Methodological Individualism and the Organizational Capabilities Approach

During the last decade, strategy scholars have increasingly converged on organizational capabilities as a key construct in strategy research. We explicate some of the underlying, unstated assumptions of current capabilities-based work by drawing on seminal work in the philosophy of social science, particularly the debate between methodological individualism and collectivism. We argue that a number of explanatory anomalies as well as the apparent lack of progress in capabilities-based work are partly due to much of capabilities-based work being based on collectivist notions that sidestep critical individual-level considerations, including individual action and heterogeneity. In this note we do not deny or reject the notion of routines or capabilities per se, but rather call for an increased emphasis on how these collective structures originate and change as a result of individual actions.