The interdependence imperative: business strategy, complementarities, and economic policy

Abstract

An enduring idea in economics and management sciences is that successful business strategies exploit complementarities across management practices within a firm. From this complementarity perspective, the success of business strategy requires utilizing a variety of interdependencies across management practices. Navigating large arrays of possible interdependencies implies that strategic decision-making is often conducted under high complexity and uncertainty. This paper provides an introduction to the conceptual foundations of complementarities in business strategy, and its implications for strategic decision-making and managerial learning. Against this backdrop, I outline issues of measurement and data collection for strategy practices, drawing on recent measurement efforts by academic researchers as well as national statistical agencies. The last part of the paper discusses how increased large-scale data collection on firm activity complementarities and strategy practices can inform a variety of policy areas, such as antitrust policy and merger review, industrial and innovation policy, tax policy, and public–private partnerships.