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Methodological Individualism and the Organizational Capabilities Approach

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AbstractDuring the last decade, strategy scholars have increasingly converged on organizationalcapabilities 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 thephilosophy of social science, particularly the debate between methodological individualismand collectivism. We argue that a number of explanatory anomalies as well as the apparentlack of progress in capabilities-based work are partly due to much of capabilities-basedwork being based on collectivist notions that sidestep critical individual-levelconsiderations, including individual action and heterogeneity. In this note we do not denyor reject the notion of routines or capabilities per se, but rather call for an increasedemphasis on how these collective structures originate and change as a result of individualactions.Key words: Organizational capabilities, methodological individualism, philosophy ofsocial science

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Teppo Felin, Nicolai J. Foss

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