Critical Approaches to Strategic Management

Critical Approaches to Strategic Management David L. Levy Associate Professor University of Massachusetts, Boston, USA [email protected]

Mats Alvesson Professor of Business Admininstration University of Gothenburg, Sweden [email protected]

Hugh Willmott Professor of Organizational Analysis Manchester School of Management UMIST, U.K. [email protected]

Abstract This paper contributes to the development of a critical understanding of strategic management. We provide a brief outline of strategic management as it is conventionally taught and practiced, pointing to several avenues for developing critical approaches. In the broadest sense, a critical perspective stands outside of the managerialist orientation in order to study strategy as an organizational process. We review work in the processual school that purports to describe how strategy is ‘really’ made, from bargaining, constructivist, and emergent perspectives. We argue that processual approaches hold some promise but quickly move toward prescriptive managerialism. A second, more profound critique draws from critical theory and postmodern insights to question the social and political effects of strategic management. Strategy can be viewed as a set of practices and discourses which promotes instrumental rationality, reproduces hierarchical relations of power, and systematically privileges the interests and viewpoints of particular groups. While this approach has been valuable in probing the ideology of strategy, its focus on discourse and lack of concern with the ‘truth of strategy’ is a potential weakness. A third approach draws from Gramsci to offer an historical materialist perspective, which pays more attention to the content of strategy. We argue that the strategic deployment of discursive, organizational, and economic resources in sustaining or challenging hegemony suggests a strategic concept of power and a political perspective on corporate strategies to exercise market power, discipline labour, influence government policies, and resist pressures from social groups. It also points to a more encompassing vision of emancipation strategies than that offered by critical theory.

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Critical Approaches to Strategic Management Introduction It is only comparatively recently that “strategic management” has been labeled, studied, and privileged as a field of managerial practice and scholarly attention (Knights and Morgan 1991). In recent years, many business schools have crowned their programs with a “capstone” course in strategic management, which is generally intended not just to convey the key concepts of the field, but also to synthesize the other sub-disciplines of management and to provide a “top-management perspective”. As possibly the most managerialist of the management specialties, strategy tends toward a narrow pragmatism and is deeply rooted in the managerial functionalist paradigm. As such, it presumes the legitimacy of established managerial priorities and is dedicated to identifying more effective and efficient means for their realization. It largely takes for granted the historical and political conditions under which these priorities are determined and enacted. Moreover, as a technocratic mode of decision making by specific elites and serving particular interests, strategy is not simply confined to the business world; rather, the hegemonic strategic project can be seen in the ever widening circle of problems which are deemed suitable for strategic management, from public sector and non-profit management to regional economic development and business school accreditation. This chapter contributes to the development of a critical understanding of strategic management that is less coloured by the preoccupations and sectional interests of top managers. Since we do not presume readers’ familiarity with this field, we provide a brief outline of strategic management as it is conventionally studied, taught and practiced, pointing to some of the major conceptual divisions and controversies in the field and several avenues for developing critical approaches. In the broadest sense, a critical perspective stands outside of the managerialist orientation in order to study strategy as an organizational process, one which has significant political ramifications within organizations and in the broader society. Where a managerialist perspective employs an instrumental rationality to help managers improve organizational effectiveness and corporate profitability, a critical lens seeks to explore the nature of strategic management as discourse and as practice, its historical roots, and how it came to be constituted in its current form. Some of the work in the processual school of strategy (Mintzberg 1990) could be loosely described as ‘critical’, in the sense that it problematises established classical and rational perspectives. However, writings in this tradition quickly shift gears from revealing the irrationality of strategy-as-practiced to recommending improvements. Even where this prescriptive urge is resisted, analysis tends to accommodate rather than scrutinize managerialist assumptions. Where the processual school examines power, for example, it tends to do so within an intra-organizational, narrowly functionalist perspective that eschews consideration of broader social and political structures. A second level of critical analysis goes beyond this effort to study strategy as process, in order to question the social and political effects of strategic management. Drawing from critical theory (Alvesson and Deetz 1996; Deetz 1992; Fairclough 1992; Habermas

1984), management can be viewed as a set of practices and discourses embedded within broader asymmetrical power relations, which systematically privilege the interests and viewpoints of some groups while silencing and marginalising others. Critical theory (CT) has an emancipatory agenda rather than a neutral stance, which seeks to probe taken-forgranted assumptions for their ideological underpinnings and restore meaningful participation in arenas subject to systematic distortion of communication. Moreover, CT draws attention to the dominance of a technical rationality obsessed with efficient pursuit of unquestioned objectives, and attempts instead to rekindle societal debate around the goals and values being pursued. Drawing from this perspective, the limited critical scholarship on strategic management has tended to emphasize the discursive and ideological dimensions of strategy. Much of this work examines the manner in which strategy constitutes certain problems as ‘strategic’ and legitimizes specific groups of people as the ‘strategic managers’ capable of addressing them, thus universalising the sectional interests of senior managers and stockholders, while securing the reproduction of organizational inequalities (Knights and Morgan 1991; Thomas 1998). The emphasis on strategy as discourse in much of the existing critical literature has perhaps been at the expense of a critical examination of the content and objectives of strategy. Knights and Morgan (1991) p.252, for example, adopt a Foucauldian position and assert that they are less concerned with the “truth of strategy” and more with strategic discourse as a "mechanism of power that has certain truth effects." Although discourse, defined broadly, includes managerial and social practices of production and interpretation (Fairclough 1992), critical analysis has focused on the ideological and symbolic character of discourse rather than its direct instrumentality (Alvesson 1991). However, CT does not deny the instrumental value of managerial practices, even while it calls for greater attention to ends and values instead of means and technique. In this chapter, we argue that the “truth” of strategy is significant, in that the skillful practice of strategy can achieve certain political and material objectives beyond the constitution of strategic managers as powerful actors or the diffusion of managerialist assumptions. If we take seriously the idea that strategic decision making can change outcomes in contested environments, whether these be games of chess, military confrontations, or labor struggles, then it becomes important for critical scholars to explore the techniques and objectives of strategy. Worthy of our attention are corporate strategies to control labour at the workplace, to influence government policies, and to resist pressures from social forces such as environmentalists and minority groups. This third strand of critical strategy offers a historical materialist perspective that has intellectual roots in the work of Antonio Gramsci, who drew in turn from Machiavelli. Gramsci has inspired generations of critical theorists from Althusser to Laclau and Mouffe, though it is useful to point out a number of points of commonality and difference with CT. Gramsci anticipated theorists of the Frankfurt school in his critique of any attempt to assert the neutrality of philosophy and science through untenable distinctions with the realm of ethics and politics. Both approaches therefore view organizational structures and managerial practices as inherently political. Another point of contact with CT is the importance attached to ideology as a force that stabilizes and reproduces social relations while masking and distorting these same structures and

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processes. Gramsci also shared CT’s position that intellectuals can and should apply theory for emancipatory purposes. Points of difference between Gramsci and the Frankfurt school indicate the potential contribution of extending our range of critical inquiry. Critical theorists have focused on the power of discursive closure and distortion, both at the broader level of mass culture (Marcuse 1964) and in small group communication (Habermas 1984). In their turn toward culture and ideology, however, critical theorists have tended to neglect the role of economic structure. For Gramsci, by contrast, social systems are shaped and stabilized in the interlocking realms of ideology, economics, and politics. If firms and markets are embedded in broader ideological and political structures (Callon 1998; Fligstein 1996; Granovetter 1985), then corporate strategies to enhance competitive and technological positioning are closely related to broader strategies to secure social legitimacy and influence policy; the content of strategy, not just its ideology, is political. Gramsci’s concept of emancipation is more ambitious and more strategic than that offered by CT. For the Frankfurt school, emancipation is a largely intellectual exercise of unmasking systems of ideology and questioning taken-for-granted assumptions. Adorno’s transcendent stance explicitly abandoned attempts to transform theory into emancipatory practice. Habermas (1984) posited specific criteria for establishing undistorted communication as an emancipatory tool, but this ideal communicative state has been widely criticized for being unattainable theoretically and for its modesty in the face of broader social and political structures of power. Horkheimer tended toward an individualistic notion of emancipation which stressed the resolution of psychological oppositions and conflicts. For Gramsci, however, power is decidedly social and lies in the ensemble of economic, ideological, and organizational forces; the emancipatory project must therefore encompass this wider totality. Emancipation is not to be left solely to elite intellectuals who somehow stand outside the dominant ideology; in Gramsci’s view, everyone is an intellectual capable of appreciating systems of oppression. Gramsci’s rejection of economistic teleology and his conception of hegemony as a relation of forces informs a strategic notion of power. A hegemonic formation results from an historically specific alignment of ideological, economic, and organizational forces, laying the foundation for a dominant alliance of social groups. A coordinated strategy across the three pillars of hegemony is required either to build and sustain hegemony, or to contest the dominance of a particular hegemonic bloc. Subordinate social groups would need to adopt a long-term strategy, or a ‘war of manoeuvre’ in Gramsci’s terms, to shift the balance of forces in their favour. While Gramsci’s analysis was primarily at the level of the state, others have applied Gramscian concepts to understand social contestation over particular issue arenas, such as the environment or race (Hall 1986; Sassoon 2000). The complex, dynamic nature of hegemonic structures suggests that subordinate groups can, given appropriate analysis and understanding, identify key points of instability and leverage, justifying Gramsci’s “optimism of the will”. Where critical theorists of the Frankfurt school might see strategy as just another arena in which to unmask asymmetrical power relations, a Gramscian approach views strategy as the embodiment of power and the route to emancipation.

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History and key concepts of strategic management A review of the development of strategic management is useful for readers unfamiliar with the field and to indicate the potential traction of critical approaches. Knights and Morgan (1990) provide a geneological analysis which traces the development of business strategy discourse back to its roots in military parlance of the late eighteenth century. The military associations of strategy have never been far from the surface. Indeed, writers on military strategy have resorted to business metaphors on occasion. Clausewitz (1956: 121) argued that “ it would be better, instead of comparing war with any art, to liken it to business competition, which is also a conflict of human interests and activities.” Contemporary business strategy literature often uses direct military analogies, making frequent reference to Sun Tzu’s (1983) Art of War, dated to the first century BCE (James 1985). Quinn, (1985) (p.160), for example, asserts that effective strategy “concentrates resources, attacks a clear exposure, overwhelms a selected market segment, builds a bridgehead in that market, and then regroups and expands from that base to dominate a wider field." A critical sensibility would be alert to the invocation of military metaphors, as they evoke the commonality of interests in defeating ‘enemies’, the value of selfsacrifice in pursuing greater goals, and the need to ignore ‘collateral damage’. As CT points out, this emphasis on ends rather than means results in an instrumental, technocratic orientation that precludes discussion of environmental, social, or other values. Neumann and Morgenstern (1947) were the first modern scholars to develop the concept of strategy for business, applying the tools of game theory to model interactions among small numbers of firms. Ansoff (1965), in an early effort to provide coherence to strategy as field of scholarly study, viewed it as the necessary extension of managerial control from the internal to the external environment. Knights and Morgan, from a more critical perspective, view this trend as the continuation of a Tayloristic ideology of control. They also contend that the growth in prestige of the business strategy field is related to the popularization of strategic discourse during World War II and beyond, and the high profile of military leaders in post-War public affairs. Moreover, the increasing separation of ownership and control in Western economies during this period generated a need to articulate corporate objectives to external audiences. The contemporaneous development of large multidivisional organizational structures, documented by Chandler (1962), also required that each unit develop plans and budgets to demonstrate alignment with the objectives of the larger corporation. Contemporary approaches to strategy are hardly monotholic, though current thinking is anchored by the work of Henry Mintzberg and Michael Porter. The variety of perspectives is suggested by Mintzberg (1998), who discusses ten schools and five definitions of strategy: plan, perspective (strategic vision), position, pattern, and ploy. The concepts of ‘strategy as ploy’ builds on the game theoretic and military heritage of strategy, suggesting that under conditions of interdependence, decisions of one actor need to take account of expected responses of others. Strategy, in this sense, can be about deceptive and unpredictable maneuvers that confuse and outflank competitors. ‘Strategy

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as ploy’ bears a number of critical implications. The concept implies a certain deviousness that almost invites scrutiny of underlying goals and motives. It also suggests that social contestation is more a matter of superior maneuvering rather than ideological or coercive domination (Abercrombie, Hill, and Turner 1980), presenting possibilities for effective challenges by subordinate groups. Strategy as position is perhaps the predominant conceptual framework in the field. Porter’s (1980) landmark Competitive Strategy signaled a shift away from earlier concerns about the logic of a business portfolio toward an interest in the positioning of individual business units. Porter’s main contribution was to reinterpret the microeconomics of industrial organization in a managerial context, by laying out a set of tools for industry analysis that reveal opportunities in segments with little competition. Close analysis of Porter’s work and subsequent developments provides considerable fuel for critical theorists concerned with the reproduction of hierarchical economic relations, as it highlights the contradictions between idealized myths of ‘perfect competition’ and the more grounded concepts of market power explored by business school strategists. Porter’s work uses economic analysis of market failures to suggest how firms might seek above-normal profits in less than competitive market segments. Porter’s subsequent book, Competitive Advantage (1985), which forms the basis for the dominant ‘resource based view’ of the firm (Wernerfelt 1984), attempts to explain how a firm might actively build market barriers and sustain monopolistic structures; it was not without some justification, perhaps, that Microsoft argued in its anti-trust suit defense that it was merely pursuing the precepts of good business strategy. One controversy in the literature concerns the extent to which strategy is, indeed, a logical, linear process of analysis and planning. Andrews (1971) and Chandler(1962) are among the best known exponents of this view, but mainstream approaches based on game theory and variants of the positioning school, such as Porter’s Five Forces analysis, also clearly reflect a rational, technocratic perspective. Most textbooks draw from these approaches to portray strategic management as an objective process in which rigorous analysis of industry conditions and company capabilities leads to evaluation of options, decision making, implementation, followed by monitoring and control. CT encourages us to question an instrumental emphasis on technique at the expense of a consideration of the wider goals and values of productive organizations. Scholars firmly established within the strategy field have also critiqued this rational, logical approach, though for somewhat different reasons. Even Sun Tzu’s classic work on military strategy (1983), though often expressed as a series of maxims, advocates an approach that is non-linear, unpredictable, and paradoxical; the ‘Art of War’ rather than the science (Luttwak 1987; Quinn and Cameron 1988). Mintzberg (1994; 1998) has been particularly prominent in arguing that strategy is better characterized as an emergent rather than planned organizational phenomenon. Mintzberg emphasizes the recursive processes of learning, negotiation, and adaptation by which strategy is actually enacted, and suggests that the planning-implementation distinction is unsustainable (Mintzberg 1990). Rather than see this as a failure of the strategy model, however, Mintzberg argues that this process both inevitable and functional, leading to superior outcomes in complex and fluid environments. Similarly, Nelson (1991) p. 69 makes the case that “it is nonsense to

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presume that a firm can calculate an actual ‘best strategy’. A basic premise of evolutionary theory is that the world is simply too complicated for a firm to comprehend.” These authors are indicative of the reluctance to pursue a more fundamental critique of strategy, and they reflect a functionalist orientation that presumes the efficacy of whatever strategy emerges from complex organizational processes. A second axis of contention in the literature concerns the extent to which firms possess the agency and capacity to adapt to a changing environment. The mainstream view is that firm-specific capabilities, or ‘core competencies’, are acquired through a long period of intentional resource allocation and can be changed only slowly and incrementally. As a result, firms must focus their efforts and undertake careful analysis and planning to select the products and markets in which to engage. The evolutionary, or population ecology, perspective posits that the degree of organizational inertia is so high that active adaptation is near impossible; rather, organizations evolve to match the environment through a process of natural selection (Hannan and Freeman 1984). At the other extreme are those who believe that environmental changes are so rapid and unanticipated that planning is quite futile; rather, organizations must be nimble and adaptable (Brown and Eisenhardt 1999; Eisenhardt 1989). From a critical perspective, the metaphor of organizations as organisms adapting to their environments conveys a sense of inevitability and naturalness that masks internal conflicts and the discretion of human agents. Moreover, the focus on adaptability constitutes an example of discursive closure, by forestalling discussion of the role of firms in shaping and structuring their environment. We now turn to a more detailed explication of the three critical approaches to strategy laid out in the introduction; the processual school, which examines the manner in which strategy is ‘really’ determined; the extant critical management studies approach, which draws from the Frankfurt school of CT and some post-structuralist insights; and the Gramscian historical materialist perspective, which places more emphasis on the content than the discourse of strategy, and suggests that strategy itself is a key dimension of power. The Processual School A key problem with conventional approaches to strategy is the tendency is for management disciplines to equate the study of management with the production of knowledge for management. The processual school deviates from this strict managerialist orientation, instead seeking to explore the process by which strategy is actually developed in organizations. Three approaches can be discerned within the processual school; the constructivist perspective questions the objectivity of strategy by noting that strategic assumptions and practices are socially constructed in institutional contexts; the political bargaining approach posits that strategy is a negotiated outcome of rival corporate factions; finally, strategy is seen by some as an emergent phenomenon, arising out of complex organizational processes. Despite these differences, proponents of the processual perspective are united in critiquing strategy as a rational, logical process in which optimal strategies can be derived from rigorous analysis. Most of the writers in this

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tradition, however, fail to critique strategy as a political project and frequently leap from description to recommendation, blunting any critical edge the processual approach might provide. An increasingly influential body of work brings a broadly constructivist approach to understanding organizational practices and processes. The notion that organizations are embedded in their environments stems back to the work of early systems theorists (Emery and Trist 1965; Trist 1983) but it is only since the mid 1980s that there has been a greater appreciation that companies are not located in a fixed, objective environment, but rather develop cognitive models, or frames, of markets and industries, which channel organizational perceptions of their environment (El Sawy and Pauchant 1988; Whipp, Rosenfeld, and Pettigrew 1989). Indeed, Weick (1995) has emphasized that organizations actively constitute and reify their environments, bringing sense and order to the tangled discursive webs in which they are located. In turn, perceptions of the external environment shape and constitute managerial cognition and action (Daft and Weick 1984). Institutional theory, which has become increasingly prominent in recent management thought, clearly displays a constructivist influence in its emphasis on cognitive and normative pressures in shaping field-level norms and practices (DiMaggio and Powell 1983; Scott and Meyer 1994). The constructivist perspective suggests that strategies are informed by historical, geographical, and cultural specificities within which conceptions of markets are developed (Dutton and Duncan 1987; Levy and Rothenberg 2001; Oliver 1996; Schneider and de Meyer 1991). Overall, however, the field of business strategy has remained remarkably immune to the spread of constructivism, perhaps because strategy is more rooted in the positivist tradition of economics than in organization theory, or perhaps because the field is so closely bound to managerial practice. Despite the affinity of the constructivist perspective with CT’s historical hermeneutic epistemology, which seeks to uncover meaning rather than causation in social phenomena, few authors utilise a constructivist analysis of strategy to draw implications concerning broader structures of dominance and inequity. Quite the contrary, the perspective is often used to generate suggestions for how managers can improve the strategy process by actively changing corporate cultures and frames, and by breaking the ‘iron cage’ of institutionalized perspectives (Whittington 1993). A few notable exceptions to this trend have argued that if strategy is rooted in the values and cognitive frames of senior managers, it is likely to reproduce their ideological frameworks and promote their sectional interests (Bourgeois and Brodwin 1984; Child 1982; Smircich and Stubbart 1985). A second approach to understanding how strategy ‘really’ works is to view it as the outcome of political bargaining process among managerial elites (Bower and Doz 1979; Child 1982; Cressey, Eldridge, and MacInnes 1985). To some extent, this perspective furthers the agenda of critical theory by questioning the rationality of strategy and unmasking the relations of power behind strategic decisions and the particular interests served. However, most studies of the politics of strategy focus on internal struggles among managerial factions rather than with labor or external stakeholders, and tend to abstract from wider historical and social contexts. Managers are still viewed as the only

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organizational actors with legitimate access to the strategy process, a form of discursive closure that trivialises the politics of strategic management. Pettigrew’s (1985) influential study of ICI, for example, makes direct reference to the way dominant groups are protected by the “existing bias of the structures and cultures of an organization” (1985:45), and how these groups actively mobilize this socioeconomic context to “legitimize existing definitions of the core strategic concerns, to help justify new priorities, and to delegitimize other novel and threatening definitions of the organization’s situation” (1985:45). Nevertheless, Pettigrew neglects the historically distinctive, politico-economic organization and contradictions of the production and consumption processes that have shaped the development and direction of strategic management at ICI. Similarly, Whittington (1992) p. 701 contends that "the limits of feasible change within ICI were defined not simply by the personal competencies and organizational advantages of particular managers ..but also by the evolving class structures of contemporary British society." As with the constructivist approach, advocates of strategy-as-bargaining are quick to jump to prescription. Whittington (1993), for example, proposes mechanisms to ensure that the strategy process remains objective rather than being captured by a particular management faction; moreover, he suggests that managers can draw from broader, less visible sources of power, such as “the political resources of the state, the network resources of ethnicity, or, if male, the patriarchal resources of masculinity” (p.38). Viewing strategy as an emergent phenomenon that arises out of complex and dispersed corporate processes represents a third, and by far the most mainstream, processual approach. In the face of complexity, uncertainty, and rapid change, attempts at rational top-down planning are viewed as not just unattainable but also undesirable. Mintzberg (1987) (p.73) uses the metaphor of strategy as craft rather than science, involving local recursive processes of understanding in which managers “learn about their organizations and industries through personal touch” rather than through study of “MIS reports and industry analyses”. The image of strategy as a set of assumptions and practices coalescing and emerging from fragmented organizational currents evokes Foucault’s conception of discourse, though this connection has not been put to critical use. Instead, writers on emergent strategy are quick to turn these insights to instrumental purposes, arguing that bottom-up strategic processes are superior because they bring more perspectives and expertise to the task, and improve implementation due to greater buy-in. To achieve the organizational flexibility and adaptability needed in the face of such environments, a number of writers have explored complexity theory, networks, and the organizational learning literature (Brown and Eisenhardt 1999; Eisenhardt 1989; Senge 1990). More than a little sceptism is in order, however, when managers are urged to tune their organizational networks to the ‘edge of chaos’ (Levy 2000). Grassroots strategic processes, as with the other processual approaches, bear some potential for challenging existing hierarchies and increasing levels of participation across an organization (Bourgeois and Brodwin 1984; Westley 1991). CT strives to recover marginalised voices, while Habermas (1984) stressed the importance of participation as a path toward communicative rationality. A critical sensibility, however, needs to be cautious of the political neutrality of participatory processes under management ground-

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rules (Alvesson 1996). For example, advocates of decentralized, emergent strategy often argue for the promulgation of shared values and mission to provide a force for integration. Wrapped up in the discourse of empowerment and non-hierarchical networks, attempts to instill a strong common culture and vision can be interpreted as the promulgation of the particular interests of senior management as the general interest. These efforts at the workplace, layered on top of broader societal ideologies privileging managerial control, are likely to colour the viewpoints that participants bring to the table. Even if participants do perceive their interests to be in conflict with management, they may be silenced by organizational sanctions for expressing dissident views. Senge's work suffers from a similar problem. His concept of free dialogue resonates with Habermas' notion of undistorted communication, but lacks any critical analysis of systematic barriers to such dialogue. Participative approaches to strategic management share the same burden as Total Quality Management, in that they need to demonstrate that they go beyond managerialist efforts to harness local knowledge and commitment (Alvesson 1993; Boje and Winsor 1993; McCabe et al. 1998). Empirical evidence suggests that despite the popular discourse of networks and empowerment, there is no discernable trend towards increased decentralization of strategic decision-making (Ruigrok, Pettigrew, and Peck 1999). Fundamentally, grassroots approaches to strategy revisit the central managerial problematic of tapping the creative energy of workers while suppressing insurgent strategies that might threaten structural change in power relations. Unmasking and Deconstructing Strategy More radical critics of strategy argue that the processual school has not sufficiently disentangled itself from the managerialist orientation of strategy, and look instead toward CT for a more fundamental critique and for its emancipatory promise. A basic limitation of much processual analysis is that little account is taken of how managers come to assume and maintain a monopoly of what has become institutionalized as ‘strategic’ decision-making responsibility. There is minimal concern to explore how managers’ practical reasoning about corporate strategy is conditioned by, and contributes to, the constitution of politico-economic structures that extend well beyond the boundaries of any particular organization. From this perspective, strategy talk is not innocent. It is a powerful rhetorical device. It frames issues in particular ways and augments instrumental reason; it bestows expertise and rewards upon those who are ‘strategists’; and its military connotations reinforces a patriarchal orientation to the organization of work. In doing so, strategy demonstrates managerial rationality and legitimizes the exercise of power. Shrivastava’s (1986) landmark critique analyzed the strategy field using five operational criteria, derived from Giddens (1979), to indicate its ideological nature: the factual underdetermination of action norms; universalisation of sectional interests; denial of conflict and contradiction; normative idealization of sectional goals; and the naturalization of the status quo. Shrivastava concluded that strategic management was undeniably ideological and that strategic discourse helped legitimize existing power structures and resource inequalities. Drawing from Habermas, Shrivastava sought emancipation in the "acquisition of communicative competence by all subjects that allows them to participate in discourse aimed at liberation from constraints on

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interaction" (p. 373). He also called on researchers “to generate less ideologically valueladen and more universal knowledge about strategic management of organizations" (p.374). While Shrivastava’s faith in the possibility of universal, objective knowledge betrays his modernist leanings, more recent critical contributions display a more postmodern sensibility. Abandoning the search for objective truth or for autonomous subjects who could potentially recognize their ‘real’ interests, postmodern critiques are concerned with the constitutive power of strategic discourse. Knights and Morgan (1991) (p.252), for example, see "corporate strategy as a set of discourses and practices which transform managers and employees alike into subjects who secure their sense of purpose and reality by formulating, evaluating and conducting strategy." Managers cannot stand outside of ideology to impose their dominant ideology on unwitting workers, but are also entangled in discursive webs. Strategy constructs a myth of commonality of organizational purpose by positing lofty and unattainable aspirations (Harfield 1998). The invocation of military metaphors brands competitors as ‘enemies’ to be defeated and mobilizes maximum effort from the rank and file who are exhorted to sacrifice individual needs to the greater glory of the corporation. Even while projecting solidarity of purpose and the universality of the sectional interests of senior managers and stockholders, the discourse of strategy legitimates organizational hierarchy with differential influence and rewards. The importance attached to strategy implies that employees who work outside of the strategic core of an organization make a lesser contribution and therefore cannot be expected to participate, even marginally, in decisions for which others are responsible. It also provides a rationale for differentiating the pay and conditions of ‘core’ and ‘peripheral’ employees. According to Stoney (1998) (p. 4): In the strategic management model, responsibility for corporate level decisionmaking rests with a core or strategic elite who are discharged from the day-to-day responsibilities of operational activities, these being devolved to the lowest possible level of control. Undistracted by operational matters and line responsibility, the elite, often an 'executive board' is left free to concentrate on strategic thinking and decision-making. The need to assert the status of an elite group of ‘strategic managers’ is perhaps particularly acute in advanced economies where manual labor is rapidly declining and traditional divisions between task execution and conception are breaking down. Strategic discourse constitutes not only strategists and implementers of strategy, but also “constitutes the problems for which it claims to be a solution” (Knights and Morgan 1991)(p. 255.) In doing so, it contributes toward an instrumental, technocratic orientation in corporate life that emphasizes efficiency and competitiveness over consideration of environmental or social values. Moreover, problems worthy of strategic management are found in widening circles of social and economic life. Stoney (1998) has described the increasing pervasiveness of strategic management in the British public sector under the

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guise of concerns for efficiency and accountability. Although advocates of strategic management in the public sector claim that it professionalises and depoliticises government services, Stoney contends that “it represents a deliberate attempt to change the very nature of local government in a manner which conformed to a specific set of interests: the interests of capital." (p.13). For local authorities competing to attract mobile capital, the language of strategy “instills potential investors with confidence that 'rational' economic strategy can be pursued locally without fear of political and bureaucratic hindrance and without the uncertainty and reversals in policy that used to accompany changes in the in the political complexion of the council" (p.19). Moreover, strategy in the public sector is complicit in promoting a totalitarian ideology in which citizens are transformed into consumers and state officials into a managerial elite: "In this managerial transformation, the traditional public sector themes of collectivism, welfare and civic duty have become unfashionable." (p.19). While critical theory offers considerable insight into the ideological and constitutive role of strategic discourse in reproducing organizational and societal relations of power, it is somewhat limited by the lack of concern with the “truth of strategy” (Knights and Morgan 1991) p.252. Almost all the critical writing on strategy, including the three articles in the July 1998 special issue of the Electronic Journal of Radical Organization Theory, draw primarily from critical theorists of the Frankfurt School and from postmodern scholars to critique strategy as ideology and discourse. While it is generally acknowledged that strategic discourse has effects in broader economic and power relations, making it difficult to disentangle the material and ideological dimensions (Smircich and Stubbart 1985), much of the critical writing implies that “it is not the practices of strategic management which require urgent investigation”, as Booth (1998) writes in the introduction to the EJROT special issue. Indeed, it is easy to be skeptical about the instrumental value of strategy, even on its own terms. Many maxims of strategy appear to be faddish aphorisms which are poor guides for action. We have seen trends toward conglomerate acquisitions in the 1970s followed by admonitions to “stick to your knitting” in the 1980s (Peters and H. 1982). Enthusiasm for elaborate and detailed strategic planning waned in the 1980s as General Electric led the way in dismantling its planning system. Mintzberg (1994) provides anecdotal evidence of the failure of planning, and reviews numerous empirical studies which tried but failed to find a financial payoff from strategic planning. Many simple models, such as the growth-share matrix, have gone through cycles of popularity and disillusionment, as managers and scholars realized their limited usefulness (Seeger 1984). SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis, a cornerstone of the strategic process, is frequently undertaken but rarely applied in the development of strategies (Hill and Westbrook 1997). Nevertheless, the ‘truth’ of strategy does have import of we take seriously the agency of corporate and state actors in protecting economic and political privileges. Strategic analysis could usefully inform appropriate action by progressive social forces concerned with social contests and emancipation, and for more democratic organizational forms engaged in market competition such as co-ops and collectives. The following section

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draws from Gramsci’s work to outline an historical materialist approach to strategy that pays more attention to the political economy of strategic practice. Strategy as power: A historical materialist approach Gramsci’s conception of hegemony provides a point of departure for a critical approach that emphasizes the interaction of material and discursive practices, structures, and strategems in sustaining corporate dominance and legitimacy in the face of challenges from social actors and economic rivals (Fontana 1993; Gramsci 1971; Sassoon 1987). This perspective refocuses attention on the content and goals of strategy and draws attention to the political nature of strategic practice. Corporations practice strategy to improve their market and technological positioning, sustain social legitimacy, discipline labour, and influence government policy. The interrelationships among these actors and among market and non-market goals leads to the conclusion that, in a broad sense, all strategy is political. A historical materialist approach therefore suggests a strategic concept of power. Strategy-as-power operates through the dialectical interplay of structure and agency; power inheres in the specific configurations of economic, ideological, and organizational forces that regulate, stabilize, and constitute social worlds and identities, and which form the terrain for strategic contestation; power is also exercised by agents and organizations attempting to shape these configurations. Gramsci’s perspective on power and ideology addresses some of the theoretical problems related to the treatment of agency and strategy in critical theory and poststucturalism. Critical theorists of the Frankfurt school explain consent to oppressive structures of capitalism in terms of ideological domination. Abercrombie et al. (1980), amongst others, have criticized this “dominant ideology thesis” on the grounds that it accords too little agency to the dominated ‘dupes’, too much intent to the dominant class, and too little modesty to intellectuals who presume to know the ‘real interests’ of others. This concept of ideology is viewed as overly monolithic and functionalist, and forces critical theorists seeking emancipation to turn to intellectuals who, along with ruling elites, stand outside the dominant culture and ideology. Poststructuralist conceptions of power embedded in pervasive discourse are also problematic; if discursive disciplinary power pervades every societal nook and crevice, then agents have little room to resist or evade the constitutive power of discourse. Hall (1986) argues that the Gramscian notion of hegemony finds some viable ground between the structural determination of ideas of crude Marxism and the fluid, endless slippage of meaning in postmodern discourse. Hegemony refers to a historically specific alignment of economic, political, and ideological forces that achieves the coordination of interests of major social groups into a dominant alliance. Hall argues that ideology can be understood as the articulation of meaning, temporarily fixed and loosely coupled to economic and political structures. Securing a relatively stable hegemonic bloc requires material payoffs, political compromises, and the projection of moral and intellectual leadership. Hegemony is never total and complete, however, and dissent persists in the margins; the persistence of plural, overlapping and interpenetrating social and cultural forms opens up theoretical space for agency and resistance (Giddens 1984; Whittington

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1992). The process of liberation is at once fuelled by the suffering and the frustration that it produces, and is enabled by the (restricted) capability of people to question prevailing priorities and institutionalized norms of conduct. Consent in a hegemonic system does not rely entirely on colonization by dominant ideologies, but can be understood, at least in part, as a strategic, contingent compliance, based on a realistic assessment of the balance of forces. This rendition resolves some of the problems associated with ideology as ‘false consciousness’. It is the complex, dynamic, and unstable nature of hegemonic formations that brings richness to a strategic conception of power. Historical blocs rest on insecure foundations of fragmented, contradictory ideologies and uneasy alliances, providing the potential for instability, contestation, and change. Gramsci asked of social structure, "what is this effective reality? Is it something static and immobile, or is it not rather a relation of forces in continuous motion and shift of equilibrium?” (Gramsci 1971) (p. 172). Understanding the relationships between the economic and ideological aspects of this complex system affords opportunities to uncover windows of opportunity and key points of leverage, but this requires careful analysis: "It is the problem of the relations between structure and superstructure which must be accurately posed if the forces which are active in the history of a particular period are to be correctly analyzed and the relations between them determined." (Gramsci 1971) (p. 177). Gramsci outlined two particular forms of strategy commonly evinced in social conflicts. “Passive revolution” described a process of evolutionary, reformist change that, while preserving the essential aspects of social structure, entailed extensive concessions by relatively weak hegemonic groups. The concept of “war of position” employed a military metaphor to suggest how subordinate groups might avoid a futile frontal assault against entrenched adversaries; rather, the war of position constituted a longer term strategy, coordinated across multiple bases of power, to gain influence in the cultural institutions of civil society, develop organizational and economic capacity, and exploit tensions in hegemonic coalitions to win new allies. As in a game of chess, power lies not just in possession of the playing pieces but in their configuration; each set of moves and counter-moves reconfigures the terrain and opens up new avenues for contestation. The strategic significance of discursive politics in the emancipatory process is suggested by the importance Gramsci attached to the institutions of civil society in ideological reproduction. In a famous passage, Gramsci contrasts the relative ease with which the Russian state was overthrown in 1917 with the resilience of west European states: When the State trembled, a sturdy structure of civil society was at once revealed. The State was only an outer ditch, behind which there stood a powerful system of fortresses and earthworks (Gramsci 1971) p.238 From these Gramscian insights, Hall laid the groundwork for the field of cultural studies and Freire (1972) developed the ideas of radical pedagogy. While both fields recognize the centrality of popular representation as an arena of struggle, Freire’s work, in particular, draws attention to the strategic potential of “organic intellectuals” who can work with subordinate social groups to develop counter-hegemonic consciousness and

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autonomous organizational structures. In using the term ‘organic’, Gramsci signaled that these intellectuals were not an elite vanguard immune to dominant ideologies who could lead the brainwashed out of their oppression; rather, these intellectuals were closely connected to their associated social class and, in a dialectical relationship, would serve as catalysts for self-education, to “give [the class] homogeneity and an awareness of its own function not only in the economic but also in the social and political fields” (Gramsci 1971) (p. 5). A critical ‘strategy of resistance’ can be found in the social movement theory literature, which has examined the conditions under which social movements emerge and analyzed successful strategies for social change. By locating agents of change outside of dominant corporate organizational forms, social movement theory offers a potentially more radical approach to resistance and change than progressive forms of ‘participative strategy’, with their attendant dangers of being co-opted as pseudo-participation. McAdam, McCarthy, and Zald (1996) argue that effective social movements need to exploit historically specific political opportunities, develop organizational and material resources, and frame issues discursively in ways which challenge hegemonic thinking yet resonate sufficiently with extant cultural forms to mobilize broad support. Ganz, (2000), for example, argues that the UFW succeeded in organizing California farmworkers where the AFL-CIO failed due to strategic capacity, not just because of a favorable opportunity structure or the possession of adequate resources. Strategic capacity in this case study comprised a diverse, well-networked leadership, and an organizational form that encouraged accountability, diverse perspectives, and explicit strategy-making. Cress (2000), in a study of fifteen homeless social movement organizations, found that outcomes were influenced by organizational, tactical, political, and framing variables. The coordination of strategy across multiple bases of power indicates a largely unacknowledged intellectual debt to the Gramscian concept of hegemony rather than CT’s emphasis on communication and ideology critique. A historical materialist approach to corporate strategy suggests the broadly political nature of corporate strategy, even of traditional market-based strategies directed toward economic objectives. As Porter’s Five Forces analysis indicates, the primary goal of strategy is to increase a firm’s bargaining leverage over its competitors, current and future, suppliers, and customers. The result of successful strategic practice is the weakening of competition and the concentration of economic power, an outcome which is hardly possible to separate from political and ideological power. Of course, companies also pursue overtly political strategies, in their efforts to influence the regulatory environment. Much of the limited literature that does exist on corporate political strategy, however, adopts a managerialist rather than a critical orientation (Hillman and Hitt 1999; Mahon 1989; Schuler 1996). Pfeffer (1978), for example, examined corporate strategies to secure advantage and reduce external dependency through control over information flows, influence over external actors, and engagement in coalition politics. Uncovering the political dimensions of apparently neutral strategic practices is, of course, a key concern of critical theory. Here we push further, and argue that the traditional distinction between conventional (market) and political (non-market) strategy is untenable. It is not just that firms need to coordinate market and non-market strategies to achieve economic

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goals (Baron 1997). More fundamentally, markets are embedded in broader social and political structures (Callon 1998; Granovetter 1985) and the articulation of markets with ideological and political structures and processes constitute “circuits of power”, to use Clegg’s (1989) formulation. Shrivastiva (1986) describes the "continuing political battles that proactively shape the structure of competition" (p.371), and emphasizes the need to analyze “the social and material conditions within which industry production is organized, the linkages of economic production with the social and cultural elements of life, the political and regulatory context of economic production, and the influence of production and firm strategies on the industry’s economic, ecological, and social environments” (p.374). However, sociologists and political scientists have generally done a much better job than critical management scholars in examining the macro-political nature of corporate strategy (Domhoff 1990; Ferguson 1995). While corporate political strategy literature has focused on the policy environment, a critical perspective can highlight the political nature of management’s relationship with other contestants for corporate influence. Critical theory can provide a critique of ‘stakeholder theory’ as a discourse that presumes the legitimacy of senior managers as the benevolent monarchs balancing the competing claims and contributions of corporate subjects. A historical materialist approach encourages attention to the multi-dimensional strategies that sustain management in a privileged position relative to these stakeholders. Labor process debates, for example, have discussed the various mechanisms for controlling labor, from technical control rooted in the production process (Braverman 1974), bureaucratic control (Edwards 1979), to the “concertive” control of total quality management and teamwork (Barker 1993; Boje and Winsor 1993) These strategies, combined with the increasing use of contingent workers and offshore sourcing, have material dimensions, rooted in production techniques, methods of surveillance, and disciplinary techniques (Smith and Thompson 1998). Recent contributions from critical management studies have also emphasized the ideological, constitutive nature of management tools such as TQM and reengineering (Ezzamel and Willmott 1998; Knights and McCabe 1997; Knights and McCabe 1998). Management is also engaged in contests for power with external owners of capital. Davis (1994) (p. 141) notes that "where corporate managers once faced a dispersed and relatively powerless set of stockholders, they now confront an increasingly organized social movement of fund trustees and advisors that share a common ideology of shareholder activism as well as the power to vote a substantial chunk of the largest firms' equity….the allocation of corporate control thus depends on political struggles among management, capital, and various governmental bodies." The political implications of globalization strategies lie in the reconfiguration of political, economic, and ideological structures. The emerging alliance of multinational corporations, consultancies and professional service firms, academics, and governmental agencies has been described in Gramscian terms as the ascendancy of a ‘transnational historical bloc’ (Cox 1987; Robinson 1996). Stephen Gill (1995) refers to the dominant ideology of this bloc as “disciplinary neoliberalism”, which incorporates a faith in market forces, privatization, and a reliance on private rather than public initiative and responsibility, leading to unfettered international trade and investment and minimal

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provision of social services. Gill (1995:411) notes that the concept of historical bloc is related to Foucault’s “discursive formation”, but with a linkage to macro-structures: "disciplinary neoliberalism is a concrete form of structural and behavioural power; it combines the structural power of capital with 'capillary power' and 'panopticism'". Sklair (1997; 1998) explicitly points to the agency and strategic function of transnational industry groupings such as the Trans-Atlantic Business Dialogue and the European Roundtable of Industrialists in creating the various practices and discourses required to support the emerging bloc. The state is also complicit in this massive project to restructure global markets and governance. As Hyman (1987) (p. 49-50) has argued, the state serves as the guardian of the overall process of accumulation and intervenes strategically to protect the legitimacy and profitability of private capital. While critical theory emphasizes the need to critique the discourse of strategy, a historical materialist perspective focuses on the strategic deployment of discourse, articulated with other dimensions of power. Critical management scholars have paid surprisingly little attention to corporate control over the means of ideological reproduction, particularly the mass media, advertising and public relations companies. The increasing concentration of media ownership combined with interlocking ownership and directorships with other economic sectors suggests the importance of comprehending the political economy of discursive production (Bagdikian 1997; Herman and Chomsky 1988). Ewen’s (1988) exploration of the rise of sophisticated marketing and imagery in the 1950s and 1960s suggests that advertising should be seen not just as a narrow marketing tool, but rather as a broader political effort to instill consumerist values in the institutions of civil society; indeed, it was critical to the constitution of a new middle class with an identity centered on consumption rather than production. Rose (1993) argues that through the acquisition of combined lobbying/PR firms by large advertising agencies in the United States, “a fuller institutional and utilitarian conceptual order was made possible. This is called ‘integrated marketing’. Now advertising messages can be coupled to public relations campaigns and with lobbying efforts all directed out of the same firm with enormous resources.” (p.22). The integration of economic and cultural production is epitomized in the Disney-ABC empire, which comprises twenty television stations, twenty-one radio stations, three music studios, the ABC television network, five motion picture studios, cable channels, book publishing, and theme parks. The town of Celebration, Florida, is a planned community of more than 2000 people constructed and run by Disney, replete with schools and a 109-acre office park. As Michael Eisner, Disney’s CEO and chairman aptly puts it, “The Disney stores promote the consumer products which promote the theme parks, which promote the TV shows. The TV shows promote the company.” (Cited in Giroux (1999) , p.1). Despite his critique of Disney’s commodification of culture, Giroux is alert to the dangers of instrumentalist renditions of ideology and the ascription of ‘real interests’: I don’t suggest that Disney is engaged in a conspiracy to undermine American youth or democracy around the world. Nor do I suggest that Disney is part of an evil empire incapable of providing joy and pleasure to the millions of kids and

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adults who visit its theme parks, watch its videos and movies, and buy products from its toy stores. On the contrary, … rather than being a monolithic empire, the Disney culture offers potentially subversive moments and pleasures in a range of contradictory and complex experiences” (pp.4-5). The Gramscian concept of hegemony can find purchase at the level of strategic contests within specific issue arenas. Levy and Egan (1998), for example, have examined the response of the fossil fuel industry to the prospect of climate change. Mandatory restrictions on emissions of greenhouse gases, radical technological change, and renewed environmental activism threaten oil and automobile companies with a loss of markets, more stringent regulation, and a loss of autonomy and legitimacy. The case demonstrates how companies responded to these threats with coordinated strategies in the economic, organizational, and discursive realms. US-based companies in the fossil fuel sector organized a strong issue-specific industry association, challenged the scientific need for action, pointed to the high economic costs of controls, and formed alliances with unions, minorities, and groups of retired people. They donated substantial amounts in political campaign contributions and have invested in shoring up markets for their traditional products. The industry has not been entirely successful in deflecting demands for change, and has been forced into a strategy of “passive revolution”, in Gramsci’s terms, in which a weakened historical bloc is forced into substantial accommodations with social pressures while still maintaining its hegemonic position. The industry has been forced to accept the scientific basis for emission controls, is investing substantial amounts in lowemission technologies, and has engaged in widespread PR portray itself and its products as green. In return, it has won broad acceptance for a flexible, market-based implementation system that preserves corporate autonomy and legitimacy. Mainstream environmental organizations and government agencies have signed on to this accommodation, offering companies renewed credibility in shaping the emerging marketbased climate regime. The construction and maintenance of hegemony is an ongoing political project. Marchand (1998) describes in rich detail the rise of corporate public relations and philanthropy in the first two decades of the 20th century as explicit strategies to create a “corporate soul”, in the face of public mistrust of the new corporations of unprecedented scale created during the merger wave of 1895 to 1904 in the U.S. The economic crisis of the mid-1930s was followed in the U.S. by the New Deal, perceived as another major threat to corporate autonomy and stimulating a new wave of public relations geared toward assuring the public of the virtues of capitalism and the dangers of state intervention. The challenges of the 1960s triggered accommodationist measures such as the establishment of the U.S. Environmental Protection Agency, but also generated at least temporary organizational unity to disparate industrial sectors and a coherent strategy to prevent the further expansion of state regulatory agencies, leading to the defeat of a proposal to establish a Consumer Protection Agency (Akard 1992). More recently, companies have been deploying the discourse of social responsibility, stewardship, stakeholder management, and corporate citizenship in their efforts to shore up legitimacy (Levy 1997; Luke 1995). While some critical theorists might view these discursive moves as ideological distortion masking the real relations of power, the Gramscian

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perspective interprets them as compromises that shift the terrain of contestation and create new opportunities, for example, by building external expectations of concomitant practices, and by legitimating broader managerial consideration of social and environmental goals. The difference between succumbing to ideological co-optation and an emancipatory “war of position” is one of long-term strategy.

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