Strategic Evolution in Highly Complex Realities: Corporate Level Strategy in the Situation of a Merger

Abstract

Complex realities are a tremendous challenge for firms, internally as well as externally. Due to a reductionist tradition of thinking and modeling, these complexities are underestimated in strategy theory. In this article, we claim that modern evolutionary theories have an elaborate understanding of complex adaptive systems and are therefore able to provide new building blocks to a more realistic strategy paradigm that helps to understand and explain a firm’s strategic behavior in its highly complex competitive and societal context. In the first part of this paper, we develop three general principles of complexity on the grounds of modern biological evolutionary theory. These principles concern the three forms of complexity, that is hierarchical complexity, functional complexity, and layer complexity. In the second part of this article, these principles are applied to corporate- level strategy as illustrated by a merger situation. Phenomena as complex as mergers, especially mega-mergers, offer so many possible dimensions of causalities that a rich frame of thinking such as evolutionary theory is essential for a comprehensive understanding of a real-life situation. This evolutionary analysis of a merger leads to a deeper understanding of the nature of corporate strategy in complex realities and confirms the analytical power of frameworks of strategic thinking based on complexity theory.