THEORY BUILDING FROM CASES: OPPORTUNITIES AND CHALLENGES KATHLEEN M. EISENHARDT Stanford University MELISSA E. GRAEBNER University of Texas at Austin The Academy of Management Journal has taken the lead among major journals in spotlighting alter- native methods that take advantage of rich empiri- cal data. In a series of ���From the Editor��� commen- taries, scholars cogently have explicated related topics such as qualitative research (Gephart, 2004), grounded theory building (Suddaby, 2006), the value of richness (Weick, 2007) and the persuasive power of the single case (Siggelkow, 2007). In this commentary, we focus on the related research strat- egy of theory building from cases, particularly mul- tiple cases. Scholars have used case studies to develop the- ory about topics as diverse as group process (Ed- mondson, Bohmer, & Pisano, 2001), internal organ- ization (Galunic & Eisenhardt, 2001 Gilbert, 2005), and strategy (Mintzberg & Waters, 1982). Classic scholars (Chandler, 1962 Whyte, 1941) as well as the authors of highly regarded AMJ papers (Dutton & Dukerich, 1991 Sutton & Raphaeli, 1988) have used the method. Indeed, papers that build theory from cases are often regarded as the ���most interest- ing��� research (Bartunek, Rynes, & Ireland, 2006) and are among the most highly cited pieces in AMJ (e.g., Eisenhardt, 1989a Gersick, 1988), with im- pact disproportionate to their numbers. Not sur- prisingly then, the winning authors (Ferlie, Fitzger- ald, Wood, & Hawkins, 2005 Gilbert, 2005) of the most recent AMJ Best Article Award relied on this method. Building theory from case studies is a research strategy that involves using one or more cases to create theoretical constructs, propositions and/or midrange theory from case-based, empirical evi- dence (Eisenhardt, 1989b). Case studies are rich, empirical descriptions of particular instances of a phenomenon that are typically based on a variety of data sources (Yin, 1994). Cases can be historical accounts, such as Weick���s (1993) study of the Mann Gulch fire, but they are more likely to be contem- porary descriptions of recent events, such as Gil- bert���s (2005) study of adaptation to discontinuous environmental change by newspaper organizations. The central notion is to use cases as the basis from which to develop theory inductively. The theory is emergent in the sense that it is situated in and developed by recognizing patterns of relationships among constructs within and across cases and their underlying logical arguments. Central to building theory from case studies is replication logic (Eisenhardt, 1989b). That is, each case serves as a distinct experiment that stands on its own as an analytic unit. Like a series of related laboratory experiments, multiple cases are discrete experiments that serve as replications, contrasts, and extensions to the emerging theory (Yin, 1994). But while laboratory experiments isolate the phe- nomena from their context, case studies emphasize the rich, real-world context in which the phenom- ena occur. The theory-building process occurs via recursive cycling among the case data, emerging theory, and later, extant literature. Although some- times seen as ���subjective,��� well-done theory build- ing from cases is surprisingly ���objective,��� because its close adherence to the data keeps researchers ���honest.��� The data provide the discipline that mathematics does in formal analytic modeling. A major reason for the popularity and relevance of theory building from case studies is that it is one of the best (if not the best) of the bridges from rich qualitative evidence to mainstream deductive research. Its emphasis on developing constructs, measures, and testable theoretical propositions makes inductive case research consistent with the emphasis on testable theory within mainstream de- ductive research. In fact, inductive and deductive logics are mirrors of one another, with inductive theory building from cases producing new theory from data and deductive theory testing completing the cycle by using data to test theory. Moreover, since it is a theory-building approach that is deeply embedded in rich empirical data, building theory We appreciate helpful comments from Diane Bailey, Steve Barley, Chris Bingham, Jason Davis, Nathan Furr, and Ben Hallen as well as the sponsorship of the National Science Foundation IOC Award #0621777 and the Stan- ford Technology Ventures Program. Academy of Management Journal 2007, Vol. 50, No. 1, 25���32. Copyright of the Academy of Management, all rights reserved. Contents may not be copied, emailed, posted to a listserv, or otherwise transmitted without the copyright holder���s express written permission. Users may print, download or email articles for individual use only. 25

from cases is likely to produce theory that is accu- rate, interesting, and testable. Thus, it is a natural complement to mainstream deductive research. But while theory building from cases is increas- ingly prominent, challenges in writing publishable manuscripts using this research strategy exist. Some reviewers who work on large-scale, hypothesis- testing research may misunderstand the method (e.g., expect random sampling), or simply regard their own methods as superior. Some reviewers who work with other research strategies that also use rich empirical data (e.g., naturalistic inquiry) may emphasize thick narrative descriptions but be less interested in gener- ating testable and generalizable theory. Still other reviewers may be sympathetic to research that is based on rich empirical evidence but be confused by the jumble of labels used to describe such research, which include grounded theory building, qualitative research, theory building from cases, and naturalistic inquiry. Having been involved with numerous re- search projects and written many papers that develop theory from cases, we are particularly sympathetic to authors. So, our purpose is to highlight the opportu- nities that differentiate building theory from cases from other research strategies, describe some of its common challenges, and suggest possible antidotes. Justifying Theory Building Sound empirical research begins with strong grounding in related literature, identifies a research gap, and proposes research questions that address the gap. But when using theory building from cases as a research strategy, researchers also must take the added step of justifying why the research ques- tion is better addressed by theory-building rather than theory-testing research. The implicit assump- tion is that theory building from cases is less pre- cise, objective, and rigorous than large-scale hy- pothesis testing. Moreover, failure to convince readers that a theory-building study is warranted in the first few pages can sink a manuscript before readers ever reach the findings. In other words, readers may ask, So why is this an inductive study? A key response to this challenge is to clarify why the research question is significant, and why there is no existing theory that offers a feasible answer. Conflicting theories are not enough. Rather, it is critical to convince readers that the research ques- tion is crucial for organizations and/or theory, and demonstrate that the existing research either does not address the research question at all, or does so in a way that is inadequate or likely to be untrue. An example is early research on making fast stra- tegic decisions (Eisenhardt, 1989a). The introduc- tion makes a strong case that fast strategic decision making is crucial for firm performance in high- velocity environments, including an example of a firm that died because its executives decided slowly. The introduction then goes on to demon- strate that the research literature has mostly ig- nored this critical topic. The background section describes several ideas from the literature that ad- dress speed (albeit obliquely), but then shows that the logic underlying these ideas is unconvincing. For example, although some of the literature im- plies that centralized strategic decision making might be fast, centralization could not solve prob- lems of access to relevant information, implemen- tation, and confidence to decide in the face of un- certainty. Thus, it is unlikely that fast decision making is simply a matter of centralization per se. The background section concludes by asking whether a ���snap decision��� process could actually be realistic. The challenge of justifying inductive case re- search partially depends on the nature of the re- search question. For theory-driven research ques- tions that extend existing theory (Lee, Mitchell, & Sabylinski, 1999), a researcher has to frame the research within the context of this theory and then show how inductive theory building is necessary. Typically, the research question is tightly scoped within the context of an existing theory, and the justification rests heavily on the ability of qualita- tive data to offer insight into complex social pro- cesses that quantitative data cannot easily reveal. For example, Greenwood and Suddaby (2006) stud- ied how a known instance of institutional change at the center of a field occurred (i.e., promotion of change by elite firms within the accounting profes- sion). They justified their approach in terms of extending institutional theory and the ability of qualitative data to explicate the complex social pro- cesses involved. In contrast, for phenomenon-driven research questions, a researcher has to frame the research in terms of the importance of the phenomenon and the lack of plausible existing theory. Here the re- search question is broadly scoped to give the re- searcher more flexibility. The justification rests on the phenomenon���s importance, and the lack of vi- able theory and empirical evidence. For example, Bingham and Eisenhardt (2006) justified their study of what executives learn when they engage in a repeated organizational process (in their study, internationalization) by observing that learning is a ubiquitous process, and yet the vast empirical lit- erature on learning ignores the content of what is actually learned. More broadly, theory-building re- search using cases typically answers research ques- tions that address ���how��� and ���why��� in unexplored 26 February Academy of Management Journal