Academic journal article Journal of Managerial Issues

Strategic Orientation and Customer Dependency in Discontinuously Changing Environments: A Study of the Defense Industry

Academic journal article Journal of Managerial Issues

Strategic Orientation and Customer Dependency in Discontinuously Changing Environments: A Study of the Defense Industry

Article excerpt

With the ever increasing intensity of competition in the marketplace, the body of literature on organizational response to discontinuously changing environments is expanding rapidly (Romanelli and Tushman, 1994). While responses to discontinuous environmental changes often are studied as reactions to a single event (Kelly and Amburgey, 1991; Smith and Grimm, 1987), multiple organizational domains influence and are influenced by these responses. To capture these interrelationships, viewing the organizations in an industry undergoing discontinuous changes from multiple domains is both helpful and necessary (Dess et al., 1993).

This study uses a configuration approach to extend research on discontinuous environmental change in four areas. First, most studies on discontinuous change have focused on internal structural responses to turbulent environments (Miller and Friesen, 1980a, 1982b; Romanelli and Tushman, 1994; Virany et al., 1992). However, attention to industry level responses has been comparatively limited and has lacked in generalizability across industries (Ginsberg, 1988; Meyer et al., 1990). Determining the content of organizational response strategies along with the process by which they are developed is important because these discontinuities will affect each organization differently (Gersick, 1991). Second, while there has been theoretical work on discontinuously contracting markets (Zammuto add Cameron, 1985) and empirical work on technologically driven discontinuous downturns (Tushman and Anderson, 1986), there has been limited work on environmental declines driven by political discontinuities. This study extends that work by focusing on a sample of firms doing business with the U.S. Department of Defense (DOD). Third, by using a theoretically grounded approach to measure the content of an organization's strategy and a heterogenous sample in terms of industry classification, this article attempts to determine strategies that are associated with strong performance within discontinuously changing environments. Fourth, existing studies of firms undergoing discontinuous change have focused on firms totally dependent on one industry for their livelihood (Meyer et al., 1990; Smith and Grimm, 1987; Zajac and Shortell, 1989.). This study extends this research by examining whether differing levels of dependence on an industry is a possible explanatory factor behind differences in strategy response and performance in these settings.

Specifically, this research seeks to answer two questions: (1) What types of strategies do companies use to respond to discontinuously changing environments, and (2) Which strategies are associated with the strongest performance within those environments? To address these questions, the remainder of the article is presented in four sections. First, the literatures on discontinuous environmental change and customer dependency are reviewed to develop the theoretical base for the study. Second, the operationalizations of variables and the data collection process are described in the methodology section. Third, the results section describes the strategic orientations and performance levels of each cluster. Lastly, the discussion section summarizes the findings and provides implications for theory, future research, and managerial practice.

LITERATURE REVIEW

Discontinuous Environmental Change

A long-standing debate in organization theory and strategic management literature is whether a selection-based or adaptation-based theory of change is most appropriate for determining behavior in the midst of environmental change (Carroll, 1993; Ginsberg and Buchholtz., 1990). While the selection perspective allows for some successful organizational change, it contends that it is unachievable for most organizations due to either organizational inertia within older organizations or a "liability of newness" within younger ones (Hannan and Freeman, 1984; Stinchcombe, 1965). …

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