System dynamics and strategy

System dynamics research has made numerous contributions to a range of management subfields, including operations, organization behavior, marketing, behavioral decision making, and strategy. In this paper, we focus on the role for system dynamics research in making important progress on the defining issue in the field of strategy: why are some firms more profitable than others? Strategy researchers are eager for dynamic theories that explain the evolution of performance differences among firms and are increasingly looking to managerial decision making as the source of dynamics. This interest in dynamics and decision making creates an enormous opportunity for system dynamics researchers as carefully grounded behavioral theories of dynamics flow naturally from the research methods of system dynamics. Building and testing theories that explain longitudinal patterns of performance differences among firms would be an enormous step forward where mainstream strategy approaches have struggled. We identify four promising research paths along these lines for system dynamics research in the field of strategy.