Showing papers in "Strategic Management Journal in 1982"
TL;DR: In this paper, the authors investigate the correlation between innovation and environmental, information processing, structural and decision-making variables that represent, or help to recognize and cope with these challenges.
Abstract: Summary Two very difJerent nmodels oJ pr-oduct innovation ar-e postulated and tested. The con rvative m-odel assumes that ininov-ation is peijormed reluictanitly-, mainl/ in r-esponise to serious challenges. It therefore pr-edic-ts that innoration will co rrelate positively with environmental, injformation processing, structlural and decision nmaking variables that represent, or help to recognize antd cope with these challenges. In conitrast, the entrepreneurial modlel supposes that innovation is alwavys aggressiv-ely plursued and w-vill be very high unless decision makers are warned to slow down. Thus negative correlations are predicted between innovation and the v-ariables that cant provide such warning. Co}rrelationial and curv ilinear regression anialyses revealed that each mi1odel wvas suppor ted by conservative and entrepreneurial sub-samples, respectively, in a diverse sanmple oj 52 Canadian firmns.
2,690 citations
TL;DR: This paper replicates that association between diversification strategy and profitability using more recent and complete data and goes on to investigate the sources of the association.
Abstract: Prior work has shown an association between diversification strategy and profitability. This paper replicates that association using more recent and complete data and goes on to investigate the sources of the association. Theoretical arguments are advanced which predict the association which will remain once the effects of varying industry profitability are removed. Empirical tests verify this prediction and permit the discrimination between the effects of industry and diversification strategy on profitability.
1,316 citations
TL;DR: Test empirically the relationships between the environmental scanning activities of upper‐level executives and their organizations' strategies, on the premise that executives would scan to reinforce their organization's particular basis for competing.
Abstract: The purpose of this study was to test empirically the relationships between the environmental scanning activities of upper-level executives and their organizations' strategies, on the premise that executives would scan to reinforce their organization's particular basis for competing. Among the three industries studied, there were differences in the strategy–scanning link. These differences may have been attributable to different dominant environmental requirements existing in each industry.
762 citations
TL;DR: In this article, a review of all published field research on the evaluation of formal planning is made, showing that formal planning was superior in 10 of the 15 comparisons drawn from 12 studies.
Abstract: A review of research from organizational behavior supported the guidelines by corporate planners: that is, use an explicit approach for setting objectives, generating strategies, evaluating strategies, monitoring results, and obtaining commitment. To determine whether these findings could be applied to strategic decision making in organizations, a review was made of all published field research on the evaluation of formal planning. Formal planning was superior in 10 of the 15 comparisons drawn from 12 studies, while informal planning was superior in only two comparisons. Although this research did not provide sufficient information on the use of various aspects of the planning process, mild support was provided for having participation by stakeholders.
Formal planning tended to be more useful where large changes were involved, but, beyond that, little information was available to suggest when formal planning is most valuable. Future research should assess the formal planning process, the situation in which it is used, and its effects on the total system.
561 citations
TL;DR: The industry group is described as a particularly important arena in which niche-related problems and solutions are identified and tested and the contribution of ‘borrowed experience’ to strategy reformulation is emphasized.
Abstract: This paper emphasizes the contribution of ‘borrowed experience’ to strategy reformulation. The industry group is described as a particularly important arena in which niche-related problems and solutions are identified and tested. Industry-wide mistakes in environmental interpretation and strategic response provide interesting evidence of the importance of this contribution to organizational decision making.
An industry oriented view of strategy reformulation requires two kinds of research which are rarely conducted today. We need to know more about the pool of strategic concepts which a group of organizations holds in common at any given time. Spender's study of fork-lift truck rental companies is reviewed as an example of this kind of work. A second kind of needed research involves change in strategic concepts over time. A study of the perceived import threat to the appliance industry from 1950 to 1975 is summarized as an example of this second kind of research.
412 citations
TL;DR: Results of binary regression analysis show that the choice between the two entry modes is well explained by measures of barriers and relatedness, and higher barriers are more likely to be associated with acquisition entry.
Abstract: Summary The economic theory of barriers to entry is integrated with the corporate strategy concept oJ relatedness, to develop a model of the choice between internal detvelopment and acquisition in div ersification entry into new+ markets. The model is tested on original data collected for this studY from PIMS Program participants. These original data coter the parent companY characteristics, entryl strategy- and entrY outcomle Jor 59 entrants into 31 markets. These entry-related data are merged with existing PIMS data on the structure of the entered markets and their incumbents. Results oJ binarY regression analysis show1 that the choice betwt een the two entry modes is wt-ell explained bY measures of barriers and relatedness. Higher barriers are more lik-ely, to be associated with acquisition entry. Greater relatedness is more likely to be associated writh direct entrv.
221 citations
TL;DR: In this paper, the authors argue that there are a number of critical administrative contingencies for successful implementation of the unrelated product strategy which only a few unrelated product firms have recognized, and discuss each in turn, describing specific instances of success and failure to illustrate the major points of the argument.
Abstract: There has been considerable debate over the viability of the unrelated product, or conglomerate strategy. The financial arguments for and against its viability are well known. However, the administrative imperatives for its successful implementation have not been well investigated. The paper argues that there are a number of critical administrative contingencies for successful implementation of this strategy which only a few unrelated product firms have recognized. These concern policies dealing with acquisition, divestment, portfolio structure, management and organization. The paper discusses each in turn, describing specific instances of success and failure to illustrate the major points of the argument.
136 citations
TL;DR: In this paper, the authors used empirical data spanning the years 1965-1980 for fifty-three major U.S. firms that have diversified and grown, and found that the background and prior experience of the incumbent CEO of each firm is significantly associated with the diversification strategy of a firm.
Abstract: Prior research by Berg and Pitts has shown that there is a difference in the diversification strategies followed by major corporations; this strategy depends upon the type of organizational structure at the corporate level. This paper extends research on diversification strategy by testing the hypotheses that the skills and competence of the incumbent chief executive officer of a major firm are associated with its diversification strategy. Using empirical data spanning the years 1965-1980 for fifty-three major U.S. firms that have diversified and grown, it is shown that the background and prior experience of the incumbent CEO of each firm is significantly associated with the diversification strategy of a firm. This has implications for boards of directors in their search for and selection of top level corporate executives, as well as implications for managers in search of executive jobs.
135 citations
TL;DR: In this paper, the authors focus on the impact of competitive expectations and risk on the PIMS and BCG growth/share matrix, and use the BCG approach mostly in the context of experience curve effects.
Abstract: Strategic market opportunities arise either because a firm is exceptionally well placed competitively or because it recognizes the opportunity, on the basis of private information, before others. Strategic market analysis must reflect these two possible routes to attractive opportunities. Both the approaches developed by the Strategic Planning Institute (SPI) through its Profit Impact of Market Strategy (PIMS) and the Boston Consulting Group's (BCG) growth/share matrix fail to reflect the full impact of competitive expectations and risk. Analysis of PIMS data should be directed more towards generalities of limited direct economic significance whereas the BCG approach should be used mostly in the context of experience curve effects. Neither approach should dominate a full analysis of the specific nature and critical ambiguities in any strategic option.
107 citations
TL;DR: The results showed that both grand strategy and industry type moderated the relationship between functional importance and company performance.
Abstract: Summary '/he iiteralurc siigi;csts that the appropriate '.(imbinutions ofjuitcnunal iniporiunee {i.e.. ihroui^h resource allocations, tvpc oj aitintie.^) for iii^h lenis of eoinpan\ pcrfornutncc are affected hv ihe tvpe of ^rand stratef^v pursued hv the firm ami tiie ftrms industrv tvpe. These rciationships wen c.xanvned for 93 industrial firms. Data on functional importance, iirand stratef(v. and industrv tvpe were obtained from tot) e.\ccutircs wliilc financial data were colledcd from tiie Compustat data fdes. The results showed that hath <;rand .slratet^v and industry type moderated the relationship bet ween. June! ional unportance and company perftnniance. These relationships were aiso examined for eueii grand strategy by industry tvpe ci'i lit proitde data for further research. CONCHPTL'AL FRAMEWORK Many researchers have concluded that desired levels of performance cannot be achie\'ed if organizations fail to respond effectively to relevant environmental demands (e.g.. Emery and Trist, 1965; Lawrence and Lorsch, 1967; Thompson. 1967; .•Xckerman. 1975; Dill, 1976; Pfefler and Salancik. 1978; Ansolf. 1979; Porter, 1980). Since environmental demands vary across organizations, dilTerent tirms may have to emphasize the development ofdilTerent mixes (or combinations) of key functional areas. The underlying as.sumption of this research is that a firm's internal and e.xternal environmental conditions determine the particular tunctional areas which will be relatively more crucial tor successtui itnplenientation of a chosen grand strategy and hence for company performance. Each group of these major functional areas [from among those of general administration (GENA), production/operations (PROD), engineering and R&D (ERD), marketing (VIKT). finance (FIN), personnel (PER), and public and governmental relations (PGR)] constitutes what has been previously called a "functional importance mix' (Hitt, Ireland, and Palia, in press). The "functional impot"tance mix' is a surrogate for the t'unctional structure of the firm In addition. pre\ious evidence suggests that the type of grand strategy' pursued by a firm and the firm's industry type tnoderate the relationship between the importance placed on functional areas and company performance. The nature of these
106 citations
TL;DR: Strategy identification, evaluation, and reformulation for the not-for-profit organization are discussed in this paper, as an adaptation of the principles developed for corporate strategic management.
Abstract: With many executives spending at least part of their management careers in not-for-profit organizations, the application of viable principles from corporate experience to the not-for-profit situation is important if these managers are to transfer their talents between organizational forms effectively. Strategy identification, evaluation, and reformulation for the not-for-profit organization are discussed in this paper, as an adaptation of the principles developed for corporate strategic management.
TL;DR: This article describes influence diagrams, explains how to use them, and relates how the tool was applied in a policy assessment study.
Abstract: 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.
TL;DR: In this paper, the authors describe the results of a study focusing on effectiveness and participation in strategic planning and their interrelationships, and present a comparative study of ten, diverse organizations in the United Kingdom.
Abstract: This paper describes the results of a study focusing on effectiveness and participation in strategic planning and their inter-relationships. The work reported is a comparative study of ten, diverse organizations in the United Kingdom. The paper sets out the frameworks for effectiveness and participation against which the empirical work took place; describes the results of the analysis undertaken; and postulates a number of theories concerning effective planning practice and its relation to participation in the system.
TL;DR: The authors analyse the nature of strategy formation in complex organizations and present some tools for improving this critical activity and are confronted with specific management modes, drawn from literature reporting on German and Japanese business practice.
Abstract: The present article is concerned with strategic management as a specific field of general management. The authors analyse the nature of strategy formation in complex organizations and present some tools for improving this critical activity. Section 2 sets out with a simple terminology and framework for the analysis of strategic management. Next, an open-systems view is presented for analysing the strategic activity and a brief literature survey is added to support the concepts presented (Section 3). After discussing their own model of strategic management in complex organizations, the authors proceed to investigate the task of top managers in this specific field (Section 4).
Finally, the concepts presented are confronted with specific management modes, drawn from literature reporting on German and Japanese business practice (Section 5).
TL;DR: This paper suggests a framework for designing planning processes that permits a symbiotic integration of both logical incrementalism and synoptic formalism, and recommends a series ofsynoptic exercises scheduled at intervals of more than a year.
Abstract: The advocates of logical incrementalism and synoptic formalism in strategic planning emphasize, respectively, the interactive and analytical dimensions of the planning process. This paper suggests a framework for designing planning processes that permits a symbiotic integration of both approaches. In particular, synoptic exercises scheduled at intervals of more than a year, with incremental exercises in the intervening years are recommended.
TL;DR: The alternative normative model for research in strategic management presented in this paper involves the simultaneous use of laboratory and field methodologies.
Abstract: Two of the most common objections to laboratory research in strategic management are presented and critically evaluated. Commonly accepted normative models of the research process in strategic management are based on the assumption that field research is appropriate in an emerging field and that laboratory research is only appropriate after sufficient field research has been done. The alternative normative model for research in strategic management presented in this paper involves the simultaneous use of laboratory and field methodologies.
TL;DR: The investigation centres on ‘behavioural problems’ encountered by managers of strategic planning systems and whether the constellation of behavioural problems managers confront varies in accordance with the role of the manager in the planning system.
Abstract: This paper reports the findings of an empirical field study of human behaviour in the context of planning. The investigation centres on ‘behavioural problems’ encountered by managers of strategic planning systems. Two general issues are addressed. The first concerns the frequency of occurrence of these problems among managers and their impact on the effectiveness of the planning process. The second issue pertains to whether the constellation of behavioural problems managers confront varies in accordance with the role of the manager in the planning system. Implications of the findings for practitioners and researchers are discussed.
TL;DR: Survey data supports the idea that top corporate decision makers are allocating significant staff and decision making authority to the public affairs/government relations function and that this activity differs significantly from the traditional lobbying and public affairs activities of the past.
Abstract: The public affairs/government relations (PA/GR) function appears to be growing in importance in large corporations. A survey of the 500 largest U.S. industrial concerns was undertaken to ascertain their views and practices with regard to the PA/GR function. 130 of the 163 firms responding to the survey have a formalized PA/GR function in place. Survey data supports the idea that top corporate decision makers are allocating significant staff and decision making authority to the PA/GR function and that this activity differs significantly from the traditional lobbying and public affairs activities of the past.
TL;DR: Ackerman and Bauer as mentioned in this paper argue that business firms are laced with new and changing social demands, and that it will be advantageous to the firm to treat the social demands as strategic issues.
Abstract: Summary We argue that business firms are laced with new and changing social demands, and that it will be advantageous to thefirm to treat the social demands as strategic issues. However, responding to these social demands strategically requires the application of new managerial concepts and techniques. In this paper we extend conceptually the lead-lag miethodology oJ Ackerman and Bauer (1976), deteloped to deal with the etolutionary nature of social demands. Then we describe the problems of measurement, uncertainty and lack of common units of measures that have to be otercome before the responses to the social demands can be included in the strategic planning and budget process. In the past the study of business and the demands society made upon it dealt mostly with the question of whether or not large private corporate institutions had a responsibility to society beyond the production of goods and services at a profit. The debate was generally moral and
TL;DR: The research attempts to answer the following general questions: Do successful firms use a different type of match between their strategy and their management system than unsuccessful ones?
Abstract: One of the requirements for a strategy to be successful is the use of the proper management system to implement it.
The purpose of this paper is to report on an empirical investigation dealing with this issue. Specifically the research attempts to answer the following general questions:
Do successful firms use a different type of match between their strategy and their management system than unsuccessful ones (description)?
If so, for a given strategy, what are the best ‘organizational arrangements’ (management system) which are likely to lead to a firm's success? Do firms using the prescribed fit or match between strategy and management system get better overall results (prediction)?
Management system or design is here defined as the processes of organizing, planning and controlling, staffing and directing in a company.
TL;DR: Afirm's equilibrium market share is compared with its actual market share to conclude whether the firm has positive or negative growth potential in terms of market share, which has some implications for its investment strategy.
Abstract: If an oligopoly is modelled as a non-zero-sum game, then the market shares associated with an equilibrium solution can be interpreted as measuring the competitive strength of the firms. By comparing afirm's equilibrium market share with its actual market share, one can conclude whether the firm has positive or negative growth potential in terms of market share, which has some implications for its investment strategy.
TL;DR: In this article, the authors used data gathered from annual reports and accounts to identify the 267 businesses which had the largest annual turnover for manufacturing companies, within Britain, in 1971 and were still in existence in 1979.
Abstract: This work is original research which is based on data gathered from annual reports and accounts. It covers some 267 businesses which had the largest annual turnovers for manufacturing companies, within Britain, in 1971 and were still in existence in 1979. The data have been subjected to analysis to reveal preferred product-market postures, movements in posture, effects of annual turnover size on strategies, and the effects of being located within specific industries.
In comparison with the work of D. F. Channon for the preceding twenty years it can be seen that, on the whole, the trend towards diversification has continued throughout the broad spectrum of British Industry.
TL;DR: In this article, the authors examined the anticipated tenure of the chief executive officer from the incumbent's point of view and found that anticipated tenure is generally little affected by whether the CEO is recruited from within or from outside the organization.
Abstract: This study examines the anticipated tenure of the chief executive officer (CEO) from the incumbent's point of view. An analysis of approximately 1500 questionnaires returned by corporate presidents reveals that anticipated tenure is generally little affected by whether the CEO is recruited from within or from outside the organization. However, under conditions of formalized succession planning and when confronted with specific problems, such as modernizing operations, mandates to increase sales and merger operations, there exist differences in anticipated tenure between inside and outside recruited CEOs. These differences are discussed in terms of their implications to corporate level succession planning.
TL;DR: In this article, the PAR equation is replaced with a non-linear model, called 5C, which combines quantitative evaluations of the average effect of various business characteristics on profitability, in a way which models the bargaining of customers with suppliers who are in competition for the supply of a bulk product.
Abstract: Various methods are in use for the ‘top down’ assessment and comparison of the future profitabilities of businesses. The most advanced is the PAR equation of the PIMS programme, which combines quantitative evaluations of the average effect of various business characteristics on profitability. However it is not a true model in the OR sense being essentially a linear regression equation. The proposed new approach is a first attempt to combine the characteristics in a way which models the bargaining of customers with suppliers who are in competition for the supply of a bulk product. All the constants in the resulting non-linear equation (called 5C) are meaningful in marketing or production terms. The model is in a preliminary non-optimized state, but seems to offer opportunities for ongoing development. It is in this spirit that it is offered for discussion.
TL;DR: Screening procedures in the context of developing an understanding of, and dialogue about, strategic problems is examined to provide a ‘thinking structure’ for policy type problems.
Abstract: This paper examines screening procedures in the context of developing an understanding of, and dialogue about, strategic problems. Such a dialogue process is seen as providing a ‘thinking structure’ for policy type problems. Within this dialogue, many different inputs and analyses of assumptions should be reviewed and discussed as a prelude to policy choice.
A case example drawn from the electronics industry is presented, followed by a discussion about the advantages and disadvantages of such approaches.