Academic journal article International Journal of Management

The Relationships between Defender and Prospector Business Strategies and Organizational Performance in Two Different Industries

Academic journal article International Journal of Management

The Relationships between Defender and Prospector Business Strategies and Organizational Performance in Two Different Industries

Article excerpt

Most strategy managers attribute organizational effectiveness to distinguishing characteristics of organizations; neglecting the influence of industry factors of the firms. Previous studies of the relationship between business strategy and organizational effectiveness have mainly focused on single industry or cross industries. This study compares two samples from the Taiwan Sporting Goods Manufacturing industry and the Hi-Tech industry at Hsinchu Science-based Industrial Park from the perspective of Configuration Theory. The empirical results show: (1) Firms from the Sporting Goods Manufacturing Industry which implement a defender strategy have better financial and holistic performance than those which implement other strategies. (2) Hi-Tech Firms from the Hsinchu Science-based Industrial Park which implement a prospector strategy have better financial and holistic performance than those which implement other strategies. Compared to previous studies, this study suggests that top management should review and analyze the industrial environment more carefully in choosing business strategy to fit the characteristics of the environment for effective organizational performance and to achieve competitive advantages.

I. Introduction

To cope with global competition, firms in Taiwan can no longer achieve competitive advantage by simply using low cost labor, but also strategically innovate in product, procedure, and marketing. Previous studies have used single industry (Short, Palmer, Ketchen, 2002; Ketchen, Thomas& Snow, 1993) or cross industries samples (Doty, Click and Huber,1993) in examining the relationship between business strategy and organizational effectiveness. Some studies suggest industry factors can explain the difference in organizational effectiveness among industries (Powell, 1996); they fail to identify how firms choose strategy according to the industrial characteristics and how they achieve higher organizational effectiveness (Kaser and Miles, 2002). In order to figure out how firms choose business strategies in both innovative and non-innovative industries to achieve organizational effectiveness, this study chose two samples from each industry to examine the influence of business strategy on organizational effectiveness. Because Miles and Snow (1978; 2003) developed their theory from empirical studies and it can be measured only within an industry of large firms it was decided to use the configuration theory proposed by Miles and Snow (Smith, Guthrie & Chen,1989) to examine the relationship between business strategy and organizational effectiveness.

II. Literature Review

According to configuration theory, all firms have strategies, structures and management process. We can classify types of firms in terms of their unique attributes or the combination of attributes (Ketchen, Thomas & Snow, 1993; Ketch et al., 1997; Miles and Miles, 2000). The configuration of strategy identifies the types of strategy an organization can choose and structure itself on. It means the bundles of alternatives. Every bundle contains the alternatives a firm needs and helps decision makers choose strategies and to allocate resources. (MacDuffie, 1995) The widespread attention given to Porter's (1980) theory reflects its strong intuitive appeal. But the theory used general terms and can be measured only among large firms (Smith, Guthrie & Chen, 1989). Hence it was decided to use the theory proposed by Miles and Snow (1978). Because the theory is based on an analysis of different industries, it is especially suitable for Taiwan.

Miles and Snow's (1978) theory identifies three ideal strategy types: prospector, defender, and analyzer. Each of these ideal types is a unique configuration of contextual, structural, and strategic factors. Defender is at one end of a continuum. Firms with defender strategies define their market as narrow and stable, devoting themselves to improving production efficiency, and cost control. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.