Academic journal article Journal of Managerial Issues

Strategic Aggressiveness: The Effects of Gain-Thrust Schema and Core Stakeholder Salience

Academic journal article Journal of Managerial Issues

Strategic Aggressiveness: The Effects of Gain-Thrust Schema and Core Stakeholder Salience

Article excerpt

A study of strategic actions is all important area of research in strategic management. Strategic actions form patterns to determine a company's strategy (Mintzberg, 1973). Due to environmental uncertainty, strategic planning blueprints are not reliable indicators of a company's strategic actions, and emergent actions that are not deliberately planned may have critical impact on performance (Mintzberg and Waters, 1985). Ironically, however, strategic actions have been studied less frequently than competitive actions which have been often defined as the mix of strategic and tactical actions (e.g., Ferrier, 2001; Ferrier and Lee, 2002; Ferrier et al., 1999; Miller and Chen, 1996). The latter emphasis is rooted in the interest to explore competitive dynamics that reflect actions and reactions by rivals (D'Aveni, 1994; Rindova et al., 2010; Smith et al., 2001). This research stream has focused on the antecedents and consequences of competitive actions (e.g., Ferrier and Lee, 2002; Miller and Chen, 1996). There has been limited interest to date in separating out tactical and strategic actions, and more on the actions and response of competitors.

Yet the value in studying strategic actions is manifold. The inconclusive findings regarding the models to predict competitive actions have been attributed to a failure to differentiate between tactical and strategic actions (Miller and Chen, 1994). The difference between these action types is substantial. Strategic actions involve large resource commitments, are irreversible, and have long-term consequences; tactical actions, in contrast, involve more modest resource commitments, are feasible to shift and realign, and have short-term effects. Companies undertake a relatively large number of tactical actions and they learn effective combinations and patterns of these actions over time. Poor performance, in particular, triggers tactical changes, such as changes in pricing strategy or a new advertising campaign, which are easy to undertake, are not usually subject to political resistance, and do not threaten the resources (Miller and Chen, 1994). However, if the tactical actions flow from a wrong strategy, negative performance implications would be warranted. Therefore, focus on strategic actions would be essential to evaluate the overall effectiveness of a company's strategy.

Prior studies have primarily relied on prospect theory and threat-rigidity theory to formulate their hypotheses involving the effects of past performance. According to prospect theory, poor performance stimulates action intensity and good performance causes complacency (Kahneman and Tversky, 1979). Ferrier (2001) argued, in line with prospect theory, that good past performance negatively affects a firm's motivation to compete aggressively and poor performance will cause firms to compete aggressively. These theories are not without shortcomings. Prospect theory is originally formulated to predict individual behavior and does not take into account some of the complexities of organizations (Shimizu, 2007; Thaler and Johnson, 1990; Ruefli et al., 1999). Indeed, Bromiley (2010) has recently argued that prospect theory is not useful as a firm level tool for strategic management questions.

This study seeks to address these two key shortcomings of prior work in competitive dynamics. First, it will focus solely on strategic actions and exclude tactical actions from the analysis. In this manner, a more clear understanding of the role of past performance on the longer term actions or strategic aggressiveness of the firm is obtained. Second, this study proposes a new perspective called "gain-thrust schema" as an appropriate firm level alternative to prospect theory. In contrast to prospect theory, in the gain-thrust schema, strategic aggressiveness becomes susceptible to forces of momentum and is likely to result in excessive levels. Finally, the study argues that effective management of the core stakeholders would moderate aggressive tendencies to gain momentum and reach excessive levels. …

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