The Critical Role of Managers in Shaping Strategy

Strategic management has long been dominated by theories that overlook the critical role of managers in driving firm success.

However, a recent paper titled “Bringing managers and management back into strategy: Interfaces and dynamic managerial capabilities,” by Nicolai J. Foss and Ambra Mazzelli, highlights the importance of bringing managers back into the forefront of strategic thinking, with a particular focus on the dynamic social interactions between managers at different organizational levels.

This renewed emphasis sheds light on the intricate mechanisms through which managers shape firm performance, particularly through their ability to influence and respond to both internal and external factors.

The Historical Context

In the early years of strategic management as a discipline, managers played a central role in shaping strategy. Foundational figures such as Edith Penrose (1959) and Alfred Chandler (1962) emphasized the importance of top management in guiding firms toward growth and adaptation. Penrose’s work on firm growth posited that managerial decisions play a pivotal role in unlocking the potential of organizational resources. Similarly, Chandler’s historical accounts of major U.S. corporations illustrated how top managers led strategic shifts that transformed industries.

However, as strategic management evolved into a more formal academic discipline, the role of managers diminished. Influential frameworks like Michael Porter’s Five Forces and the Resource-Based View (RBV) of the firm, while offering valuable tools for understanding competitive dynamics, largely left out the role of individual managerial actions. In these frameworks, firm success was seen as a result of market forces or resource endowments rather than the actions of managers within the firm.

Bringing Managers Back into Focus

In their paper, Foss and Mazzelli argue that the role of managers has been too narrowly focused on top executives like CEOs, neglecting the interactions between managers at different levels within organizations. They propose that understanding the “interfaces” between top management and other levels of the organizational hierarchy is crucial to explaining how firms create and sustain value.

These interfaces are points of interaction where managers exchange information, make decisions, and influence one another’s behavior. The paper emphasizes that these interactions are not just top-down directives from senior leaders but involve a more dynamic and reciprocal exchange. Managers at different levels contribute to strategy formulation, adjustment, and implementation through social influence, coalition-building, and even informal negotiations within the firm.

Microfoundations and Dynamic Capabilities

The authors draw on the concept of “microfoundations” to explain how individual managerial actions aggregate into broader firm-level outcomes. Microfoundations focus on the behaviors, capabilities, and interactions of individuals within the firm, suggesting that firm performance is not just shaped by external market forces or internal resources, but by how managers at various levels act and collaborate.

At the core of this view is the idea of dynamic managerial capabilities. This refers to a manager’s ability to sense opportunities, seize them, and reconfigure resources to maintain or enhance competitive advantage. Managers must be adaptable, not only reacting to changes but actively shaping the environment through strategic decision-making.

For example, the famous case of Intel’s shift from memory chips to processors illustrates how middle managers can drive strategic change. While top management initially resisted the shift, middle managers leveraged their knowledge and influence to allocate resources toward processors, which eventually led to Intel’s dominance in that market. This case highlights the importance of interactions across managerial levels in shaping strategy.

Social Mechanisms at Interfaces

Foss and Mazzelli introduce several social mechanisms through which managers influence firm outcomes at these interfaces. These mechanisms include:

• Sensemaking and Sensegiving: Managers help employees and other stakeholders make sense of complex situations and shape their understanding through narrative and communication.
• Coalition Building: Managers form alliances within the organization to support strategic initiatives, especially in uncertain environments where buy-in from multiple stakeholders is crucial.
• Conflict Resolution: Managing disagreements within the organization is essential for ensuring that strategic changes are implemented smoothly. Without effective conflict resolution, firms risk fragmented efforts and poor execution.

The authors also emphasize that these mechanisms are not solely downward, where top managers impose their will on subordinates. There is also significant upward influence, where middle and lower-level managers can shape the decisions of senior leaders by presenting new ideas, highlighting risks, or offering alternative solutions.

Implications for Research and Practice

The paper advocates for a more nuanced approach to studying strategic management, one that incorporates the interactions between managers at all levels of the organization. By understanding these interfaces, researchers can gain deeper insights into how firms adapt to changing environments, capitalize on opportunities, and maintain a competitive edge.

For practitioners, this perspective underscores the importance of fostering open communication and collaboration across different managerial levels. It suggests that firms can enhance their strategic agility by empowering managers at all levels to contribute to strategic decision-making and by cultivating the social mechanisms that enable effective collaboration.

Conclusion

The return to a focus on managers in strategic management is not just a theoretical shift but a practical necessity. As firms face increasingly complex and dynamic environments, the ability to leverage managerial capabilities across the organization will be key to sustaining competitive advantage. By understanding and utilizing the social mechanisms at the interfaces of managerial interaction, firms can better navigate challenges and seize opportunities in today’s fast-paced business world.

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Reference:

Nicolai J. Foss, Ambra Mazzelli, “Bringing managers and management back into strategy: Interfaces and dynamic managerial capabilities”, Journal of Business Research, Volume 186, 2025, 114947, ISSN 0148-2963, https://doi.org/10.1016/j.jbusres.2024.114947. (https://www.sciencedirect.com/science/article/pii/S014829632400451X)

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