The creation of momentum for change through the process of strategic issue diagnosis

This paper presents a model of how decision-makers interpret stategic issues. The model of strategic issue diagnosis identifies three critical events: activation, assessments of urgency and assessments of feasibility. The relationship of each of these interpretive assessments to the creation of momentum for change allows one to predict if and how organizations will respond to a changed decision environment. The paper further links strategic issue diagnosis to organizational responses by highlighting the systematic effect of two contextual variables—the organization's belief structure and its resources—upon the assessments in diagnosis. In this way, the model of issue diagnosis provides a framework for understanding how and why organizations respond differently to strategic issues.     

Communication and attention dynamics: An attention‐based view of strategic change

Research Summary : The attention‐based view (ABV) has highlighted the role of organizational attention in strategic decision making and adaptation. The tendency to view communication channels as “pipes and prisms” for information processing has, however, limited its ability to address strategic change. We propose a broader role for communication as a process by which actors can attend to and engage with organizational and environmental issues and initiatives and argue that such a view can significantly advance understanding of strategic change. On this basis, we offer suggestions for future research on communication practices, vocabularies, rhetorical tactics, and talk and text in shaping organizational attention in strategic change. We also maintain that this enhanced view of the ABV can help advance research on dynamic capabilities, strategy processes, strategy‐as‐practice, and behavioral strategy. Managerial Summary : To further enhance our capabilities to manage strategic change and renewal processes in organizations, we need a better understanding of how to manage organizational attention. In this article, we highlight the importance of understanding the role of communication and discuss the use of different communication practices, vocabularies, rhetorical tactics, and talk and text as possible levers that can be used to dynamically shape organizational attention. We call for further research to advance the understanding of how these levers can be used to influence the ways in which different sets of strategic issues, initiatives, and action alternatives are handled. We believe that such an enhanced view of organizational attention can enable the development of new, improved strategy practices to manage strategic change and renewal processes.     

On strategic networks

In parallel with a theoretical acceptance of the importance of the laws of competition to formulate strategy, the realization is growing that cooperative behavior among firms is at the root of many success stories in today's management. This situation calls for an effort to develop a theoretical framework to study both aspects of firm behavior (cooperative and competitive) as compatible, complementary aspects of a unique reality. Indeed, the cooperative relationships of a firm can be the source of its competitive strength. This paper develops the concept of strategic network, as a tool to understand those cooperative relationships and their role in the strategy of the firm. There are three main tasks of the paper: first, to show that strategic networks are but a ‘mode of organization’; second, to study the economic conditions of existence of a network; finally, to analyze the conditions of existence of a network from the point of view of its internal consistency. In a final section some of the most obvious strategic implications of the framework are outlined.     

Measuring strategic performance

This paper demonstrates the inadequacy of traditional measures, that are based on a firm's profitability, for evaluating its strategic performance. Two other measures, one that attempts to assess the quality of a firm's transformations (and not merely its outcomes) and the other that attempts to measure the satisfaction of all of the firm's stakeholders (and not merely its stockholders), are shown here to be important discriminators of strategic performance. The performances of seven ‘excellent’ firms from the computer industry, featured in the recent book by Peters and Waterman, are contrasted with that of seven ‘non-excellent’ firms from the same industry, to develop a framework for measuring strategic performance.     

Influence diagrams for complex strategic issues

Influence diagramming is a practical desk-top tool for mapping complex strategic issues so as to make the issues more comprehensible than otherwise. This article describes influence diagrams, explains how to use them, and relates how the tool was applied in a policy assessment study.     

Erratic strategic decisions: when and why managers are inconsistent in strategic decision making

While decision makers in organizations frequently make good decisions rooted in stable and consistent preferences, such consistency in outcomes is not always the case. In this study, we adopt a psychological perspective of judgment to investigate managers' erratic strategic decisions, which we define as a manager's inconsistent judgments that can shape the direction of the firm. In a study of 2,048 decisions made by 64 CEOs of technology firms, we examine how both metacognitive experience and perceptions of the external environment (hostility and dynamism) could affect the extent to which managers make erratic strategic decisions. The results indicate that managers with greater metacognitive experience make less erratic strategic decisions. The results also indicate that in hostile environments managers make more erratic strategic decisions. But contrary to our expectations, in dynamic environments managers make less erratic strategic decisions. Similarly, hostility and dynamism interact in their effect on erratic strategic decisions in that the positive relationship between environmental hostility and erratic strategic decisions will be less positive for managers experiencing high environmental dynamism than those experiencing low environmental dynamism. These results have important implications for strategic decision‐making research. Copyright © 2010 John Wiley & Sons, Ltd.     

The paradox of strategic controls

This paper reviews the literature on strategic controls. It summarizes the main theoretical arguments that have been put forward for establishing strategic control systems, and contrasts these arguments with evidence that suggests that few companies in fact have a strategic control system in place. The paper then identifies some of the difficulties that may be associated with establishing a strategic control system, points up issues that require further empirical research, and suggests a framework for exploring a contingency theory concerning the sorts of businesses in which strategic control systems would be most and least valuable.     

Performance differences among strategic group members

Whether and why members of the same strategic group would experience different performance results has received little attention in previous research. These questions are addressed in this paper. First, conventional theory on the relationship between firm performance and strategic group membership is reviewed. Then a theory is developed as to how historical differences among strategic group members may result in performance differences. An empirical analysis of risk and return relationships is conducted, centered on the nature of environmental change characterizing the industry. The empirical setting throughout is the U.S. pharmaceutical industry over the period 1963–82.     

Using meta‐analytic structural equation modeling to advance strategic management research: Guidelines and an empirical illustration via the strategic leadership‐performance relationship

This paper demonstrates how meta‐analysis can be combined with structural equation modeling (MASEM) to address new questions in strategic management research. We review this integration, describe its implementation, and compare findings from bivariate meta‐analyses, a direct‐effect structural equations model, and two mediating frameworks using data on the strategic leadership and performance relationship. Results drawn from 208 articles that collectively included data on 495,638 observations demonstrate the new insights available from MASEM while also suggesting a revision to conventional thinking on strategic leadership. Whereas some theories posit that boards of directors influence firm performance through monitoring and disciplining the top management team, MASEM provides more support for the view that boards mediate the top management teams' decisions. Implications for applying MASEM in strategic management are offered. Copyright © 2014 John Wiley & Sons, Ltd.     

Strategic concepts as micro‐level tools in strategic sensemaking

Research Summary: The purpose of this article is to illuminate the role of concepts in strategic sensemaking. Based on a longitudinal real‐time study of a city organization, we demonstrate how the concept of “self‐responsibility” played a crucial role in strategic sensemaking. We develop a theoretical model that elucidates how strategic concepts are used in meaning‐making, and how such concepts may be mobilized for the legitimation of strategic change. Our main contribution is to offer strategic concepts as a missing micro‐level component of the language‐based view of strategic processes and practices. By so doing, our analysis also adds to studies on strategic ambiguity and advances research on vocabularies. Managerial Summary: Our analysis helps to understand the role of strategic concepts, that is, specific words or phrases with established and at least partly shared meanings, in an organization's strategy process. We show how adopting the concept “self‐responsibility” helped managers in a city organization to make sense of environmental challenges and to promote change. Our analysis highlights how such concepts involve ambiguity that can help managers to establish common ground, but can also hinder implementation of specific decisions and actions if it grows over time. We suggest that under environmental changes, development of new strategic concepts may be crucial in helping managers to collectively deal with environmental changes and to articulate a new strategic direction for the organization.     

Dynamic and risk measurement perspectives on bowman's risk-return paradox for strategic management: An empirical study

Bowman's (1980, 1982) widely quoted papers have reported the existence of a risk-return paradox for strategic management. In this paper the authors examine the dynamic behavior of the risk-return relationship and analyze whether the risk-return paradox is stable across time. The analysis involves tracking Bowman's so-called negative association ratio across time. Using accounting measures of risk and return, it is demonstrated that while the paradox holds during the 1970s, the finding does not hold in the environment of the 1960s. Further, the paradox disappears if market-based risk measures are used. Some implications for strategic management are then discussed and attention is directed towards the meaning of risk in the context of strategic management. In addition, possible explanations for this paradox are evaluated and directions for further research are suggested.     

Research notes and communications development and validation of the strategic locus of control scale

Previous studies investigating the role of locus of control beliefs in relation to strategy-making behavior, organizational structure, performance and environment have employed the well known Rotter (1966) I-E scale. Unfortunately, however, this scale is beset by a number of problems which render it unsuitable for studies of business organizations, namely, that the items comprising the scale lack context-specificity and its well known tendency to correlate with measures of social desirability response set. This paper describes the development of a new measure designed to overcome these limitations. The measure, intended specifically for investigating locus of control beliefs in relation to issues of strategic management, assesses the extent to which respondents regard their own and other organizations' strategic issues to be resolved by the systematic application of strategic management techniques (e.g. environmental analysis, strategic planning, etc) or through external environmental forces (e.g. the actions of powerful competitors, unforeseen chance events, etc) largely beyond the control of organizations. Data is presented from two samples which indicate that the measure demonstrates acceptable reliability and construct validity.     

Post‐formation dynamics in strategic alliances

This paper investigates the occurrence and determinants of post‐formation governance changes in strategic alliances, including alterations in alliances' contracts, boards or oversight committees, and monitoring mechanisms. We examine alliances in the biotechnology industry and find that firms' unique alliance experience trajectories affect the likelihood of such ex post adjustments in these partnerships. Transactional features such as the alliance's scope, its division of labor, and the relevance of the collaboration to the parent firm also bear upon alliances' dynamics. We discuss the implications of these findings and how they complement prior research focusing on alliance design or termination at opposite ends of the alliance life cycle. Copyright © 2002 John Wiley & Sons, Ltd.     

How new top managers use control systems as levers of strategic renewal

This research is a longitudinal study of 10 newly-appointed top managers; the research focuses on understanding (1) their business vision and strategy and (2) how they use formal control systems as levers of strategic change and renewal. The results reported in the paper are based on data collected over a period of approximately 18 months following the appointment of each new manager. Analysis of the data suggests that control systems are important levers used to manage both evolutionary and revolutionary change. In situations of strategic change, control systems are used by top managers to formalize beliefs, set boundaries on acceptable strategic behavior, define and measure critical performance variables, and motivate debate and discussion about strategic uncertainties. In addition to traditional measuring and monitoring functions, control systems are used by top managers to overcome organizational inertia; communicate new strategic agendas; establish implementation timetables and targets; and ensure continuing attention to new strategic initiatives.     

The role of information technology in strategic buyer–supplier relationships

Information technology (IT) has long been acknowledged as an integral part of inter-organizational business exchange. The extant research, however, tends to emphasize the focal company perspective and focuses on operational issues, perceiving IT and business relationships as separable. Through a qualitative dyadic case study, our study defines how IT is positioned with regard to various elements of a strategic buyer–supplier relationship and the respective actors' operational and managerial behaviors. The study defines the role of IT regarding the structural, action, and management layers of a relationship and shows how IT can be a strong element around which relationship management activities are implemented to improve the consistency and performance of the relationship. The study prepares the ground for further qualitative and quantitative research to enhance a holistic understanding on IT in relation to the structures and processes in inter-organizational contexts of business relationships and networks.     

The role of a firm's strategic orientation dimensions in determining market orientation

Little is known about how various strategic orientation dimensions determine market orientation. The authors identify four key dimensions of a firm's strategic orientation as critical antecedents to market orientation: the firm's aggressiveness, its future orientation, the extent of marketing formalization, and risk proclivity. Moderating effects of two environmental forces, competitive intensity and technology turbulence, are also considered in light of their relationship with various dimensions of strategic orientation and market orientation. Using a survey with firms spanning multiple industries, the proposed effects are tested with latent class analysis with multiple regimes. The results, based on an optimal two-regime solution, show that that although market orientation is significantly impacted by these strategic orientation dimensions, the pattern of influence differs based on a firm's membership in one of two regimes.     

On tailoring a strategic planning system to its context: Some empirical evidence

Based on a survey of 111 senior executives this study finds that tailoring a firm's strategic planning system to its context is not a popular practice, despite its presumed importance. Moreover, the lack of fit between a firm's strategic planning system and its context appears to be inconsequential to how managers rate their planning systems. Implications of the findings are discussed.     

Managing to make markets: Marketization and the conceptualization work of strategic nets in the life science sector

This paper presents one of the first studies to identify and explain the marketization work of a strategic net. Through a study of the Stevenage Bioscience Catalyst – a strategic net formed to support the marketization of Life Science Discoveries - we generate insights into the everyday work that makes marketization happen. Marketization is understood as the process that enables the conceptualisation, production and exchange of goods. Our findings focus on one specific form of marketization work found to be core to the strategic net: conceptualisation work. Three forms of conceptualisation work are identified: conceptualising actors' roles, conceptualising markets and conceptualising goods. These manifest as routinized, recursive practices. Our analysis reveals how these practices gather together multiple forms of scientific, technical and market knowledge to generate new market devices that transform market rules and conventions, and introduce new methods and instruments of valuation that change the market. In contrast to extant studies that claim a strategic net's activities influence markets; our findings position the conceptualisation work of the strategic net as constitutive of markets and the broader system of provision for ‘healthcare’ and ‘health futures’.     

Strategy transformation through strategic innovation capability – a case study of Fanuc

This paper presents a theoretical framework under which large companies should be able to bring about strategy transformation. First, we present the concept of ‘strategic innovation capability’, a corporate system capability to achieve corporate strategy transformation by strategic innovation. Then, we consider strategic innovation capability by comparing it with previous theories (dynamic capability, major innovation, dynamic capability, breakthrough innovation capability). Second, we present the case example of strategy transformation at Fanuc, a company that holds the top global share in the numerical control (NC) market. In this case study research, we consider and analyze historically how the company aimed for new creativity in the NC market, developed innovative NC technology for the machine tool market, and used that technology energetically for commercialized products. From the strategic innovation capability framework, the core theory of this paper, we also analyze and consider how top management made conscious efforts to form a new development organization within the company, and the processes involved in achieving strategy transformation to establish competitive superiority in this field. Finally, we discuss the implications drawn from this case analysis, and the issues for future research.     

Hybrid strategic groups

The notion of strategic groups has recently emerged as a critical perspective for uncovering firms' strategic postures/recipes and competitive market structures. Firms within strategic groups generally adopt similar strategic recipes and compete more intensely than firms across strategic groups. Building on recent research, the authors develop the concept of hybrid strategic groups, which blend the strategic recipes of more than one group, in contrast to existing conceptualizations of strategic groups, where either firms tightly follow the recipes of a strategic group (i.e., core firms) or firms loosely follow the recipes of a strategic group (i.e., secondary firms). Thus, competition among firms depends not only on the strategic group but also on the overlap of that strategic group with other strategic groups. The authors devise a combinatorial optimization-based classification procedure utilizing a bilinear model that accommodates multiple variable batteries that can estimate hybrid strategic groups. The proposed methodology is illustrated by using archival data on public banks. For this illustration, the hybrid strategic group solution outperforms ordinary cluster analyses and offers critical insights into the nature of competition among firms. Copyright © 2007 John Wiley & Sons, Ltd.