Strategic Management Theory in a Post‐Pandemic and Non‐Ergodic World

• DOI: http://doi.org/10.1111/joms.12646
• Author: Jean‐Luc Arregle,R. Michael Holmes,Michael A. Hitt
• Date: 01 January 2021
• Published date: 01 January 2021

© 2020 Society for the Advancement of Management Studies and John Wiley & Sons, Ltd.

Strategic Management Theory in a Post-Pandemic and

Non-Ergodic World

Michael A. Hitta,*, Jean-Luc Arregleb and

R. Michael Holmes Jr.c,d

a Texas A&M University; b EM-Lyon; c Florida State University; d University of Johannesburg

Keywords: agency theory, discontinuous change, pandemic, resourc-based theory, resource

orchestration, stakeholder theory, supra-dynamic managerial capabilities

From time to time, organizational environments undergo cataclysmic upheavals – changes so sudden and

extensive that they alter the trajectories of entire industries, overwhelm the adaptive capacities of resilient

organizations, and surpass the comprehension of seasoned managers. (Meyer et al., 1990, p. 93)

This quote, written 30 years ago, describes the pandemic environment in which the

world exists today. As Meyer et al. (1990) explained, such quantum discontinuous changes

require entrepreneurial responses. In the ongoing Covid-19 pandemic, firms must devise

strategies to deal with short-term discontinuities and significant uncertainty to survive.

After the pandemic eases, longer-term strategic changes may be needed to navigate the

competitive landscape arising in the ‘New Normal’ which has resulted from technolog-

ical, socio-political, and institutional changes (Ahlstrom et al., 2020) that resemble the

causes of environmental jolts explained by Meyer et al. (1990). This New Normal is

unlikely to be a static equilibrium, because the pandemic shock has triggered another

unexpected dynamic. As Nobel Laureate Douglass North (1999) explained, we now exist

in a non-ergodic world in which the new equilibrium after major disruptions continues

to change thereafter, similar to dynamic equilibria in open systems. Thus, firms need new

and more flexible strategies to achieve what North described as adaptive efficiency. While

it is unclear which changes caused by the pandemic will persist, it seems evident that

certain aspects of the business environment will change with the current crisis serving

as a tipping point. Hence, this new environment (during the pandemic and thereafter)

begs the question ‘How does strategic management theory help us understand how firms

Journal of Man agement Studi es 58:1 January 2021

doi:10. 1111/j om s .12 64 6

Address for reprints: Michael A. Hitt, Texas A&M University, College Station, TX, USA (mhitt@mays.tamu.

edu).

[Correction added on 26th October 2020, after first online publication: the author name has been updated

from R. Michael Holmes to R. Michael Holmes Jr.]