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30: Theory-Driven Strategic Management Decisions (Alfonso Gambardella)

Updated: 5 days ago

Prerecorded session

Live session

Required readings

Camuffo, A., Gambardella, A. and Pignataro, A., 2023. Framing Strategic Decisions in the Digital World. Strategic Management Review, 4 (2), 127-160.

Camuffo, A., Gambardella, A. and Pignataro, A., 2024. Theory-Driven Strategic Management Decisions. CEPR DP 17664v3.

Discussion questions

1 - The CEPR DP provides a framework for making strategic decisions under uncertainty based on causal logic moving from the choice of a state space (that is, a problem) and assumptions about the relations among attributes in the state space:

  • But where does the choice of the problem or assumptions come from? This is an inherent act of creativity – how and why can it be a source of competitive advantage?

2- An important limitation of the Bayesian logic is that it cannot update events that have zero probability – that is, events that agents are unaware of at the moment of the decision. Recent developments suggest that this can take place in two alternative ways:

  • Agents recognize that there could be states that they are not aware of and assign a probability that they occur. Then, if these events occur, they do not change the probability distribution across known and unknown states (Reverse Baysianism)

  • If agents observe events that they were not aware of, they change radically the entire state space and probabilities. When and why do we observe one vis-à-vis the other?

3- How can we test these theories (RCTs? Simulated experiments? Secondary data?)

Additional resources

Additional materials

Please also give a look at the following website: where you can find

  • several simulations of famous strategic management decisions under uncertainty using the framework of the CEPR DP. You are welcome to play the simulations!

  • a non-technical video summarizing the CEPR DP

  • a technical video summarizing the CEPR DP

  • a video that shows how to play the simulations

Group members

Faculty advisors

  • TBD


  • TBD

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