Academic journal article Akron Business and Economic Review

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

Academic journal article Akron Business and Economic Review

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

Article excerpt

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. …

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