Miles and Snow's Typology of Strategy, Perceived Environmental Uncertainty, and Organizational Performance

Namiki, Nobuaki, Akron Business and Economic Review

Miles And Snow's Typology Of Strategy, Perceived Environmental Uncertainty, And Organizational Performance

Formulating and implementing strategy congruent to external environment have been an important challenge for many top executives. Much research has been conducted to identify viable strategies in a given environment and to find necessary organizational structure and other arrangements to effectively implement such strategies. One recent advancement in this field is the adoption of a new view that supports the existence of commonalities in strategies employed by firms in an industry. It is based on the recognition that strategies differ within the same industry and that subgroups of firms (or strategic groups) employ different mixes of methods to compete in the industry (12). Companies operating in the same oor similar environment may compete by using different competitive methods due to dissimilar strategic orientations of their management and other internal distinctive competence. The existence of groups of firms within an industry following similar strategies has been observed in several industries such as chemical process, consumer goods, and brewing industries (16, 19, 20, 22).

Based on this view of strategy, several typologies have been developed to classify and describe firms' strategic behaviors. It should be noted that a strategic typology is usually considered conceptually, and not empirically, derived classifications of firms' strategic behaviors (11). Also, most strategic typologies have been developed under the substantial influence of two major theories. One is the industrial organization theory that focuses on the structure-conduct (i.e., strategy) performance relationship (21). The other is the organizational theory that focuses on the internal process of the firm and its impact on performance (23).

A strategic typology is a broad categorization of firms' strategic behaviors into a few types. It is a simplified description of strategic options available to a firm. Appropriate organizational structure, functional expertise, and other organizational attributes are also prescribed to effectively pursue each alternative. In other words, a strategic typology represents several alternative "packages," each of which contains a required or recommended set of strategy and organizational characteristics. It has a potential to be a powerful tool in guiding top executives to select a strategy, organize firms' structures, and effectively allocate resources to functional departments. It can also be used to assess strengths and weaknesses of firms in following a particular strategy relative to their competition, which can help initiate corrective actions.

A strategic typology, however, has some limitations, most of which center around the issues of validity and usefulness (10, 25). It is parsimonious, and thus may not account for significant variations across organizations. Moreover, it is a conceptually (and not empirically) derived classification and is usually based on researchers' case studies and experience in a limited number of industries (10). Therefore, strategic typologies need to be tested for validity and usefulness through empirical investigations.

This research focuses on the examination of Miles and Snow's (17) typology of strategy. The typology is one of the earlier attempts to classify firms' strategies into parsimonious types (17). Following an organization theory tradition, Miles and Snow have developed the typology that focuses on processes of organizational adaption to external environment. It has been regarded as a broad yet comprehensive model and has been well received by the academic community. However, the typology has not been subjected to more comprehensive investigations in order to test the validity and usefulness of the typology. Hambrick suggests that past studies of the typology may have employed research methodologies and biases that "yielded the appearances of a more powerful typology than may in fact exist" (10, p. 7). In addition, previous research has either assumed the validity of the model (26, 28) or identified the strategy type based on a single dimension (10), though the model includes several key dimensions. In order to advance the knowledge in the relatively new field of strategic management and to help managers make effective strategic decisions, the typology needs further development and testing (10, 25, 30).

OBJECTIVES OF THE STUDY

The primary purpose of this study is to assess, based on empirical data, the validity and usefullness of Miles and Snow's typology of strategy. Specifically, this research study is undertaken to address three major questions. First, it investigates the internal consistencies among such dimensions as entrepreneurial, engineering, and administrative within each strategy type using a multivariate approach. The question addressed is on the extent to which detailed descriptions by Miles and Snow of the organizational strategy and characteristics within each strategy type corresponded with empirically derived results. Second, this study assesses the organizational performance of firms comprising each strategy type to detect whether significant differences exist between the four strategy types. It examines the contention made by Miles and Snow and the findings by Snow and Hrebiniak (26) that the three successful strategy types, i.e., prospector, analyzer, and defender, perform equally well in any industry. They are contrary to the more traditional view that certain strategies perform differently in different environments.

Third, in order to further clarify the role of environmental forces over the typology, this study examines the strategy-environment relationship. The question addressed in this study is whether certain strategies favor particular environments over others, i.e., the associated relationship between strategy and environment.

THEORETICAL BACKGROUND AND HYPOTHESES Miles and Snow's Typology

Miles and Snow's typology is regarded as a relatively comprehensive model, richly describing firm characteristics and the strategy configurations of each type of organization. Miles and Snow contend that four basic patterns of strategy, i.e., prospectors, …

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Publication information: Article title: Miles and Snow's Typology of Strategy, Perceived Environmental Uncertainty, and Organizational Performance. Contributors: Namiki, Nobuaki - Author. Journal title: Akron Business and Economic Review. Volume: 20. Issue: 2 Publication date: Summer 1989. Page number: 72+. © 1989 University of Akron. COPYRIGHT 1989 Gale Group.

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