Frank Knight on Business Strategy

Much of the economic foundation of business strategy stems from industrial-organization economics via Michael Porter and from institutional perspectives via Oliver Williamson. Frank Knight was one of the leading economic theorists of the twentieth century who profoundly influenced micro theory, especially the theory of the firm and the theory (and practice) of finance. Yet the business-strategy literature largely ignores Knight's writings that are closely aligned with business strategy. This paper focuses on Knight's book Risk, Uncertainty, and Profit. The links with Knight include forecasting demand, forecasting new products, managerial selection, and the link between managerial selection and managerial control.