Business and public policy: Competing in the political marketplace

Strategic management is about organizational efforts to discover and exploit value-creating opportunities. At any point in time opportunities differ across geographic space. In different locales organizations operate within environments comprised of what Nobel Laureate Douglas North has described as formal and informal institutions (North, 1994, 1990). Formal institutions include laws, rules, policies and their actual enforcement, while informal institutions are the norms, values and mental models of the constituents who make up a country or political region (North, 1994, 1990). For any particular organization, the activities of the other organizations, ranging from competitors and suppliers to political parties and interest groups, operating in the same environment also affect the existing opportunities. Numerous strategy researchers examine the fit between the organization and the external environment (Nohria and Ghoshal, 1994; Venkatraman, 1989). In rapidly changing environments, however, opportunities (and threats) are created on an ongoing basis. Thus the static concept of firm fit is not as useful as the dynamic concept of the firm's frequent actions to improve competitive position in anticipation and/or reaction to changes in the environment (Ferrier, Smith, and Grimm, 1999; Smith, Grimm, and Gannon, 1992). In dynamic environments, opportunities (and threats) evolve from the interaction of organizations with each other and with their institutional environment.