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Abstract Micro‐foundations have become an important emerging theme in strategic management. This paper addresses micro‐foundations in two related ways. First, we argue that the kind of macro (or ‘collectivist') explanation that is presently utilized in the capabilities view in strategic management—which implies a neglect of micro‐foundations—is incomplete. There are no mechanisms that work solely on the macro‐level, directly connecting routines and capabilities to firm‐level outcomes. While routines and capabilities are useful shorthand for complicated patterns of individual action and interaction, ultimately they are best understood at the micro‐level. Second, we provide a formal model that shows precisely why macro‐explanation is incomplete and which exemplifies how explicit micro‐foundations may be built for notions of routines and capabilities and how these impact firm performance. Copyright © 2008 John Wiley & Sons, Ltd.
Abell et al. (Mon,) studied this question.