck and taxi drivers to some high-skill jobs such as paralegals and engineers.

Global Policy: There’s an open question about how we’ll get important things done. I’m thinking specifically about whether global governments and institutions will be working in sync to aggressively fight climate change and resource pressures, and tackle vast inequality and poverty — or whether it will be every region and ethnic group for itself. Predicting politics is nearly impossible, and it’s hard to imagine how global policy action on climate and other megatrends will play out. The Paris Agreement was a monumental start, but countries, most notably the U.S., have lately retreated from global cooperation in general. Trade wars and tariffs are all the rage in 2019. It seems likely that, even more than today, it will be up to business to play a major role in driving sustainability.

Populism: The rise of nationalism and radicalism may increase … or it won’t. Even less certain than policy is the support, or lack thereof, of the mass of people for different philosophies of governing. In recent years, populists have been elected or consolidated power in countries as varied as the U.S., Brazil, and Hungary. And yet, in recent weeks, citizens in countries like Turkey, Algeria, and Sudan have pushed back on autocracy. Will that trend continue?

How Should Business Prepare?

Laying out strategies for companies to navigate this likely future world is a book-length conversation. But let me suggest a few themes of action to consider:

  • Engage everyone in the sphere of the business world on climate. A dangerously changing climate is the biggest threat humanity has ever faced. But it’s not all set in stone … yet. Companies have an economic incentive and moral responsibility to work hard to reduce the damage as much as possible. Engage employees (stamp out climate denial), talk to consumers and customers about climate issues through your products, and change internal rules on corporate finance to make investment decisions with flexible hurdle rates that favor pro-climate spending. Most importantly, use influence and lobbying power to demand, at all levels of government, an escalating public price on carbon — and publicly admonish industry lobbying groups that don’t.
  • Consider the human aspect of business more. As new technologies sweep through society and business, the change will be jarring. Those changes and pressures are part of why people are turning to populist leaders who promise solutions. Business leaders should think through what these big shifts mean for the people that make up our companies, value chains, and communities.
  • Embrace transparency. To be blunt, you don’t have a choice. Each successive generation will expect more openness from the companies they buy from and work for. 
  • Listen to the next generation. By 2030, the leading edge of millennials will be nearing 50, and they and Gen Z will make up the vast majority of the workforce. Listen to them now about their priorities and values. 

Predicting the future means projecting forward from what’s already happening, while throwing in expected inertia in human and natural systems. It can give us an impressionistic picture of the world of the future. Our choices matter a great deal, as individuals and through our organizations and institutions. Business, in particular, will play a large role in where the world goes. Employees, customers, and even investors increasingly demand that the role of business be a positive one. 

Look, we could all just wait and see where these historic waves take us. But I prefer that we all work proactively to ensure that a better, thriving future is the one we choose.

About the Author

Andrew Winston is founder of Winston Eco-Strategies and an adviser to multinationals on how they can navigate humanity’s biggest challenges and profit from solving them. He is the coauthor of the international best seller Green to Gold and the author of the popular book The Big Pivot: Radically Practical Strategies for a Hotter, Scarcer, and More Open World. He tweets @andrewwinston.

a database of reports globally published by many institutions.

Global Trends and Future Scenarios

IDB InterAmerican Development Bank

Key Institutions doing Global Scenarios, Trends, and Futures analysis

Shell Scenarios

HP Mega Trends

World Economic Forum

Global Risks Report

US DNI NIC Global Trends

Paradox of Progress

Atlantic Council

Global Risks 2035 Update

Decline or New Renaissance?

Mathew J. Burrows 2019

UK MOD Global Strategic Trends
EY Mega Trends

Megatrends 2020 and beyond


The Long View: Scenarios for the world economy to 2060

EU Parliament
World Bank

The Future is Now: Scenarios to 2025 and Beyond

J. Warren Evans

International Monetary Fund

World Economic Outlook

World Resources Institute

United Nations

McKinsey Global Institute

MGI in 2019

Highlights of our research this year

McKinsey and Company

The Use and Abuse of Scenarios

McKinsey Special Collections
Trends and global forces

Shifting tides: Global economic scenarios for 2015–25

Boston Consulting Group BCG

Have you future Proofed your strategy?

APRIL 17, 2020 By Alan InyHans KuipersEnrique Rueda-Sabater, and Christian Haakonsen

International Food Policy Research Institute IFPRI

Global food projections to 2020 

emerging trends and alternative futures

World Energy Council


EPRI Electric Power Research Institute

A Perspective on the Future of Energy: Scenarios, Trends, and Global Points of View

Millienium Project


The Institute for the Future

My Related Posts

Shell Oil’s Scenarios: Strategic Foresight and Scenario Planning for the Future

Strategy | Strategic Management | Strategic Planning | Strategic Thinking

Art of Long View: Future, Uncertainty and Scenario Planning

On Anticipation: Going Beyond Forecasts and Scenarios

HP’s Megatrends

Clock of the Long Now: Time and Responsibility

History of Operations Research

Profiles in Operations Research

Jay W. Forrester and System Dynamics

Water | Food | Energy | Nexus: Mega Trends and Scenarios for the Future

Short term Thinking in Investment Decisions of Businesses and Financial Markets

The Origins and History of Management Consulting

Multilevel Approach to Research in Organizations

Hierarchical Planning: Integration of Strategy, Planning, Scheduling, and Execution

Networks and Hierarchies

Hierarchy Theory in Biology, Ecology and Evolution

Systems Biology: Biological Networks, Network Motifs, Switches and Oscillators

Growth and Form in Nature: Power Laws and Fractals

Shapes and Patterns in Nature

Systems View of Life: A Synthesis by Fritjof Capra

Multiplex Financial Networks

Boundaries and Networks

Key Sources of Research

Future Population Growth

by Max Roser

Our World in Data

This article was first published in 2014. It was last revised in November 2019.

Future Studies


Global Foresight 2050 – Six global scenarios and implications for the forest sector 

AUTHORS: Sten Nilsson, Fredrik Ingemarson
PUBLISHED: 2017, Uppsala
PUBLISHER: Swedish University of Agricultural Sciences (SLU)

An overview of global energy scenarios by 2040: identifying the driving forces using cross‑impact analysis method

S. Ghasemian1 · A. Faridzad1 · P. Abbaszadeh2 · A. Taklif1 · A. Ghasemi1 · R. Hafezi3

Received: 27 November 2019 / Revised: 11 March 2020 / Accepted: 6 April 2020

Learning from the Future

How to make robust strategy in times of deep uncertainty 

From the Magazine (July–August 2020)

Why the Social Sector Needs Scenario Planning Now


OCTOBER 01, 2020

Future Worlds

PA Consulting

Directions in Scenario Planning Literature – A Review of the Past Decades

Celeste Amorim Varuma, Carla Meloa
aDepartment of Economics, Management and Industrial Engineering, University of Aveiro,

Campus Universitário de Santiago, 3810-193 Aveiro, Portugal

The Century Ahead:
Four Global Scenarios

Christi Electris, Paul Raskin, Rich Rosen, and John Stutz


Four Scenarios for Geopolitical Order in 2025-2030: What Will Great Power Competition Look Like?

September 16, 2020


Futurology Why it’s worth reading crazy-sounding scenarios about the future

Speculating about the future can make it easier to respond to unexpected events

Jul 6th 2019



Scenarios for the United States in 2030

Johanna Zmud, Liisa Ecola, Peter Phleps, Irene Feige


Future energy: In search of a scenario reflecting current and future pressures and trends

Jennifer Morris, David Hone, Martin Haigh, Andrei Sokolov and Sergey Paltsev

November 2020

MIT Joint Program on the Science and Policy of Global Change

2018 Food, Water, Energy and Climate Outlook 

MIT Joint Program on the Science and Policy of Global Change

Consensus Forecasts

Global Outlook 2020 – 2030

The Conference Board

Global Economic Outlook

The Water-Energy-Food Nexus

A new approach in support of food security and sustainable agriculture


The Food Water Energy Nexus


Water, Food and Energy Nexus in Asia and the Pacific


Developing the Pardee RAND Food-Energy-Water Security Index

Toward a Global Standardized, Quantitative, and Transparent Resource Assessment

by Henry H. WillisDavid G. GrovesJeanne S. RingelZhimin MaoShira EfronMichele Abbott


Introduction to the water-energy nexus

Article — 23 March 2020


Mining & Metals Scenarios to 2030



The Long View: Scenarios for the world economy to 2060


Risk, Resilience, and Alternative Futures: Scenario-building at the World Economic Forum

Christina Garsten, Adrienne Sörbom


If only we knew. With scenario planning, we do. Here’s how to prepare better for the next crisis


Energy and Climate Scenarios

IHS Markit

The World in 2030: Nine Megatrends to Watch

Andrew S. Winston 

May 07, 2019

MIT Sloan Review

The future of capitalism: Trends, scenarios and prospects for the future

Gerard Delanty

First Published January 30, 2019 

Journal of Classical Sociology

EYQ Mega Trends

Year 2020 Mega Trends

Year 2016 Megatrends

Year 2018 Megatrends

Shaping the Future of Global Food Systems: A Scenarios Analysis

Highlights from the report February 2017

Deloitte and WEF

Global Risks 2035: The Search for a New Normal

Atlantic Council


Vision 2040: Global Scenarios for the Oil and Gas Industry


The future of Asia

Asian flows and networks are defining the next phase of globalization

MGI 2020

Low Interest Rates and Business Investments – Update October 2020

Low Interest Rates and Business Investments – Update October 2020

There has been several new research on the topic of Low Interest Rates and Business Investments since my last post.

Decision Making by Firms in Low Interest rates environment

  • Invest and Grow
  • Merge / Consolidate
  • Pay Dividends
  • Buyback Shares
  • Divestures
  • Acquisitions
  • Horizontal Mergers (Market Share)
  • Vertical Mergers (Costs)
  • Innovation M&A (New Tech, New Product)

Key Terms

  • Business Investments
  • Monetary Polcy
  • Zero Lower Bound
  • Interest Rates
  • Fed Funds Rate
  • Corporate Finance
  • Hurdle Rates
  • Capital Budgeting
  • Internal Rate of Return IRR
  • CAGR Compond Annual Growth Rate
  • Cost of Capital
  • Discounted Cash Flow
  • Net Present Value
  • Mergers vs Investments
  • Organic Growth
  • Inorganic Growth
  • State of the Industry
  • State of the Economy
  • Liquidity Financial
  • Bank Lending
  • Capital Markets
  • Economic Growth
  • Corporate Planning
  • Strategic Planning
  • Strategic Management

My Related Posts

Increasing Market Concentration in USA: Update April 2019

Rising Market Concentration and Declining Business Investments in the USA – Update June 2018

Low Interest Rates and Business Investments : Update August 2017

Business Investments and Low Interest Rates

Cash and Investments: Corporate Savings Glut in USA

Low Interest Rates and Monetary Policy Effectiveness

Low Interest Rates and Risk taking channel of Monetary Policy

Low Interest Rates and International Investment Position of USA

Low Interest Rates and Bank’s Profitability – Update May 2019

Low Interest Rates and Banks’ Profitability : Update July 2017

Low Interest Rates and Banks Profitability: Update – December 2016

Impact of Low Interest Rates on Bank’s Profitability

The Decline in Long Term Real Interest Rates

Cash and Investments: Corporate Savings Glut in USA

Why do Firms buyback their Shares? Causes and Consequences.

Short term Thinking in Investment Decisions of Businesses and Financial Markets

Key Sources of Reserach

Lengthy era of rock-bottom interest rates leaving its mark on U.S. economy

Weak demand in U.S. and other rich nations explains historic shift

Washington Post

Do Interest Rates Affect Business Investment? Evidence from Australian Company-level Data

Jonathan Hambur and Gianni La Cava

Low Interest Rates Have Benefits … and Costs

Kevin L. Kliesen

October 1, 2010–and-costs

Low for Long?
Causes and Consequences of Persistently Low Interest Rates

Geneva Reports on the World Economy 17 Charles Bean

London School of Economics and CEPR

Christian Broda

Duquesne Capital Management

Takatoshi Ito

SIPA Columbia University and CEPR

Randall Kroszner

Booth School of Business, University of Chicago


Low Interest Rates, Market Power, and Productivity Growth∗

Ernest Liu

Princeton University

Atif Mian
Princeton University and NBER

Amir Sufi
University of Chicago Booth School of Business and NBER

August 18, 2020

The Economic Effects of Low Interest Rates and Unconventional Monetary Policy

17 September 2020

Rochelle Guttmann, Dana Lawson and Peter Rickards


Firms’ Investment Decisions and Interest Rates

Kevin Lane and Tom Rosewall


Has Business Fixed Investment Really Been Unusually Low?

By François Gourio

Chicago Fed Letter, No. 418, 2019

Fiscal Policy with High Debt and Low Interest Rates

William Gale

July 1, 2019

The impact of negative interest rates on banks and firms 

Carlo Altavilla, Lorenzo Burlon, Mariassunta Giannetti, Sarah Holton  

08 November 2019

Global Trends in Interest Rates

Marco Del Negro Domenico Giannone Marc P. Giannoni Andrea Tambalotti

Staff Report No. 866 September 2018

Financial stability implications of a prolonged period of low interest rates

Report submitted by a Working Group established by the Committee on the Global Financial System

The Group was co-chaired by Ulrich Bindseil (European Central Bank) and Steven B Kamin (Board of Governors of the Federal Reserve System)

July 2018


Eight centuries of global real interest rates, R-G, and the ‘suprasecular’ decline, 1311-2018.

Paul Schmelzing

Low Interest Rates and Risk Taking: Evidence from Individual Investment Decisions

Review of Financial Studies

49 Pages Posted: 14 Jul 2016 Last revised: 29 Aug 2018

Chen Lian

Massachusetts Institute of Technology (MIT)

Yueran Ma

University of Chicago – Booth School of Business

Carmen Wang

Harvard University – Department of Economics; HBS Negotiations, Organizations and Markets Unit

Date Written: August 22, 2018


James Cloyne Clodomiro Ferreira Maren Froemel Paolo Surico

Determinants of the real interest rate

Remarks by Philip R. Lane, Member of the Executive Board of the ECB, at the National Treasury Management Agency

Dublin, 28 November 2019

Understanding Weak Capital Investment: the Role of Market Concentration and Intangibles∗

Nicolas Crouzet and Janice Eberly

Prepared for the Jackson Hole Economic Policy Symposium Federal Reserve Bank of Kansas City

August 23 – 25, 2018 This version: May 14, 2019

Monetary policy in advanced economies

Low policy rates are here to stay

Have low interest rates led to excessive risk taking?

The Policy Perils of Low Interest Rates

The consequences of prolonged low interest rates in Europe,economy,2465.html

The Purpose of a Corporation: A Redefinition

The Purpose of a Corporation: A Redefinition


What is good for one, May not be good for All.

What may be good for a business, may not be good for the society or economy.

This is new realization by the Top CEOs of American corporations.

The systems ideas are percolationg in business/corporate strategy.

Such as,

  • Embedded-ness
  • Nested Levels
  • Hierarchy Theory
  • Parts and Whole
  • Business in Society
  • Society in Nature
  • Interacting Agents
  • Complex Systems
  • Micro and Macro
  • Aggregate Vs Firm Level
  • Boundaries and Networks
  • Networks and Hierarchies
  • Local Vs Global
  • Individual Vs Collective
  • Internal Vs External
  • Inclusive Vs Exclusive


Economists have to learn Finance.  Effects of Macro Decisions on Micro Performance and Decisions

And, CEOs need to learn Macroeconomics, Sociology, and Ecology.

Effects of Micro/Firm level decisions on Macro/Aggregate level Decisions and performance.  Macro-Economics, Sociology, and Ecology

Because of current focus on shareholder value, we have bifurcation in US economy – Haves and Have-nots.  Income Inequality, Stagnant wages, Less mobility and others.

Rational decisions by individual businesses to seek their own interests, that is, pursuit of Profits have effects on Macro/Aggregate trends – deindustrialization, offshoring, outsourcing, and increase in trade and globalization.  Loss of Jobs, Decline of Manufacturing, Movement of Industries/Production from Northern States to Southern States, to Mexico and China.

Emergence of extreme political left and extreme political right are the results of above macro trends.  Trade Protectionism of Donald Trump, Economic Nationalism of Steve Bannon on one end and Democratic Socialism/Social Welfare of Bernie Sanders on the other end.

In Corporate Planning/Strategy, Business Environment Scanning is about monitoring trends which are external to a company.

  • Demographic
  • Social
  • Economic
  • Technological
  • Geopolitical
  • Ecological
  • Regulatory
  • Governance (City, State, National)

Good companies seeking lasting long term value seek to internalize what is external to them.  Thats is why Corporate Planning / Development / Strategic Risk Management function is an essential part of corporate governance.


The redefinition of corporate purpose is a first step in self regulation.

A thwarting mechanism.



Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans’

WASHINGTONBusiness Roundtable today announced the release of a new Statement on the Purpose of a Corporation signed by 181 CEOs who commit to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.

Since 1978, Business Roundtable has periodically issued Principles of Corporate Governance. Each version of the document issued since 1997 has endorsed principles of shareholder primacy – that corporations exist principally to serve shareholders. With today’s announcement, the new Statement supersedes previous statements and outlines a modern standard for corporate responsibility.

The American dream is alive, but fraying,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co. and Chairman of Business Roundtable. “Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.

This new statement better reflects the way corporations can and should operate today,” added Alex Gorsky, Chairman of the Board and Chief Executive Officer of Johnson & Johnson and Chair of the Business Roundtable Corporate Governance Committee. “It affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders.”

Industry leaders also lent their support for the updated Business Roundtable Statement, citing the positive impact this commitment will have on long-term value creation:

I welcome this thoughtful statement by Business Roundtable CEOs on the Purpose of a Corporation. By taking a broader, more complete view of corporate purpose, boards can focus on creating long-term value, better serving everyone – investors, employees, communities, suppliers and customers,” said Bill McNabb, former CEO of Vanguard.

CEOs work to generate profits and return value to shareholders, but the best-run companies do more. They put the customer first and invest in their employees and communities. In the end, it’s the most promising way to build long-term value,” said Tricia Griffith, President and CEO of Progressive Corporation.

This is tremendous news because it is more critical than ever that businesses in the 21st century are focused on generating long-term value for all stakeholders and addressing the challenges we face, which will result in shared prosperity and sustainability for both business and society,” said Darren Walker, President of the Ford Foundation.

The Business Roundtable Statement on the Purpose of a Corporation is below and the full list of signatories is available here.

Statement on the Purpose of a Corporation

Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity. We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all.

Businesses play a vital role in the economy by creating jobs, fostering innovation and providing essential goods and services. Businesses make and sell consumer products; manufacture equipment and vehicles; support the national defense; grow and produce food; provide health care; generate and deliver energy; and offer financial, communications and other services that underpin economic growth.

While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to:

  • Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
  • Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
  • Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.
  • Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
  • Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.

Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.


Please see my related Posts

Strategy | Strategic Management | Strategic Planning | Strategic Thinking

Shareholder Capitalism: Rising Market Concentration, Slower Productivity Growth, Rising Inequality, Rising Profits, and Rising Equities Markets

Why do Firms buyback their Shares? Causes and Consequences.

Short term Thinking in Investment Decisions of Businesses and Financial Markets

Micro Motives, Macro Behavior: Agent Based Modeling in Economics

Trading Down: NAFTA, TPP, TATIP and Economic Globalization

On Inequality of Wealth and Income – Causes and Consequences

Rising Profits, Rising Inequality, and Rising Industry Concentration in the USA

Boundaries and Networks

Networks and Hierarchies

Boundaries and Relational Sociology



Key Sources of Research




The CEOs of nearly 200 companies just said shareholder value is no longer their main objective




Maximizing shareholder value can no longer be a company’s main purpose: top CEOs




Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans’

Business Roundtable



Group of top CEOs says maximizing shareholder profits no longer can be the primary goal of corporations

Washington Post



Move Over, Shareholders: Top CEOs Say Companies Have Obligations to Society

Wall Street Journal

America’s top CEOs say they are no longer putting shareholders before everyone else

Fast Company



The Myth Of Shareholder Value

The Myth Of Shareholder Value



Capitalism is in crisis – and business leaders know it


Strategy | Strategic Management | Strategic Planning | Strategic Thinking

Strategy | Strategic Management | Strategic Planning | Strategic Thinking




Key Terms and Concepts

  • Action Learning
  • Systems Thinking/Systems Dynamics – Jay Forrester
  • Organizational Learning – Peter Senge
  • Business Environment Scanning
  • Trends
  • Risks
  • Competitive Industry Analysis
  • Scenario Planning
  • Corporate Planning
  • Strategic Planning
  • Operations Research
  • Threats – Micheal Porter
  • Organizational Psychology and Culture – Ed Schein
  • Internal vs External
  • Resource based view of Strategy
  • Innovation Management
  • Balance Scorecards
  • Strategic Management
  • Sales and Operational Planning (S&OP)
  • Integrated Demand Supply Planning
  • Operational Effectiveness
  • Operational Excellence
  • Value Chain Analysis
  • SWOT analysis
  • Strategic Conversations
  • Business Policy
  • BCG Growth Share Matrix
  • GE/McKinsey  Matrix
  • Ansoff Matrix
  • ADL Matrix
  • Shell Directional Policy Matrix
  • Product Portfolio Planning Models
  • Corporate Planning Models
  • Porters Five Forces Analysis
  • McKinsey 7S
  • PIMS Analysis
  • PEST Analysis
  • Porters Four Corners Analysis
  • Business Process Reengineering


Key People

  • Henry Mintzberg
  • Russell Ackoff
  • Arnaldo Hax
  • Peter Drucker
  • Gary Hamel
  • Igor Ansoff
  • Kenneth Andrews
  • George Steiner
  • Alfred Chandler
  • C K Prahlad
  • Micheal Porter
  • David P Norton
  • Robert S Kaplan
  • Richard L Nolan
  • J Scott Armstrong
  • Peter Senge
  • Edgar Schein
  • Chris Argyris
  • Donald Schon
  • Bruce Henderson
  • John Sterman
  • John Morecraft
  • R G Dyson
  • Pankaj Ghemawat
  • Kenichi Ohmae
  • Pierre Wack
  • Peter Schwartz


From The History of Strategy and Its Future Prospects



Schools of Thoughts on Strategic Planning

  • Design
  • Planning
  • Positioning
  • Entrepreneurial
  • Cognitive school
  • Learning school
  • Political school
  • Cultural school and
  • Environmental school



Please see my related posts:

Art of Long View: Future, Uncertainty and Scenario Planning

Hierarchical Planning: Integration of Strategy, Planning, Scheduling, and Execution

Shell Oil’s Scenarios: Strategic Foresight and Scenario Planning for the Future

Water | Food | Energy | Nexus: Mega Trends and Scenarios for the Future

On Anticipation: Going Beyond Forecasts and Scenarios

Key Sources of Research


Russell Ackoff: A Concept of Corporate Planning

Click to access A1986E843300001.pdf



The Evolution of Business Strategy

By Rich Horwath


Click to access evolution.pdf




The Art of Planning


Click to access file75267.pdf






Click to access nd_00286.pdf



The Use of Corporate Planning Models: past, present and future




Click to access




Concept of Corporate Strategy


Click to access mbaii_sm.pdf


How to improve strategic planning



Integrated business planning: Unlocking business value in uncertain times



Click to access EY-Integrated_Business_Planning.pdf






Fred Nickols


Click to access strategy_etc.pdf

Click to access strategy_definitions.pdf





Arnoldo C.:,Hax and Nicolas S. Majluft

January 1983



Click to access SWP-1396-09362356.pdf








Click to access fulltext.pdf





World Bank Group


Click to access mosaica_10_steps.pdf



Strategic Management for Senior Leaders: A Handbook for Implementation

Click to access managebk.pdf


What Is Strategy?


Strategic Management for Competitive Advantage




From Competitive Advantage to Corporate Strategy




Blue Ocean Strategy


How Information Gives You Competitive Advantage




The Office of Strategy Management

Nolan and Kaplan



Getting Back to Strategy




The Core Competence of the Corporation




Strategic Management: The theory and practice of strategy in (business) organizations.

Jofre, Sergio


Click to access rapport1.11.pdf



Creating the Office of Strategy Management

Robert S. Kaplan

David P. Norton


Click to access 05-071.pdf

The Corporate Strategic Planning Process

The Origins and History of Management Consulting

The Origins and History of Management Consulting




Pioneers in Management Consulting

  • Edwin Booz
  • James O. McKinsey
  • Andrew Kearney
  • Arthur D Little
  • James Allen @Booz Allen
  • Marvin Bower @McKinsey
  • Bill Bain @Bain and Company
  • Bruce Henderson @Boston Consulting Group BCG


Global Strategy Consulting

  • McKinsey
  • Bain
  • Boston Consulting Group
  • GBN/Monitor/Deloitte
  • Strategy&/BoozAllenHamilton/PWC
  • Arthur D Little
  • Roland Berger
  • LEK
  • Oliver Wyman
  • Accenture
  • Ernest and Young
  • Deloitte
  • Nolan Norton Institute/KPMG
  • PwC
  • AT Kearney
  • Bearingpoint





A brief history of management consultancy

While commercial activity is as old as civilization itself, management consultancy is of more recent vintage. Business historians put the origins of consultancy in the mid-19th century when Samuel Price, Foster Higgins, James Sedgwick and others began operating “advisory practices” in England and the United States. Many historians also agree that Arthur Little was the founder of the first pure consultancy in the USA in the 1880s with a focus on technology and engineering economics. In the 1890s, George Touche and William Deloitte started accounting practices and by the first two decades of the 20thcentury they expanded into auditing and advising, focusing on large clients, offering assistance on financing , taxation, and corporate strategy. Just about all of the early accountancy firms or partnerships, with such hallowed names as Arthur Andersen, Arthur Young, Cooper Brothers, Ernst & Ernst, Peat Marwick, Touche Ross, have entered into the realm of “advice business”. Meanwhile, technology firms, and institutes, such as Stanford Research and Battelle Memorial, joined the fray, marketing themselves as technical-managerial counselors (Biswas and Twitchell, 2002; Gross and Poor, 2008). The appearance of “true” management consultants is traced to Edwin Booz in the 1910s and to James McKinsey, and Andrew Kearney in the 1920s in the USA (Kipping and Clark,2012). Their names survive to this day in partnerships or companies, but others have not fared as well. These pioneers also started with assistance on finances and taxes, but they soon got involved in long-term corporate strategy and short-term operations. In the 1930s, sensing opportunity in an era of depression, Marvin Bower took charge of McKinsey & Company.He hired graduates from top business schools, mostly from Harvard Business School, put them to work as analysts, then later as consultants, emphasizing repeatedly that “the firm”was to be the locus and focus of professionalism (Bower, 1998; Higdon, 1969; McKenna,2006; O’Mahoney, 2010). Even in these early years there was much debate about credentials, qualifications, and branding, followed by heated discussion about accountability, client cultivation, and “proper”competition. The Association of Consulting Management Firms (ACME) was formed in1929 to serve as both “spokesman and policeman”; its current name is the Association of Management Consulting Firms (AMCF). Since then several other associations arose in both USA and Europe. The driving forces behind the growth of management consultancy in the USA have been analyzed in two doctoral dissertations (David, 2001; McKenna, 2000). David identified four major forces that fueled the growth of consultancy during 1930-1960: the increasing number and complexity of companies; the spread of corporate ideology to non-corporate sectors;the organization for the World War II; and the growing impact of business education and the business press. McKenna, on the other hand, emphasized that entry and expansion of consultancies came from emulating the patterns set by three professions: accounting,engineering , and law. In contrast to both David and McKenna, several European authors (e.g. Kipping and Engwall, 2001) found that consultancies in that region owe much to the work of Taylor,Emerson, and the Gilbreths, that is the “scientific management” movement that had its start in the USA. They cite the examples of the firms of Morrini, Urwick Orr, and the REFA Institute from Italy, the UK, and Germany, respectively, to show that emphasis on efficiency,cost containment and strict work rules held sway in Europe during 1915–1965. While this signifies disagreement in regard to the forces that influence consultancies, the debate is about the impact of each specific factor. On a worldwide basis, it is estimated that revenues for management consultancies grew from about $1 billion in 1955 to over $150 billion by 2005 or at an annual rate –nearly11 percent- that is in excess of the growth rate of global trade, output, or investment. (Czer-niawska, 2006; FEACO, 2008; Kennedy Information, 2009). New firms were formed during this period, primarily in the USA, such as Bain & Company, Boston Consulting Group, and the Monitor Group. Older firms, such as McKinsey, Kearney, Booz Allen, AD Little and others also did well; McKinsey was especially successful invading the UK. Specialists did well too e.g. Hay, Hewitt, Mercer, and Watson Wyatt in human resources. The big accounting firms are still doing consultancy and high-tech firms such as IBM are now at the top of the list.Several books (and, of course, many articles) published in the past fifteen years analyzed the growth of consultancy in the second half of the 20thcentury. These volumes fall into three distinct categories: (1) “panorama” books that deal with major trends, corporate practices, cases, and profiles of key firms (Biswas and Twitchell, 2002; Curnow and Reuvid, 2001;Fombrum and Nevins, 2004); (2) “revelation” books that emphasize the politics of the sector and major missteps by consultants and/or their clients (Kiln, 2006; Micklethwait and Wooldridge, 1996; O’Shea and Madigan, 1997; Pinault, 2000); and, (3) “update” books thats how the state of the art and recent activities of companies, along with expansion of business in a given region (Armbruster, 2006; Ferguson, 2002; Kipping and Engwall, 2001;O’Mahoney, 2010; Poor and Gross, 2003; Thommen and Richter, 2004). In contrast, the doctoral theses written during this period emphasized the international expansion of consultancies (Backlund, 2004; McKaig-Berliner, 2001; Wood, 2001). Record-keeping firms also appeared in this era e.g. Kennedy Information (KI) and the Vault in the USA, Datamonitor and the Management Consulting Association (MCA) in the UK, and the European Federation of Management Consulting Associations (FEACO) in Belgium. These organizations make a valiant attempt to gather good data on firm revenues and related statistics; but problems arise in regard to terminology, classification, and data collection. Recently, these firms, much like the consultancies they survey, expanded the scope of the sector to include outsourcing ; it was simply added to the traditional four areas of strategy, operations, human resources, and information technology. We found some outright errors as well as lack of consistency and transparency in the published data. Finally,there is a tendency to exaggerate growth rates, “hot fields,” and opportunities in developing nations.

The current competitive landscape

As we noted, management consulting got its strongest impetus in the USA and the revenues from clients in this nation still account for about one half of the worldwide total. Com-petition now takes place globally among major firms. The leading organizations are information technology firms such as Accenture, CSC and IBM and firms with a strong accounting background, such as Deloitte, KPMG, and PWC have occupied the leading ranks. Global revenues and steady growth in sales, along with market share and contracts won, are objective measures of success on an annual basis. Yet longevity and recruiting are still of great importance and on these facets the old-line firm such as McKinsey, Boston Consulting Group(BCG), Bain, and Booz have done very well. They prospered by recruiting at top business schools, granting generous salaries and bonuses, stressing long-run strategy, and cultivating top management clientele (Datamonitor, 2008; Gross and Poor, 2008; O’Mahoney, 2010,Vault, 2008; etc.). Both the business and popular press in the USA espouse rankings such as “ten largest” or“twenty best,” so publishers started to evaluate not just cars and appliances, but institutions,such as colleges and hospitals. Reaction to such rankings is predictably in a dual mode;decrying them as simplistic or even misleading , while embracing them for promotional goals when one’s rank improved or is high. Kennedy Information, Vault and others now rank management consultants and report that McKinsey, BCG, Bain, and Booz are still at the top in terms of prestige, both in the USA and in Europe, but the information technology firms of Accenture, IBM, and others are making inroads in this largest sub-sector. Roland Berger of Germany was rated the top non-U.S. consultant. Observers argue that beyond financial indicators and subjective rankings lie “the true measure” of success for organizations— in building corporate culture, reputation, competence, and a solid base of loyal clients. The early pioneers of such thinking were James McKinsey and Marvin Bower, under whom McKinsey & Company became known as “The Firm.” They argued that status and success should be achieved by strong governance and reputation-building at the level of the firm. They also sought jurisdictional control, while opposing any outside regulation. Finally, they thought that emulation of accounting, engineering, law, and medicine would lead to professional recognition (McKenna, 2000; Bower, 1998). Others, including James Allen, chief executive of Booz Allen Hamilton in 1960, argued that consultancy did not possess admission and performance standards comparable to the older, established professions and that consultancy was a business. However, both sides were determined to chase out self-styled experts, aggressive salesmen, and especially charlatans.

The debate continues on where consulting really belongs and has not been settled. Hall-marks of a profession are formal education, full-time occupation, a vast body of specialized and published knowledge, and a code of conduct. In addition, regulatory bodies and associations or special groups emerge that strive to restrict entry and establish some monopoly rights. There are complex issues that have been debated at much length (Blair and Rubin,1980; Shimberg et al., 1972). Various degrees of occupational regulation exist, e.g. licensure, certification, and registration for doctors, accountants, and engineers, respectively (Hollings and Pike-Nase, 1997). But so far, states and nations have not enacted legislation for consultancies, in part due to practitioners opposing such moves and in part –as many case studies indicate- because the old-line firms contend that they are the locus of professionalism and that they would enforce rules of conduct and high standards (McKenna, 2000, Rasiel, 1999;O’Mahoney, 2010)

The Origins of Modern Management Consulting

Christopher D. McKenna

In 1993, AT&T spent more on management consulting services than on corporate research and development, and AT&T is not alone [8, p. 60]. Wall Street analysts expect billings for consulting services to advance at twice the rate of corporate revenues over the next decade. Yet, despite the size, growth, and influence of consulting firms, business historians have remained uncharacteristically silent about the origins, development, and impact of management consulting, or “management engineering” as it was known before the Second World War. 2 In this paper, I will describe the professional origins of management consulting firms at the turn of the century and discuss why, after slow, gradual growth through the 1920s, these firms took off during the 1930s. I argue (1) that historians have wrongly assumed that management consulting arose directly out of Taylorism, (2) that engineers, accountants, and lawyers, often supervised by merchant bankers, provided counsel that later became the primary repertoire of management consultants, and (3) that the legal separation of investment and commercial banking in 1933 drove the rapid professionalization and growth of management consulting during the Great Depression.

Recent historians of scientific management, including Daniel Nelson, Stephen Waring, and Judith Merkle, have traced the impact of Taylorism on contemporary institutions as diverse as business education, public administration, and British industry long after the Progressive-era craze for “efficiency” ended [29, 36, 26]. The proponents of scientific management, Frederick Taylor, Henry Gantt, Morris Cooke, Frank and Lillian Gilbreth, and Harrington Emerson, consulted with nearly 200 businesses on ways to systematize the activities of their workers through the application of wage incentives, time-motion studies, and industrial psychology [29, p. 11]. Naturally then, historians of Taylorism have assumed that they could describe contemporary practitioners of “industrial engineering,” “production engineering,” “consulting engineering,” and “efficiency engineering,” as early management consultants. Similarly, management consultants, like Thomas Cody, trying to trace the history of management consulting have assumed that:

undoubtedly the most influential factor in the growth of modern management consulting was the development of the concept of ‘scientific management’ by Frederick Taylor …. The concept combined the practice of engineering with the principles of economics, and it was out of this coupling that today’s profession was born [11, p. 24].

But Taylorists and management consultants actually had very different professional and ideological origins.

As Hugh Aitken pointed out in Scientific Management in Action, those executives and their advisors in large scale business who were “concerned with problems of formal organization and control at the administrative level,” came out of a different intellectual tradition than the shop management movement from which Taylor made his reputation [1, pp. 17-18]. Taylorists were largely concerned with industrial relations while early management consultants focused on problems of bureaucratic organization. While Harrington Emerson’s firm of “efficiency engineers” did survive as a very small consulting firm through the 1980s, and the British “management consultancies” founded in the 1930s were undoubtedly Taylorist, none of the large modern American management consulting firms have Taylorist origins [31, 35]. Rather, professionally-trained accountants and engineers, often with backgrounds in law or banking, founded the early “management engineering” firms to offer advice to executives on the organization of their boardrooms, not on the efficiency of their shop floors.

The growth and complexity of the largest industrial organizations in the United States created a market at the turn-of-the-century for the professional firms of engineers, accountants, and lawyers which offered independent corporate counsel [9, pp. 464-468]. By the 1890s, executives of large manufacturing companies who needed engineering advice, but did not want a full-time engineer on staff, could turn to consulting chemical engineers like Arthur D. Little or electrical engineering firms like Stone & Webster for technical knowledge [20; 19, pp. 386-391]. Similarly, in the 1890s, corporate managers employed American subsidiaries of the British accounting firms, like Price Waterhouse, to provide external audits and financial controls for their growing companies [ 9, p. 464]. By the 1900s, American-based accounting firms like Arthur Anderson, Haskins & Sells, Ernst & Ernst, and Seidman & Seidman were expanding throughout the country [23, pp. 1-3]. In law, large New York corporate law firms like Cravath Swaine, Davis Polk, and Sullivan & Cromwell provided legal advice to businesses headquartered in New York. At the same time growing regional firms like Jones Day in Cleveland and Baker and Botts in Houston served local divisions of national companies [24, p. 22]. The three professions, engineering, accounting, and law, all enjoyed strong growth in firm numbers and size from the 1890s onward because of the specialized skills that larger partnerships could offer their expanding corporate clients.

This expanding corporate clientele enabled younger partners to build practices of “management engineering” within older, larger firms or to found new specialty firms. These younger professionals intentionally borrowed skills and credentials from fields outside their professional training as they struggled to attract clients. For example, the electrical engineering consulting firm of Stone & Webster worked for J.P. Morgan & Co. after the 1893 recession, appraising the value of electrical utility companies owned by General Electric [21, pp. 21-24]. Their appraisals combined engineering expertise and accounting skills as they traded on their Wall Street contacts? While engineers were performing accounting, accountants marketed themselves as engineers. In 1927, James McKinsey, an accountant and lawyer from Chicago, put “accountants and engineers” on his letterhead, as did Miller, Franklin, Basset & Company, an accounting firm based in New York [28]. This blurring of professional boundaries was sometimes just a response to demand but frequently it was the result of training in more than one profession. James McKinsey was not alone in combining legal training with management consulting; his former boss, George Frazer, and his protege, Marvin Bower, were both trained as lawyers [17, p. 7; 6, p. 1]. Management engineers, like others struggling for professional status, used multiple professional credentials to support their claims to specialized knowledge and professional approval in their efforts to market a new and poorly understood service [7].

These engineers, accountants, and lawyers often worked for merchant bankers who, in turn, coordinated a wide array of services which were, at the turn of the century, the closest functional equivalent in the American setting to management consulting. 4 Since merchant bankers provided both commercial and investment banking services, bankers acted both as internal advisors to help their client companies and as external regulators to safeguard investors’ interests. For example, bankers hired countless engineers, accountants, and lawyers to assist them in reorganizing the thirteen large railroads which failed between 1893 and 1898 [14, p. 5]. Bankers frequently needed to evaluate the worth, organization, and prospects of companies for projects as diverse as the valuation of an initial public offering, the reorganization of a bankrupt company, or the administrative integration of two merging corporations. During the 1920s, National City Bank (now Citibank) performed management engineering studies to evaluate the initial financing of United Aircraft, troubled loans at Anaconda Copper, and the merger of six separate business machine companies to form Remington Rand. [2]. To gain a thorough understanding of increasingly complex corporations, bankers called upon and coordinated the work of both internal and external professionals. Investment houses employed engineers for valuations and organizational surveys, accountants for audits and the installation of financial cost controls, and lawyers to serve on reorganization and bond-holder committees. In the 1920s, Arthur Andersen & Company became nationally known for its investigations of “plants, products, markets, organization, and future prospects” of companies that investment banks in New York and Chicago were underwriting [ 3, p. 13-14]. By drawing on a range of professional services as they advised corporate management on planning, organization, and executive control, bankers provided a range of organizational advice, backed by a blue-blooded reputation, which only management consultants would later equal.

While management consulting services were available from the turn of the century onward, the rapid growth, both in numbers and in size, of independent management consulting firms did not begin until the Great Depression. It wasn’t until the 1930s that management consulting firms grew beyond a few founding partners and established branches in new cities. In 1926, after twelve years in business, Edwin Booz employed only one other management engineer; by 1936, Booz -Allen & Hamilton had eleven consultants on staff [5, pp. 7, vi]. Similarly, James O. McKinsey and Company, which McKinsey founded in Chicago in 1926, had, by 1936, expanded to more than 25 employees and had a second office in New York [30, p. 11 ]. The growth in the number of firms mirrored the expansion of the firms themselves. Between 1930 and 1940, the number of management consulting firms grew, on average, 15% a year from an estimated 100 firms in 1930 to 400 firms by 1940 [4, Table 2]. It was no coincidence that the economist Joel Dean wrote in 1938 that “unheralded, almost unnoticed, professional management counsel has become an important institution in our business world” [15, p. 451 ]. During the 1930s the services that management consulting firms provided began to increase in importance. In the 1920s, acquaintances in local companies hired management engineers to analyze limited, technical problems. But, by the 1930s, hundreds of large corporations including Armour, Union Carbide, Kroger, Carrier, Sunbeam, U.P.S., Borden, Upjohn, Johnson Wax, and Sears routinely hired management engineers to improve their organization’s overall strategy, structure, and financial performance. Consultants later assumed that this growth during the depression was a counter cyclical reaction as troubled firms used management engineers to cut costs and improve operational efficiency. Yet, management consultants suffered badly during the 1920-21 recession and, fifty years later, following the 1973 oil embargo – in both cases, clients simply put off expensive studies as their plants sat idle [27, 13]. The growth of management consulting in the 1930s was not simply a “natural” market response to the economic downturn. It was, instead, an institutional response to new government regulation.

New Deal banking and securities regulation propelled the growth of management consulting in the mid-1930s. Firms of management consultants prospered as companies turned from bankers to management engineers for organizational advice. In this last section of the paper, I will illustrate this process of institutionalization by describing (1) the reorganization of U.S. Steel by Ford, Bacon & Davis between 1935 and 1938, (2) the career of management engineer George Armstrong, and (3) the development of the “general survey outline” at James O. McKinsey and Company in the 1930s.

Congress passed the Glass-Steagall Banking Act of 1933 to correct the apparent structural problems and industry mistakes that contemporaries believed led to the stock market crash in October 1929 and the bank failures of the early 1930s. Glass-Steagall divided the investment and deposit-taking functions within banks like J.P. Morgan and National City Bank into two separate industries: commercial banking and investment banking. J.P. Morgan & Company, for example, chose to remain a commercial bank, but several partners left to form the investment banking firm of Morgan, Stanley & Company. Simultaneously, Congress created the Securities and Exchange Commission to regulate financial markets and enforce a more open system of corporate disclosure [25, pp. 169-171]. These legislative changes which reconfigured banking and promoted the rapid growth of independent accounting audits also shaped the institutionalization of management consulting. Since Glass-Steagall prohibited commercial banks from engaging in “non-banking activities,” like management engineering, commercial banks could no longer act as management consultants [32, p. 23]. Federal regulators forced commercial banks to cease their non-banking activities like insurance, real estate development, or management consulting. And, while Glass-Steagall did not restrict investment banks from acting as management consultants, S.E.C. regulations required that underwriters perform external due diligence on securities issues and corporate reorganizations so investment banks could not use their internal management engineers to certify new issues. Federal regulation forced investment and commercial banks from 1934 onward to hire outside consultants to render opinions on the organization of a bankrupt company or the prospects of a newly-formed public company. Commercial bankers simultaneously encouraged business executives to hire management consultants since officers inside the banks could no longer coordinate internal organizational studies of their clients. The new institutional arrangements in banking opened up a vacuum into which firms of management consultants rushed.

The contrast between the old and new institutional order was evident in Ford, Bacon & Davis’ reorganization of U.S. Steel between 1935 and 1938. In 1901, J. Pierpont Morgan had personally supervised the initial organization of U.S. Steel, but in 1935, U.S. Steel’s Chairman, Myron Taylor, asked his college friend, George Bacon, to oversee the reorganization of the largest industrial firm in the country [22]. As Taylor reported to the stockholders of U.S. Steel in 1938,

In 1935 we retained the firm of Messrs. Ford, Bacon & Davis to go through all of our properties, methods, personnel and markets and, in collaboration with our engineers and executives to formulate definite recommendations [cited in 18, p. 619].

Ford, Bacon & Davis’ study took three years, cost 3.2 million dollars, and eventually included 203 separate reports produced in collaboration with five different sub-contracting consulting firms, including McKinsey, Wellington & Co [16]. It was the largest study ever done by management engineers, and the recommendations which Ford, Bacon, & Davis made on the organization, strategy, and operations of U.S. Steel influenced the company’s investment, labor, and administrative policies through the 1950s. In labor relations, for instance, the 1937 accord reached with workers overturned a long-standing antagonistic relationship endorsed by the Morgan Bank which would have immobilized U.S. Steel in the tight labor markets of the Second World War [34, pp. 15-17].

George Armstrong, a Vice-President in charge of industrial investigations at National City Bank between 1921 and 1932, personified the changes caused by the Glass-Steagall Act. During the 1920s, National City Bank had Armstrong conduct studies of their troubled loans to the Saco-Lowell Shops, of the proposed merger of Palmolive, Kraft, and Hersey, and (at J. C. Penney’s personal request) a comparative study of the Penney chain stores and their relative expense ratios [2]•

In 1932, however, with inside assurances from his uncle that Franklin D. Roosevelt intended to break apart commercial and investment banking, Armstrong resigned from National City Bank to found his own consulting firm. His timing was shrewd since lawyers who examined the new statues agreed, in Armstrong’s words,

that any financing be preceded by the exercise of due diligence. This was interpreted to mean the investigation of the subject by a firm of competent engineering consultants and the review of the Registration Statement by such consultants [2, p. 69].

Armstrong’s new firm, George S. Armstrong & Company was successful from its founding in 1933. The firm worked for a succession of investment banking firms during the 1930s investigating such corporate giants as Jones & Laughlin, Seagrams, Birdseye Frozen Foods, and Philip Morris. George Armstrong profited from the transition from banker supervision of management engineering studies to the institutionalization of management consulting even though the types of studies that Armstrong performed did not change. George S. Armstrong & Co. grew rapidly not because it offered a new form of organizational advice but because Armstrong had founded an independent firm.

The history of James O. McKinsey & Company illustrates the institutionalization of management consulting after the Glass-Steagall Act. During the 1930s, James McKinsey worked to systematize the complicated process of soliciting new clients and conducting a management engineering survey. In order to secure new clients, McKinsey methodically cultivated contacts throughout the financial community. He claimed to have taken every important banker in Chicago or New York to lunch and, in return, “‘nearly every one at one time or another has given me some work….'” [37, p. 42]. Perhaps James McKinsey’s greatest contribution to the institutionalization of his firm was the “general survey outline,” which he drafted in December 1931, to give young, inexperienced consultants a model to follow when, as McKinsey specified, they were asked to prepare a complete study of a company that was in financial difficulties [30, p. 11]. Marvin Bower, who joined the firm in 1933, has written that the general survey resembled the corporate reorganizations for bondholders’ committees which Bower had previously overseen as a young lawyer at Jones, Day [6, p. 17]. Indeed, because consultants frequently prepared these general surveys for investment firms during the 1930s, the partners at James O. McKinsey and Company came to refer to them as “banker’s surveys.” The general survey outline survived in modified form in McKinsey and Company’s training manual until 1962 [30, p. 12]. As early as the 1930s, James O. McKinsey and Company was profiting from the external imposition of banking and finance regulation, a transition it was well equipped to exploit. The firm also profited from its internal systematization of client contact and report writing. These internal arrangements allowed McKinsey and Company to overcome the limitations of novice consultants and variable economic conditions as the firm’s organization grew beyond its founder and expanded throughout the world.

The origins of modern management consulting are in the 1930s. Contrary to popular assumptions, Taylorism was not the predominant influence on the development of consulting firms. Rather, management engineers drew on the practices of accountants, engineers, and lawyers to offer CEO-level studies of organization, strategy, and operations. The major change in this emerging quasi- profession took place in the 1930s and was primarily a product of political developments. Before the 1930s, merchant bankers coordinated these studies. But, the Glass-Steagall Act and S.E.C. disclosure regulations forced commercial and investment bankers to abandon internal management consulting activities even as regulators mandated that they commission outside studies. These required studies, combined with the increasing acceptance of management engineers by corporate executives, propelled the rapid growth of consulting firms from the 1930s onward. New Deal legislation and firm-level systemization catalyzed the development of this particularly American form of professionalized corporate counsel.

Since the 1930s, management consultants have reorganized the largest and most important organizations in the world. During the Second World War, the Federal Government hired large numbers of consultants to streamline civilian production, reorganize the military, and oversee the rapid expansion of the Federal Administration. By 1949, Cresap. McCormick & Paget was working for the Hoover Commission restructuring the Executive Branch [12]. As consultants worked for the government, they carried ideas between the public and private bureaucracies, accelerating the process of organizational innovation and dissemination. Since other countries did not legislate the separation of commercial and investment banking, the institutionalization of management consulting never happened outside of the United States. When American management consultants expanded into Europe in the early 1960s, they sold American management “know- how” to European managers eager to employ the organizational structures that J. J. Servan-Schreiber labeled “The American Challenge. “• By the 1970s, McKinsey and Company had decentralized one-quarter of the hundred largest companies in Great Britain [10, p. 239]. Whether reorganizing the Bank of England, Royal Dutch Shell, the Government of Tanzania, or even the World Bank, management consultants disseminated American management techniques throughout the world. But, it was the institutional and professional growth of consultants during the 1930s that was the necessary precursor to the predominance of American management consultants throughout the world and, through them, the ascendancy of American models of corporate organization after the Second World War.


1. Hugh G. J. Aitken, Scientific Management in Action: Tayh•rism at Watertown Arsenal, ] 908-1915 (Princeton, 1960).

2. George S. Armstrong, An Engineer in Wall Street (New York, 1962).

3. Arthur Andersen & Co., The First Sixty Years, 1913 – 1973 (Chicago, 1974). -• Indeed, Servan-Schreiber, in his bestseller from 1968, noted that hand in hand with the growth of American industrial subsidiaries in Europe, “the three American consultant firms with European branches (Booz-Allen, and Hamilton, Arthur D. Little, Inc., and McKinsey and Co.) have doubled their staffs every year for the past five years” [33, p. 8, emphasis in original].

4. Association of Consulting Management Engineers, Inc. (ACME), Numerical Data an the Present Dimensions, Growth, and other Trends in Management Consuhing in the United States (New York, 1964).

5. Jim Bowman, Booz -Allen & Hamilton.. Seventy Years q[‘ Client Service, 1914-1984 (Chicago, 1984).

6. Marvin A. Bower, Perspective on McKinsey (New York, 1979).

7. JoAnne Brown, The Definition of a Pri•bssion: The Authority q[‘ Metaphor in the History Intelligence Testing, 1890-1930 (Princeton, 1992).

8. John A. Byrne, “The Craze for Consultants,” Business Week, (July 25, 1994), 60-66.

9. Alfred D. Chandler, Jr., The Visible Hand (Cambridge, 1977).

I 0. Derek F. Channon, The Strategy and Structure q[‘British Enterprise (Boston, 1973).

I I. Thomas G. Cody, Management Consulting: A Game without Chips (Fitzwilliam, NH, 1986)

12. Cresap, McCormick & Paget, A Summary q[‘the Hoover Report (New York, 1950).

13. “The Consultants Face a Competition Crisis,” Business Week, (Nov. 17, 1973), 72.

14. Stuart Daggett, Railroad Reorganization (Cambridge, 1908).

15. Joel Dean, “The Place of Management Counsel in Business,” The Harvard Business Review, 16 ( 1938), 451-465.

16. Ford, Bacon & Davis, United States Steel Company: Final Study Summarizing the Survey (New York, 1938).

17. Frazer, George E., First Forty Years (Chicago, 1957).

18. N.S.B. Gras, and H. M. Larson, Casebook in American Business History (New York, 1939).

19. Thomas P. Hughes, Networks q[‘Power: Electrification in Western Society, 1880-1930 (Baltimore, 1983).

20. E.J. Kahn, Jr., The Problem Solvers.’ A History of Arthur D. Little, Inc. (Boston, 1986).

21. David Neal Keller, Stone & Webster, 1889-1989 (New York, 1989).

22. Thomas W. Lamont Papers, Box 133, File 6, Historical Collections, Baker Library, Harvard Business School.

23. Miles Lasser, 75 Years •’ Total Involvement: A History (•[‘Seidman and Seidman (New York, 1985).

24. Kenneth J. Lipart(to, and Joseph A. Pratt, Baker & Botts in the Development of Modern Houston (Austin, 1991).

25. Thomas K. McCraw, Prophets of Regulation (Cambridge, 1984).

26. Judith A. Merkle, Management and Ideology: The Legacy of the International Scienti/ic Management Movement (Berkeley, 1980).

27. Miller, Franklin, Basset & Company, The Industrial and Production Engineering Service q/’Miller, Franklin, Basset & Company (New York, 1920).

28. Miller, Franklin, Ba•set & Company, The First Quarter Century (New York, 1927).

29. Daniel Nelson, ed., A Mental Revolution.’ Scientific Management since Taylor (Columbus, 1992).

30. John G. Neukom, McKinsey Memoirs: A Personal Perspective (New York, 1975).

31. James P. Quigel, Jr., The Business *•[‘Selling Efficiency: Harrington Emerson and the Emerson EJJ•ciency Engineers, 1900-1930 (Ph.D. Dissertation, Pennsylvania State University, 1992).

32. Peter S. Rose, The Changing Structure q/’American Banking (New York, 1987).

33. J.J. Servan-Schreiber, The American Challenge (New York, 1968).

34. Paul A. Tiffany, The Decline q/’American Steel (New York, 1988).

35. Patricia Tisdall, Agents of Change: The Development and Practice •’Management Consultancy (London, 1982).

36. Stephen P. Wari ng, Taylorism Tran•s/brmed (Chapel Hill, 1991).

37. William B. Wolf, Management and Consulting: An Introduction to James O. McKinsey (Ithaca, 1978).

Key sources of Research:

The Origins of Modern Management Consulting

Christopher D. McKenna

• The Johns Hopkins University

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Boundary Spanning in Multinational and Transnational Corporations

Boundary Spanning in Multinational and Transnational Corporations

What are:

  • Boundaries
  • Boundary Spanners
  • Gate Keepers

How do Boundaries evolve?

How do we coordinate and manage across Boundaries?




Global organizations are inherently complex. Rapidly developing emerging markets and increasing spatial dispersion of innovative activities coupled with digital convergence create the need for continuously developing new ways of coordinating, organizing, and re-configuring of organizational structures and routines across inter and intra-organizational boundaries.

Early studies discussed the roles of gatekeepers in the context of technology transfer between different departments or functional areas within organizations. In more recent research, one stream has explored the role of boundary objects as contextual aids for cross-boundary knowledge sharing. A complementary stream has begun to investigate individuals as boundary spanners and their roles in effectively operating across complex inter- and intra-organizational, socio-cultural and geographic boundaries. Individuals are the nested antecedent to organizational level actions and therefore deserve careful theoretical and empirical deliberation.

Existing research on boundary spanning is mainly conceptual or based on a limited number of case studies. The research suggests that a small number of managers with unique skill sets or personality traits have emerged as critical facilitators for cross-boundary coordination. Boundaries can be both explicit as between parents and subsidiaries of multinational enterprises, and also implicit as between line managers and top management. For example, middle managers have been argued to perform the role of boundary spanners between line managers and top management in a general organizational context. A delineation of explicit and implicit boundaries across organizational subunits as well as within organizational subunits is important to understand the boundary spanning function.

From a managerial perspective, little is known about the characteristics of boundary spanners and whether their capabilities are inherent or can be developed. Although the literature has provided some useful insights, most existing research treats the individual actors and the organizational environment as two discrete dimensions. Further, the boundary-spanning role is essentially associated with structural holes and bridging ties, so key questions arise as to how they affect organizations and organizational capabilities, and how organizational structures foster or hinder boundary spanning.

From an organizational architecture perspective little is known about the specificities of boundaries and how they manifest themselves other than those that are explicit in the form of hierarchies, functional domains, or geographic territories. In global organizations, organizational subunits often become embedded in geographical contexts that differ in terms of culture, institutions, language, etc. These organizational realities create implicit boundaries in many dimensions, e.g., cultural and psychic distance, institutional incompatibilities as well as linguistic issues that may be labeled “lost in translation”. The boundary spanning function in such organizations includes a wide range of coordination mechanisms, which need to be explored in greater detail.

The boundary spanning phenomenon provides an opportunity for moving beyond emblematic borrowing of individual level theories and applying them to organizational level research. This will move the research agenda toward addressing both micro-macro linkage and macro-micro linkages systematically, thus substantially advancing theory.

With this special issue we seek to connect different, though loosely related research domains. The buoying microfoundations of strategy discussion, research on strategy as practice, and behavioral strategy could be particularly fertile areas for such an approach. In addition, this special issue seeks to foster cross- fertilization from and between different epistemological orientations. This includes research in the areas of industrial and organizational psychology and behavioral economics, among others.


Building on extant research, we seek contributions that either add empirical insights or/and advance theory building regarding the boundary spanning functions in global organizations as well as the characteristics, development and roles of boundary spanners, a special type of manager that allows organizations to manage more effectively across intra- and inter-organizational boundaries.

We are interested in theoretical, empirical and analytical submissions. We welcome submissions that address both, organizational and managerial based approaches to boundary spanning.

The submission to this special issue must go beyond anecdotal descriptions of the phenomenon and represent a substantial contribution to theory development. The topics that the special issue intends to cover include (but are not limited to):

Definition: What are explicit and implicit boundaries, how do they manifest themselves materially, contextually, intellectually, perceptually and from a structural and/or managerial coordination perspective?

Evolution of boundaries: How do boundaries arise, become entrenched in some circumstances and dissolve in others? To what extent do boundaries evolve dynamically over time and how do boundary- spanning roles emerge? How can analyses of boundaries improve our understanding of conflicts and conflict resolution in general?

Organizational versus managerial level of analysis: Is boundary spanning an organizational capability or a managerial skill or both? What is the role of management in either fostering or hindering boundary spanning? What are managerial or individual boundary spanning skills and how are they developed? How can our understanding of well-known organizational functions (middle managers, staff vs. line managers, etc.) be improved using an analysis of boundaries?

Boundary spanning, a cause or effect: Is the boundary spanning function a cause or an effect? In some contexts, the boundary spanning function could be an outcome of particular forms of organizational values or structures, while in others it could be a means of creating and reinforcing them.

Boundary spanning versus boundary setting: Is boundary spanning always a good thing? Are there situations in which boundary setting (and the associated specialization) is more important than boundary spanning?

Boundary spanners versus gatekeepers: What are the individual, functional and conceptual similarities that boundary spanners and gatekeepers share with each other? What are the differences that distinguish them from each other?

Organizational adaption: How do global organizations adapt over time to new boundary challenges and what are the organizational structures that make boundary spanners more or less effective?

Intra versus inter organizational perspective: Are there fundamental differences between “inter” and “intra” organizational boundary spanning activities? How does boundary spanning relate to the dialectical process of change implementation (theses) and resistance to change (antitheses) in complex/global organizations?

Role of external context in boundary spanning: In global organizations, organizational subunits often become embedded in geographical contexts that differ in terms of culture, institutions, language, etc. How do these differences affect the boundary spanning function as well as the effectiveness of boundary spanners?


What are Boundaries?

Early research defined boundaries as distinctive lines that separate what is within an organization and what is in the external environment with which it interacts (Aldrich and Herker 1977; Friedman and Podolny, 1992). Thus a boundary defines an entity. But boundaries also exist within organizations, either in the form of clearly defined subunits, like MNE HQs and their dispersed subsidiaries, or less clearly defined boundaries, based on, for example, different cultures, demographics, and professions. In organization theory, seminal works from both the economics (Coase, 1937) as well as the sociology (Weick, 1995) paradigms view boundary definition as a core function as well as an essential property. In classical transaction cost economics, the firm’s fundamental decision is to decide what activities are undertaken within its boundaries and what activities are implemented through market transactions (Williamson, 1979; Gibbons, 1999). In the theory of sense-making, an organization is identified in terms of those who share a common identity, often operationalized through their understanding of the external environment (Weick, 1988; 1995).

These two pillars of organization theory provide us with complementary perspectives on the nature of boundaries. The economics perspective is based on an external, explicitly defined notion of legal ownership; the boundary distinguishes between what the organization owns and what it does not (Demsetz, 1983). The sociology perspective is based on an internal, tacit notion of belonging (Durkheim, 1938) whereby the boundary appears between those who identify with the organization and those who do not.

The complementarity of these two perspectives is evident from that fact that they generate co-evolutionary, dynamic boundary drivers. Common ownership often underpins the creation of routines and operating procedures that build common syntax and semantics which eventually result in a common basis of sense-making. A strong organizationally derived identity – as seen in “corporate culture” (Guiso et al, 2015) or “political culture” (Mudambi and Navarra, 2003) – often drives acquisition and location decisions that result in common ownership.

Both economics-based and sociology-based boundaries are intangible, but they often give rise to tangible structures like national borders, factory gates and other physical boundary markers (Hernes, 2004). However, these are merely representations of the underlying reality that is based on the complementary notions of boundaries. It is possible that over time, physical edifices may strengthen boundaries, but they rarely create them.

Key sources of Research:

Exploring the Role of Boundary Spanning in Distributed Networks of Knowledge

Eli Hustad and Aurilla Aurelie Bechina



The Importance of Boundary-Spanners in Global Supply Chains and Logistics Management in the 21st Century

Timothy Kiessling Michael Harvey Garry Garrison


Click to access 1357370196.704415399747.pdf



Boundary Spanning in Global Organizations

Andreas P. J. Schotter

Ram Mudambi

Yves L. Doz

16 January 2017

Click to access Boundary-Spanning-in-Global-Organizations.pdf

Click to access boundary-spanners-special-issue-call.pdf

Boundary spanning behaviors of expatriates

Kevin Y. Au, John Fukuda

Journal of World Business, 37, 285-296.




Global Mobility Policies, Social Positioning and the Boundary Spanning Work of Expatriate Managers


Click to access Mense-Petermann_Spiegel-2016.pdf



Crowding at the frontier: knowledge brokers, gatekeepers, boundary spanners and marginal-intersecting individuals

Aurore Haas



Boundary Spanning Leadership: Tactics to Bridge Social Identity Groups in Organizations

Chris Ernst and Jeffrey Yip


Click to access boundary_spanning_leadership.pdf


Boundary Spanning Leadership

Mission Critical Perspectives from the Executive Suite

Jeffrey Yip, Chris Ernst, and Michael Campbell

Contributors: Corey Criswell and Serena Wong

Click to access 00b49528fa0ea2a023000000.pdf


Loosely Coupled Systems: A Reconceptualization

Orton, J. Douglas; Weick, Karl E.
Academy of Management. The Academy of Management Review; Apr 1990;

Click to access OrtonWeickAMR1990.pdf

Beyond brokering: Sourcing agents, boundary work and working conditions in global supply chains


January 17, 2017





School of Business, University of Kansas, Lawrence, Kansas, U.S.A. 2 Fisher College of Business, Ohio State University, Columbus, Ohio, U.S.A.







School of Business, University of Kansas, Lawrence, Kansas, U.S.A. 2 Fisher College of Business, Ohio State University, Columbus, Ohio, U.S.A.





Department of Management, University of Bologna, Bologna, Italy 2 Cass Business School, City University London, London, U.K.





ANTONIO CAPALDO* Catholic University of the Sacred Heart, Milan, Italy