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Optimal Strategy and Business Models: A Control Theory Approach

Publication: Research - peer-reviewJournal article

DOI

This study picks up on earlier suggestions that control theory may further the study of strategy. Strategy can be formally interpreted as an idealized path optimizing heterogeneous resource deployment to produce maximum financial gain. Using standard matrix methods to describe the firm Hamiltonian, it is possible to formalize useful notions of a business model, resources, and competitive advantage. The business model that underpins strategy may be seen as a set of constraints on resources that can be interpreted as controls in optimal control theory. Strategy then might be considered to be the control variable of firm path, suggesting in turn that the firm's business model is the codification of the application of investment resources used to control the strategic path of value realization.

Publication information

Original languageEnglish
JournalManagerial and Decision Economics
Volume37
Issue number8
Pages (from-to)515–529
Number of pages15
ISSN0143-6570
DOIs
StatePublished - Dec 2016

ID: 43771062