Academic journal article Journal of Managerial Issues

Linking Strategy Processes to Performance Outcomes in Dynamic Environments: The Need to Target Multiple Bull's Eyes *

Academic journal article Journal of Managerial Issues

Linking Strategy Processes to Performance Outcomes in Dynamic Environments: The Need to Target Multiple Bull's Eyes *

Article excerpt

One reason for this incomplete understanding of the effectiveness of strategic processes is that many empirical studies focus on strategic processes involving only the top management team (Boyd, 1991; Finkelstein and Hambrick, 1996; Hopkins and Hopkins, 1997; Powell, 1996; Mintzburg, 1994). In addition, these studies usually focus on only one dimension of strategic process such as consensus among the team (e.g., Dess and Priem, 1995) or social integration among the team (e.g., Smith et al., 1994). We investigate a broader range of strategy processes that include participation of other organization members outside the top management team.

Another related gap in our understanding is the moderating role environment plays in understanding the link between strategic processes and firm performance. We know that environments can have a significant impact, however the nature of this impact is unresolved (Powell, 1996). Some studies find a stronger association between strategic processes and firm performance in stable environments (Fredrickson and Mitchell, 1984) and others find a stronger association in unstable environments (Miller and Friesen, 1983). Other process variables impacted by dynamic environments (defined as the high rate of change and uncertainty) are top management teams' ability to make fast decisions, the ability to process information (Eisenhardt, 1989), minimize politics, and their history of working together (Bourgeois and Eisenhardt, 1988). Again the focus in these investigations is on the top management team. We also consider the moderating role of dynamism on strategy process performance relationships where a greater participation of organization members is required.

Finally, despite the long-standing call to include multiple dimensions of performance, there has been a focus on financial definitions of firm performance. There has been a call for a conceptualization of outcomes other than economic measures (Venkatraman and Ramanujam, 1986). It has been proposed that a broader conceptualization of effectiveness will be more meaningful in the context of strategy process research (Rajagopalan et al., 1993).

This study addresses these gaps in previous research by investigating the impact of different strategy processes on different dimensions of firm performance and the role of the environment in these relationships. In the following two sections we first summarize Hart's (1992) integrative framework and subsequently present the logic behind the hypotheses that are tested in this investigation.

HART'S INTEGRATIVE FRAMEWORK OF STRATEGY PROCESSES

In an attempt to provide a comprehensive framework of strategic processes, Hart (1992) integrates the themes and dimensions used to characterize these processes from previously published typologies. He presents five types of processes that reflect "the complementary roles that top managers and organizational members play in the making of strategy" (1992: 333). The five strategy processes are named Command, Symbolic, Rational, Transactive, and Generative. Two key characteristics of Hart's typology are: the different roles that the top management team and other organizational members play in making strategy, and their relative levels of participation. We will describe each of these processes as they relate to the relative involvement of the top management team and the other organizational members.

The two processes that have the most top management team involvement are command processes and symbolic processes. For an organization utilizing command processes, strategy is driven by a leader or small top management team. Top management decides and controls the direction of the firm. Organizational members are not involved in decision making and have little autonomy in their choice of action; their role is to obey. Symbolic processes drive strategy by creating an implicit control system based on shared values, meaning, and identity that become embedded in the social fabric of the organization. …

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