Signaling Theory and Equilibrium in Strategic Management Research: Assessment and Research Agenda (10 pages)

Summary Organizational actors must commonly make choices armed with asymmetrical and incomplete information. The goal of signaling theory is to explain how people can achieve this. The "separating equilibrium," which happens when a signal's expectations are validated by experience, serves as this theory's primary predictive mechanism. According to content analysis, separate equilibrium has not been adequately utilized in most strategic management signaling theory studies. Future research could take one of two directions presented here. First, separate equilibrium may be included by some scholars. This research article demonstrates how doing so can reveal new connections, produce fresh perceptions, and strengthen the theory's applicability. Others may use concepts from the signaling approach with other information philosophies to theorize about signals without looking at separate equilibrium. Here, a signal is just one of several stimuli corporate actors perceive and use to guide their actions. The article offers study agendas so that signaling theory can be used most successfully to strategy academics' research goals. Signaling theory is very distinctive. The focus on establishing a "separating equilibrium" makes it unique. Stakeholder searches for clues about a corporation, interpret those cues, and are guided by their perceptions when devising their actions. By describing how signal senders and watchers can discern between - or "separate" - high-quality actors from low-quality actors based on an observable signal, signaling theory provides an extra and crucial step. The fundamental forecasting principle that underpins the distinctive explanations connected with signaling theory-based hypotheses is the premise of separating equilibrium. The distinctive explanatory insights provided by............................................