Entrepreneurship and Knightian Uncertainty

Unlike some other academic fields, the study of business has always had the challenging task of striking a balance between theory and practice. How can theoretical concepts aid business practitioners in real-world situations? And how can business academics expand their understanding of theory through that real-world application?  

Jay Barney is a professor of strategic management at the University of Utah David Eccles School of Business. His work, including numerous books, journal articles, and textbooks, has shaped the field of strategy and entrepreneurship for decades. His most recent book is The Secret of Culture Change: How to Build Authentic Stories That Transform Your Organization.

Jay and Greg discuss the evolving role of academia in the business world, the historical and current perceptions of business education, and the various theories that underpin strategic management. Barney delves into resource-based theory, the importance of organizational culture, and the intersection of strategy and practical business applications. 

*unSILOed Podcast is produced by University FM.*

Episode Quotes:

What really makes a strategy hard to imitate

44:56: You're going to have a strategy that's likely to be a source of sustained advantage; you have to figure out how that leverages resources, or capabilities that are socially complex. Why? Because that's harder to imitate, stuff that's developed over long periods of time. That's path dependent. Why? Because that's hard to imitate, or stuff that's costly and ambiguous. Well, you don't know how to develop those capabilities because that makes it hard to imitate. And I can make some empirical predictions that socially complex resources and capabilities should last longer. As long as their value is retained, they should last longer than non–socially complex.

Why entrepreneurship is so hard to theorize

39:22: Entrepreneurship, one reason that it's under-theorized as a field is because the theory is really hard, because many of the assumptions and attributes that make it possible to theorize in non-entrepreneurial settings do not apply in entrepreneurial settings. And so then we're stuck with this Knightian uncertainty and difficulties associated with that.

How strategy escapes the tautology problem

46:25: I think that we can avoid the tautology problem by identifying the characteristics that resources and capabilities need to have in order to be sources of sustained advantage. And then, then empirical predictions come out of that. But they do not come out of the tautology, but by definition.

Show Links:

Recommended Resources:

• Jay Barney “The Lessons They Didn’t Teach You in Business School” | unSILOed 
• Modigliani-Miller Theorem
• Hawthorne Effect
• Nicholas Bloom
• Michael Porter
• David Teece
• William H. Meckling
• Michael C. Jensen
• Jensen and Meckling article 76 JFE

Guest Profile:

• Faculty Profile at University of Utah
• Professional Profile on LinkedIn
• Website

Guest Work:

• The Secret of Culture Change: How to Build Authentic Stories That Transform Your Organization
• What I Didn't Learn in Business School: How Strategy Works in the Real World
• Organizational Economics: Toward a New Paradigm for Understanding and Studying Organizations
• Gaining and Sustaining Competitive Advantage
• Strategic Management and Competitive Advantage, Concepts: Concepts and Cases
• Jay Barney | Google Scholar

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