Does history matter in strategy? The possibilities and problems of counterfactual analysis

Does history matter in strategy? The lack of attention given to historical perspectives in the mainstream literature suggests that it does not. Recently, however, authors have argued that historical forces do affect the strategic management of organizations, and have highlighted their importance through the concept of “path dependence”. I review the literature on path dependence and argue that a conception of the complexities of historical understanding is required in a dynamic understanding of organizations. To highlight these complexities, I review an important theme in twentieth century historiography: the possibilities and problems presented by counterfactual analysis. Despite some serious objections to counterfactual thinking, this method may yield benefits for both managers and theorists. I conclude that to do justice to the importance of history in organizations, we must follow Collingwood in engaging, not with the question “Shall I be a historian or not?”, but rather with the question, “How good a historian shall I be?”.