Causal Ambiguity

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Description of Causal Ambiguity. Explanation.


Causal ambiguity of share prices...Definition Causal Ambiguity. Description.

Causal Ambiguity is the situation where it is hard or even impossible to relate the consequences or effects of a phenomenon to its initial states or causes.


One area were this phenomenon is well known is the development of the prices of shares, options, futures, and similar products on exchanges (picture).


But is phenomenon is also very common in strategy where it is often impossible to determine whether the success of a company is due to solid strategic thinking or due to sheer luck.

That is particularly relevant for the Resource-based View, because it is a condition that prevents both a firm and its rivals from determining the causes of the firm's above average  performance. This may arise because a competence is complex, tacit, or firm specific; or because the causal path from the competence to performance is impossible to specify; or because a large number of competencies interact in ways that resist precise articulation and imitation.

Also causal ambiguity applies to leadership: are the actions, charisma or vision of the CEO the reason for the success of his corporation, or was he just at the right place at the right moment?

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Compare with: Cognitive Bias  |  Paralysis by Analysis  |  Analogical Strategic Reasoning  |  Bounded Rationality  |  Strategy Dynamics  |  Feedback Loops  |  Tacit Knowledge  |  TRIZ  |  Lateral Thinking  |  Synectics  |  Chaordic Organization

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