ABSTRACT
This chapter focuses on causal explanations, which are central to management research. It discusses the covering law model, which is the best-known account of explanation and introduces mechanismic explanation. Unlike the covering law model that is more than half a century old, mechanisms and mechanism-based explanations have attracted substantial attention from both natural and social scientists during the past two decades. The chapter also discusses contrastive explanation, which specifically accommodates intrinsic essential characteristic of explanation. Changes in the institutional environment, the context within which a causal mechanism operates, shift the comparative costs of markets, hybrids, and hierarchies. The high-powered incentives of the market form of governance impede adaptability among transacting parties, resulting in high transaction costs that are required to monitor exchange behavior and guard against opportunism. Since researchers may mistakenly think that explanations, such as those embedded in theories, are necessarily general, the chapter discusses the generality of explanations.
