theory-based-view

Theory-Based View of Strategy

Confidence 0.72 · 2 sources · last confirmed 2026-06-08

The theory-based view (TBV) of strategy is Teppo Felin and Todd Zenger’s (2009, 2017) framing of strategy formulation as the construction, communication, and progressive validation of a firm-specific theory of value. The executive’s primary job is not to scan the environment for opportunities (the resource-based view’s stance) nor to position against five forces (Porter’s stance), but to articulate a falsifiable theory about how the firm creates value, and then build the coalition that turns that theory into reality.

Working definition (Felin & Zenger 2009, 2017, as cited in Carroll & Sørensen 2024)

A theory-based strategy answers four canonical questions:

1. What is your firm’s theory of value? — A causal account of why customers will pay, why the firm can supply at lower cost than alternatives, and why the value created is defensible. Not a list of activities — a causal proposition.
2. Is your theory novel, simple, elegant? — Novelty discriminates from competitors’ theories; simplicity is what lets the organisation hold the theory in working memory; elegance is the test of whether the theory generalises beyond the case that generated it.
3. Is it falsifiable / generalizable / generative? — Falsifiability is the Popper test: what observation would refute this theory? Generalisability is the transfer test: does the theory predict beyond the case that generated it? Generativity is the output test: does the theory produce new strategic moves the executive wouldn’t have seen without it?
4. Who must you convince for your theory to be realized? — Strategy is a coalition-building task, not an analytic exercise. Naming the must-convince audience is part of theory construction.

The wiki currently anchors TBV via second-hand citation in Carroll & Sørensen 2024. The two primary sources — Felin & Zenger 2009 Strategy, Theory, and Practice and Felin & Zenger 2017 The Theory-Based View — are deferred-ingest targets (see Open questions).

Bridge: TBV in the wiki’s strategy network

TBV sits at a precise falsifiability layer below the wiki’s other strategy lenses. The cross-walk:

• [[strategy|Martin’s theory of winning]] (Martin 2022) — Martin’s coherent, doable, translatable tests are TBV’s novel / simple / elegant tests in less rigorous vocabulary. TBV adds the falsifiability criterion explicitly; Martin implies it through “what would have to be true”. The two converge on the same construct from different traditions (Martin’s practitioner-strategy literature; Felin & Zenger’s academic-organisational-theory literature).
• [[infinite-game|Sinek’s Just Cause]] (Sinek 2018) — TBV is the logical hygiene applied to the Just Cause. A Just Cause that fails TBV’s falsifiability test is rhetorical, not strategic; a Just Cause that passes is a theory of why this institution should perpetuate itself.
• Oberholzer-Gee’s value stick (Oberholzer-Gee 2022) — The value stick is the measurement instrument for TBV’s theory of value. WTP/WTS asks did the theory in fact create value?; TBV asks what theory predicts the value creation in the first place?
• disciplined analogy (Carroll & Sørensen 2024) — Disciplined analogy is the practical methodology for TBV theory discovery: analogies surface candidate causal mechanisms, name what is unique about the firm, and communicate the theory to the must-convince audience. The Tripadvisor → Glassdoor worked example in the analogical-reasoning page is a TBV theory-discovery exercise in disguise.
• strategic-foresight — Foresight’s scenarios are inputs to TBV’s what would have to be true logic; TBV’s theory is the synthesis foresight scenarios cannot supply on their own.

Why TBV matters now

Three reasons the wiki holds TBV as a load-bearing concept in 2026:

• The AI-strategy debate is full of theories without falsifiability. “AI is the new electricity”, “compute is the new oil”, “agents are the new SaaS” — all generative, none yet falsifiable in the TBV sense. The TBV discipline forces the question what observation would refute this? and that question is doing real work across the wiki’s enterprise-ai-adoption cluster.
• Coalition-building is back in vogue. TBV’s question 4 (who must you convince?) anticipates the Carrier 2026 “our ability to adopt and absorb the technology” framing — the binding constraint is organisational, not analytic.
• Disciplined analogy is the practical entry point. Most working executives do not start by writing falsifiable theories; they start by saying “we’re the X of Y.” TBV + disciplined analogy is the bridge from the colloquial pattern to the rigorous construct.

AI and the theory-based view (Csaszar, Ketkar & Kim 2024)

The wiki’s second TBV source — and the first to test the framework against AI — is Csaszar, Ketkar & Kim (2024), published in the Strategy Science Special Issue on the Theory-Based View. It argues AI both supports and challenges the TBV, which sharpens what the framework actually claims:

• The challenge to TBV (three tensions): (1) LLMs are next-word predictors, which may limit their capacity for forward-looking causal theory creation — the heart of Felin & Zenger’s TBV (citing Zellweger & Zenger 2023); (2) because LLMs rely on past data, they risk reproducing conventional, widely-held strategies, reducing the novelty/uniqueness a theory-based advantage depends on (Felin & Holweg 2024); (3) LLM generality may miss the firm-specific context a bespoke theory of value requires. In TBV terms: LLMs are strong at retrieving existing theories but structurally weak at the generative, falsifiable, firm-unique theorising the TBV prizes.
• The support for TBV: AI can expand the reach of theory-based strategising — e.g. virtual strategy simulations that test “what would have to be true” at scale, and AI-augmented versions of classic tools (Porter’s Five Forces, Devil’s Advocate) that surface candidate causal mechanisms faster.
• Why this matters for the concept: it operationalises the “AI-strategy debate is full of theories without falsifiability” point above. If LLMs default to conventional strategies, the TBV’s falsifiability-and-novelty discipline becomes more valuable, not less — it is the test that distinguishes a genuine firm-specific theory of value from an AI-generated consensus strategy everyone else can also generate (the paradox of access applied to strategy theory). See strategy for the companion competitive-advantage argument (Ricardian → Schumpeterian → erased).

Debates and supersession

• Does AI strengthen or weaken the TBV’s relevance? Csaszar, Ketkar & Kim (2024) argue both directions hold at once: LLMs can augment theory-based strategising (faster candidate-mechanism surfacing; virtual strategy simulations) yet are structurally weak at the generative, falsifiable, firm-unique theorising the TBV prizes (next-word prediction; past-data conventionalism). The wiki’s reading: AI raises the value of the TBV discipline precisely because LLMs default to consensus strategies — falsifiability-and-novelty is the test that separates a genuine firm-specific theory of value from an AI-generatable one. No supersession — the two sources are complementary (Carroll & Sørensen supply the methodology via disciplined analogy; Csaszar et al. supply the AI-era stress test).
• Second-hand vs primary anchoring. The TBV is still anchored partly second-hand (via Carroll & Sørensen 2024); the Felin & Zenger 2009/2017 primaries remain deferred-ingest targets (see Open questions). Confidence (0.72) reflects this — a peer-reviewed second source (Csaszar et al.) raised it from 0.60, but the foundational primaries are not yet ingested.

Related concepts

• strategy — TBV is the falsifiability discipline applied to Martin’s theory of winning.
• analogical-reasoning — disciplined analogy is the practical methodology for TBV theory-discovery.
• infinite-game — TBV’s criteria are the logical hygiene for Sinek’s Just Cause.
• strategic-foresight — foresight scenarios are inputs to TBV’s what would have to be true logic.

Open questions

• Felin & Zenger 2009 Strategy, Theory, and Practice primary source — deferred-ingest (Phase B4 in the strategy-gap remediation plan). Landing would lift source_count to 2 and confidence ~0.60 → ~0.70; promote Teppo Felin to an entity page (alongside the second source under the §Author-entity-promotion rule).
• Felin & Zenger 2017 The Theory-Based View primary source — same deferred-ingest tier (Phase B4). Landing alongside 2009 would promote both Felin and Zenger to entity pages and lift source_count to 3, confidence ~0.80.
• Gavetti & Rivkin (2005, 2014) on analogical strategy — already flagged on analogical-reasoning as a deferred-ingest deepening target. Their work is the upstream theoretical companion to Carroll & Sørensen’s tooling.
• Empirical anchoring is thin. TBV is a methodological claim about how strategy work should be structured, not an empirical claim about what successful firms do. A peer-reviewed empirical study of firms with explicit falsifiable theories of value vs firms without would strengthen the page substantially; no candidate in the wiki yet.