Let chaos reign,then rein in chaos—repeatedly: managing strategic dynamics for corporate longevity

Combining longitudinal field research and executive experience, we propose that corporate longevity depends on matching cycles of autonomous and induced strategy processes to different forms of strategic dynamics, and that the role of alert strategic leadership is to appropriately balance the induced and autonomous processes throughout these cycles. We also propose that such strategic leadership is the means through which leadership style exerts its influence on corporate longevity. Our findings can be related to organizational research on structural inertia, learning and adaptation, as well as to formal theories of complex adaptive systems. They also contribute to resolving the seeming contradiction between a study of corporations that attributes exceptional long‐term success to leadership style, and the more common proposition that strategy is the determinant of long‐term performance. Copyright © 2007 John Wiley & Sons, Ltd.     

Performance feedback and middle managers’ divergent strategic behavior: The roles of social comparisons and organizational identification

Research Summary: What drives middle managers to search for new strategic initiatives and champion them to top management? This behavior—labeled divergent strategic behavior—spawns emergent strategies and thereby provides one of the essential ingredients of strategic renewal. We conceptualize divergent strategic behavior as a response to performance feedback. Data from 123 senior middle managers overseeing 21 multi‐country organizations (MCOs) of a Fortune 500 firm point to social performance comparisons rather than historical comparisons in driving divergent strategic behavior. Moreover, managers’ organizational identification affects whether they attend to organizational‐ or individual‐level feedback. These results contribute to research on performance aspirations and strategy process by providing a multilevel, multidimensional framework of performance aspirations in middle management driven strategic renewal. Managerial Summary: Middle managers are essential actors in strategic renewal. Their unique positions offer insights into operations alongside knowledge of strategy. In contrast to typical assessments of managerial performance with reference to a prior year, this research shows that performance comparisons relative to peers and other organizational units better motivate managers’ divergent strategic behavior. Our results also show that managers who identify with the firm are more attentive to organizational rather than individual performance discrepancies. Thus, our study unveils an important approach for organizations aiming to spark strategic renewal.     

The moderating influence of strategic orientation on the strategy formation capability–performance relationship

An effective strategy formation capability is a complex organizational resource—a dynamic capability that should lead to superior performance. Strategy scholars have examined the strategy formation capability from many perspectives. However, no study has examined a comprehensive model of strategy formation in the context of the firm's strategic orientation. We develop and examine such a model. The results show that strategic orientation moderates the relationship between different elements of the strategy formation capability and performance. Copyright © 2006 John Wiley & Sons, Ltd.     

Discourse revisited: Dimensions and employment of first‐order strategy discourse during institutional adoption

Despite decades of research on strategy, we still know little about what the concept of strategy means to actual strategists and how they use it in practice. Working at the intersections of institutional and practice theories, we use exploratory interviews with strategy directors and a longitudinal case study to uncover four dimensions of first‐order strategy discourse: functional, contextual, identity, and metaphorical. We also reveal three phases in the interrelation between first‐order strategy discourse and institutional work: shaping, settling, and selling and a differential emphasis (selective focusing) on dimensions of the first‐order strategy discourse during the institutional adoption process. We contribute to a deeper understanding of the concept of strategy in practice, the process of institutional adoption, and of the role of discourse in this process. Copyright © 2013 John Wiley & Sons, Ltd.     

Organizational control as antidote to politics in the pursuit of strategic initiatives

In contrast to the contingency approach advanced by most prior work, we suggest a complementary perspective on organizational control and its relationship with performance. We argue that the simultaneous use of behavior and outcome control capitalizes on their respective advantages, and is therefore more effective than a sole reliance on either control type. Moreover, with organizational control seeking alignment between individual and organizational goals, the benefits of such a complementary approach may be more pronounced in a context characterized by high levels of organizational politics, or the pursuit of individual at the expense of organizational goals. Our analysis of strategic initiatives pursued by 184 European corporations provides support for both a complementary approach to organizational control and a contingency effect of organizational politics. Copyright © 2014 John Wiley & Sons, Ltd.     

Towards an organic perspective on strategy

The strategy field's core issues—the concept of strategy, causal models relating strategy to other constructs, and models of strategic management and choice—have been previously addressed by two key progressions. The mechanistic perspective based on disciplinary‐based theories, the design model, and a view of strategy as a planned posture, has provided a unified view, but a narrow and increasingly less pertinent one. The advent of organic developments that included strategy process research, evolutionary and process models, and interactive and integrative views, has provided richness and pertinence, but not a unified perspective. These two progressions marked an epistemological shift from mechanistic to organic assumptions: from discrete to incessant time, from directional to interactive flow, and from differentiated to integrated constructs and models. Building on this shift, this paper proposes an organic perspective that combines the insights and coherence of the mechanistic perspective with the more relevant organic ideas. It makes use of the organic assumptions to advance a view of strategy as an adaptive coordination, introduce the Organization–Environment–Strategy–Performance (OESP) integrative theoretical model, and present an organic model of strategic management. The organic perspective provides a basis for an upgraded, more unified, and better‐attuned view on strategy's core issues. Copyright © 2002 John Wiley & Sons, Ltd.     

Challenges to existing strategy theory in a postindustrial society

In the postindustrial era, firms are facing increasing complexity for a number of reasons, two of which are fundamentally altering the competitive context of firms and managers, namely knowledge and technology dissemination. In this article, we argue that these global changes at the societal as well as the individual level affect strategic management theory and practice in two ways: they alter the relationships between firms and external stakeholders (e.g., customers), and they alter the relationships between firms and internal stakeholders (e.g., employees). After briefly outlining the changes observed, we analyze a number of contributions to strategic management theorizing and argue that as researchers we tend to focus primarily on one of these dimensions of complexity: internal or external. We then continue by discussing how the postindustrial context will require fundamentally different approaches, as the dimensions of internal vs. external collapse, and as a result even the notion of an industry, becomes blurred. In this new context, we need to go beyond the theoretical lenses and paradigms we have been trained in, to explore the implications of these changes at a more fundamental level. For the traditional theories, we need to refocus attention on the underlying assumptions, in order to explore their areas of applicability and the limits to their relevance. In addition, we need to discover and invent new theories and approaches relevant to this specific context. Since we do not know at this point in time what the postindustrial organization may be, we must not limit our creativity as researchers nor as managers by prematurely investing in assumptions and frameworks which may turn out to be less than ideal for the new opportunities (and threats) to be discovered. We need to explore alternative solutions with managers dealing with extreme complexity on a day-to-day basis, try out alternative options and invent new ones, and more than ever be critical about the relevance of the existing body of knowledge as well as sensitive to the possibilities created in this new and exciting context. © 1998 John Wiley & Sons, Ltd.     

A Process model of strategic business exit: Implications for an evolutionary perspective on strategy

The process model of strategic business exit (SBE) maps the activities of different levels of management onto the business and corporate levels of strategy making involved in Intel Corporation's exit from its core dynamic random access memory (DRAM) business. The SBE process model contributes to the development of an evolutionary process theory of strategy making by conceptualizing the pattern of managerial activities through which resources and corporate competencies are internally redirected toward more viable business opportunities, and the strategic context of a core business dissolves. The SBE process model corroborates the usefulness of the Bower-Burgelman process model for conceptualizing strategy making in complex organizations.     

Strategy tools‐in‐use: A framework for understanding “technologies of rationality” in practice

In response to critiques of strategy tools as unhelpful or potentially dangerous for organizations, we suggest casting a sociological eye on how tools are actually mobilized by strategy makers. In conceptualizing strategy tools as tools‐in‐use, we offer a framework for examining the ways that the affordances of strategy tools and the agency of strategy makers interact to shape how and when tools are selected and applied. Further, rather than evaluating the correct or incorrect use of tools, we highlight the variety of outcomes that result, not just for organizations but also for the tools and the individuals who use them. We illustrate this framework with a vignette and propose an agenda and methodological approaches for further scholarship on the use of strategy tools. Copyright © 2014 John Wiley & Sons, Ltd.     

Incumbent strategic behavior in financial markets and the exit of entrepreneurial start‐ups

This paper empirically investigates the forces that shape the post‐entry exit probability of entrepreneurial start‐ups, with an emphasis on the impact of incumbents' strategic behavior in financial markets. We find that entrepreneurial start‐ups in highly competitive industries are more likely to exit and that leverage compounds this exit risk. However, the latter result only holds when potential adverse selection and moral hazard problems in financial markets are large at start‐up. Under these circumstances, competitors can negatively influence creditors' perceptions on entrepreneurial quality or behavior through aggressive strategic actions to impede future financing and induce the start‐up's exit. Copyright © 2004 John Wiley & Sons, Ltd.     

The evolution of cooperation in strategic alliances: Initial conditions or learning processes?

We examine how the learning, along several dimensions (environment, task, process, skills, goals), that takes place in strategic alliances between firms mediates between the initial conditions and the outcomes of these alliances. Through a longitudinal case study of two projects in one alliance, replicated and extended in another four projects in two alliances, a framework was developed to analyze the evolution of cooperation in strategic alliances. Successful alliance projects were highly evolutionary and went through a sequence of interactive cycles of learning, reevaluation and readjustment. Failing projects, conversely, were highly inertial, with little learning, or divergent learning between cognitive understanding and behavioral adjustment, or frustrated expectations. Although strategic alliances may be a special case of organizational learning, we believe analyzing the evolution of strategic alliances helps transcend too simple depictions of inertia and adaptation, in particular by suggesting that initial conditions may lead to a stable ‘imprinting’ of fixed processes that make alliances highly inertial or to generative and evolutionary processes that make them highly adaptive, depending on how they are set.     

Research notes and communications corporate restructuring and strategic change: The effect on diversification strategy and R & D intensity

In the 1980s a number of large corporations restructured their diversified businesses through divestitures. It is hypothesized that restructuring activity focused on firms at intermediate levels of diversification (e.g., related-linked) which have a mixture of related and unrelated business units. Results confirm this hypothesis which explains that such mixed corporate strategies create organizational and control inefficiencies in managing both related and unrelated types of business units. Restructured firms were also found to move towards two types of different internal capital markets (related and unrelated). Most restructuring firms moved toward lower levels of diversification (e.g., related-constrained), although some moved toward higher levels of diversification (e.g., unrelated business). Also, this study finds restructuring firms that changed their corporate strategy by reducing diversified scope increased their R&D intensity. Firms that restructured and increased their diversified scope decreased R&D intensity. This result suggested a partial substitution between diversification and R&D activity.     

Biases in the selection stage of bottom‐up strategy formulation

We propose that the failure to adopt an idea or innovation can arise from an in‐group bias among employees within an organizational subunit that leads the subunit's members to undervalue systematically ideas associated with members of the organization outside their subunit. Such biases in internal selection processes can stymie organizational adaptation and therefore depress the performance of the firm. Analyzing data on innovation proposals inside a large, multinational consumer goods firm, we find that evaluators are biased in favor of ideas submitted by individuals that work in the same division and facility as they do, particularly when they belong to small or high‐status subunits. Copyright © 2013 John Wiley & Sons, Ltd