Showing papers in "Strategic Management Journal in 1987"
TL;DR: A conceptual framework encompassing a range of different issues relevant to global strategies is presented, aimed at providing a basis for relating and synthesizing the different perspectives and prescriptions that are currently available for global strategic management.
Abstract: Global strategy has recently emerged as a popular concept among managers of multinational corporations as well as among researchers and students in the field of international management. This paper presents a conceptual framework encompassing a range of different issues relevant to global strategies. The framework provides a basis for organizing existing literature on the topic and for creating a map of the field. Such a map can be useful for teaching and also for guiding future research in this area. The article, however, is primarily directed at managers of multinational corporations, and is aimed at providing them with a basis for relating and synthesizing the different perspectives and prescriptions that are currently available for global strategic management.
1,223 citations
TL;DR: An attempt is made to relate several common dimensions of business-level strategy to their organizational contexts and a model is developed that predicts the structural and environmental correlates of a strategy on the basis of the number and uncertainty of its contingencies.
Abstract: An attempt is made to relate several common dimensions of business-level strategy to their organizational contexts. A model is developed that predicts the structural and environmental correlates of a strategy on the basis of the number and uncertainty of its contingencies. It is shown that strategies of complex product innovation, marketing differentiation, market breadth and conservative cost control each have pronounced but very different relationships with bureaucratic and organic structural devices of uncertainty reduction, differentiation and integration, and with environmental dynamism, heterogeneity and hostility.
881 citations
TL;DR: A model of how decision-makers interpret stategic issues provides a framework for understanding how and why organizations respond differently to strategic issues.
Abstract: 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.
804 citations
TL;DR: Investigation of the conceptual argument that acquisitions which are related in product/market or technological terms create higher value than unrelated acquisitions finds that related target firms benefit more from acquisition than unrelated target firms.
Abstract: This research investigates the conceptual argument that acquisitions which are related in productlmarket or technological terms create higher value than unrelated acquisitions. Related acquisitions are found to have greater total dollar gains than unrelated acquisitions. Acquired firms in related acquisitions have substantially higher gains than acquired firms in unrelated acquisitions. These findings indicate that related target firms benefit more from acquisition than unrelated target firms. Implications of these findings for managers are discussed. Research on corporate diversification is an important area in the strategic management literature. As this research has developed, some appealing operationalizations of diversification have emerged (Rumelt, 1974). These have resulted in generalizations about the linkage between diversification strategy and profitability. As the specificity of research on diversification has increased, corporate acquisitions have been researched as an exclusive focus. Notable among this research is Salter and Weinhold's (1979)
771 citations
TL;DR: It is shown that mergers lead to permanent gains in stockholder value for both acquiring and acquired firms' stockholders, but they do not support the popular prescription: ‘All things being equal, some product and market relatedness is better than none.’
Abstract: Acquisition literature suggests a relationship between stockholder gains and the relatedness of merging firms. This notion is tested by classifying mergers into four relatedness categories and by using measures of stockholder value as developed in the literature on capital markets. In all, stock returns of 439 acquiring firms in 1031 large mergers are examined, as are stock returns of 340 large acquired firms. The findings show that mergers lead to permanent gains in stockholder value for both acquiring and acquired firms' stockholders, but they do not support the popular prescription: ‘All things being equal, some product and market relatedness is better than none.’
536 citations
TL;DR: Findings indicate that consensus on either objectives or methods is positively related to organizational performance.
Abstract: This paper examines the relationship between organizational performance and consensus (or agreement) within top management teams on company objectives and competitive methods for a sample of nineteen firms competing within a highly fragmented industry—paints and allied products (SIC 2851). It was hypothesized that intense competitive pressures and the resultant low industry profitability would constrain organizational resources and augment the need for consensus on both objectives and methods. However, findings indicate that consensus on either objectives or methods is positively related to organizational performance.
494 citations
TL;DR: An empirical study involving 97 manufacturing firms that averaged $20 million in annual sales yielded a strong positive correlation between the degree of planning formality and firm performance, suggesting formalized strategic planning was consistently a positive factor associated with high levels of organizational performance.
Abstract: An empirical study involving 97 manufacturing firms that averaged $20 million in annual sales yielded a strong positive correlation between the degree of planning formality and firm performance. Additionally, interactive analysis disclosed that this relationship pervaded various grand strategies; the implication being that formalized strategic planning was consistently a positive factor associated with high levels of organizational performance.
463 citations
TL;DR: In this paper, the authors examine the literature on strategic groups and extend it: first, by clarifying the distinction between two alternate approaches to forming groups, emphasizing that multivariate group analysis can be used to conserve information not only summarize it as bivariate grouping does; second, focusing attention on the importance of asymmetrical mobility barriers and competitive advantage in the process of industry consolidation and concentration; and linking groups and the concept of contestability in an effort to make some progress towards explaining the evolution of industry structure.
Abstract: This paper examines the literature on strategic groups and extends it: first, by clarifying the distinction between two alternate approaches to forming groups, emphasizing that multivariate group analysis can be used to conserve information not only summarize it as bivariate grouping does; second, by focusing attention on the importance of asymmetrical mobility barriers and competitive advantage in the process of industry consolidation and concentration; and third, by linking groups and the concept of contestability in an effort to make some progress towards explaining the evolution of industry structure.
379 citations
TL;DR: In this article, a competitive strategy under uncertainty involves a tradeoff between acting early and acting later after the uncertainty is resolved, and another trade-off between focusing resources on one scenario and spreading resources on several scenarios, thus maintaining flexibility.
Abstract: Competitive strategy under uncertainty involves a trade-off between acting early and acting later after the uncertainty is resolved, and another trade-off between focusing resources on one scenario and spreading resources on several scenarios, thus maintaining flexibility. This paper analyzes both these trade-offs taking into consideration the nature of uncertainty, industry economics, intensity of competition, and the position of a firm relative to its competitors.
360 citations
TL;DR: The relationship between the strategic orientation of three tobacco companies, the proportion of executives recruited from outside the company and the proportion from different functional backgrounds in the upper echelon of the companies is the focus of this paper.
Abstract: Every organization reflects the background of its most powerful top managers; what the organization does and the way it carries out its functions could be explained, in part at least, by the profile of its upper echelon. The relationship between the strategic orientation of three tobacco companies, the proportion of executives recruited from outside the company and the proportion of executives from different functional backgrounds in the upper echelon of the companies is the focus of this paper.
341 citations
TL;DR: In this paper, the authors developed several propositions that link compensation strategy and the effectiveness of the compensation systenm, and tested these propositions in a samiple of 33 high.tech and 72 non-high tech firms or business units in the Boston Route 128 area.
Abstract: This paper develops several propositions that link compensation strategy and the effectiveness of the compensation systenm. The underlying argument is that effectiveness at realizing intended pay strategies depends significantly on the existence of a match between compensation strategies, organization and environment. These propositions are tested in a samiple of 33 high.tech and 72 non-high tech firms or business units in the Boston Route 128 area. Respondents are nmanagers responsible for compensation policies in these firms or business units. The relationships among compensation strategies, organization characteristics and environment are explored. The findings nmay help researchers conceptualize, and practitioners manage, the relationship between reward processes and strategy in organizations. The consistency with which systematic relationships have been discovered between organizational characteristics and strategy at the overall firm level would lead one to expect the existence of a similar relationship with the organization's compensation system. To date, very little work has been done in developing a contingency theory that ties the pay system to the organization's operating objectives and strategies. This is surprising in view of the fact that labor costs comprise more than half of total costs in most organizations, and that pay systems are pivotal in terms of the motivation, attraction, and retention of human resources (Lawler, 1981). As argued by Milkovich and Newman most compensation research tends to emphasize techniques 'where the mechanics become the focus, ends in themselves . . . the purposes of the pay system are often forgotten . . . to date we really do not know enough to recommend [pay] policies under different conditions' (1984: 11). The purpose of this paper is to take some first steps in the development of a contingency theory of compensation strategy at the orgainizational level. The decision to concentrate on the macro
TL;DR: Analysis of the effects of deregulation on strategic management in the railroad industry suggests that most firms changed their strategies in response to environmental variation, and that those that did change their strategics out‐performed those thatdid not.
Abstract: Concepts from the literature on the relationship between environmental variation and strategic change are used to analyze the effects of deregulation on strategic management in the railroad industry. Specific hypotheses are presented about the impact of regulation and change in regulation on strategy, strategic change and performance. A survey of experts identified the strategies of 27 railroads prior to and after deregulation. Five different railroad strategies and five different kinds of strategic chatnges are identified and described. Results suggest that most firms changed their strategies in response to environmental variation, and that those that did change their strategies out-performed those that did not. Among the strategic changes, those involving innovation and contingency strategies were found to be the most profitable. Other empirical results are presented and discussed.
TL;DR: Results from the research reported herein support the notion that managers' perceptions of the indicators of a firm's strengths and weaknesses, and of environmental uncertainty, vary by managerial level.
Abstract: Some literature suggests that managers' perceptions of strengths and weaknesses indicators vary by management level. Differences likely result because of individuals' cognitive schemes, which include their cognitive biases. In turn, systematic errors may occur in managerial decisions. Results from the research reported herein support the notion that managers' perceptions of the indicators of a firm's strengths and weaknesses, and of environmental uncertainty, vary by managerial level. Differences in these perceptions were discovered to be more significant within each firm. Implications of these results are examined, including the impact on the deployment of firms' strategy formulation processes.
TL;DR: In this paper, the authors examined the performance of corporate international diversification from a market point of view and found that in a highly industrialized, but relatively small, West German market, companies going abroad create shareholder wealth.
Abstract: While product diversity has primarily attracted strategic management scholars, this paper examines the performance of corporate international diversification from a market point of view. The results indicate that in a highly industrialized, but relatively small, West German market, companies going abroad create shareholder wealth.
TL;DR: The paper proposes a paradigmic framework which legitimizes and accommodates the respective theories and suggests that the theories differ because they were based on observations of organizations in different environmental settings.
Abstract: Several apparently conflicting empirically tested theories have been advanced as explanations of strategic behavior. This paper suggests that the theories differ because they were based on observations of organizations in different environmental settings. The paper proposes a paradigmic framework which legitimizes and accommodates the respective theories.
TL;DR: In this article, a game-theoretic model is used to examine how the learning rate and information diffusion affect entry barriers, profits, and price dynamics in a competitive strategy under a range of assumptions regarding competition and the nature of the learning process.
Abstract: This paper explores the implications of the learning curve for competitive strategy under a range of assumptions regarding competition and the nature of the learning process. A game-theoretic model is used to examine how the learning rate and information diffusion affect entry barriers, profits, and price dynamics.
TL;DR: The results suggest that announcements of CEO changes are typically associated with a reduction in the value of the firm, as reflected in the perceptions of the stock market, and that CEO successors tend to significantly influence the production and investment decisions of their firms.
Abstract: This paper argues that the succession/performance relationship is a function of two distinct, complementary concepts: manager effects and succession effects. Hypotheses are tested using a cross-sectional/longitudinal research design, with a sample of 209 large corporations. The results suggest that announcements of CEO changes are typically associated with a reduction in the value of the firm, as reflected in the perceptions of the stock market, and that CEO successors tend to significantly influence the production and investment decisions of their firms. These results hold for both insider and outsider succession.
TL;DR: This paper examines how interactions between marketing and research and development personnel vary across business units pursuing different strategies and indicates that conflict between the two departments is greatest under a prospector business unit strategy.
Abstract: This paper examines how interactions between marketing and research and development personnel vary across business units pursuing different strategies. Based on the Miles and Snow typology of strategy, several propositions concerning the extent of interdepartmental conflict, the structures used to manage and resolve such conflicts, and the perceived effectiveness of the interaction between marketing and R&D are developed. These propositions are empirically tested in a study of marketing personnel from three divisions of a large Fortune 500 company. The results of this preliminary test indicate that conflict between the two departments is greatest under a prospector business unit strategy. The degree of formalization and the use of different forms of conflict resolution mechanisms only partially conformed to the predictions of Miles and Snow, but were strongly linked to respondents' assessment of the effectiveness of relations between the two functional areas.
TL;DR: Several refinements to Michael Porter's ideas are suggested which may further enhance their value to academicians and practitioners.
Abstract: Michael Porter has formulated a set of generic strategies and addressed them to academicians in the fields of economics and strategic management and to top managers of businesses. This article suggests several refinements to his ideas which may further enhance their value to academicians and practitioners.
TL;DR: Analysis revealed that four archetype tactics were used almost exclusively and an ‘interventionist’ approach had the best results but was used in only one case in five.
Abstract: Cases were profiled to identify tactics used by strategic managers to implement strategy and to determine which tactic was the most effective in promoting adoption. Analysis revealed that four archetype tactics were used almost exclusively. An ‘interventionist’ approach had the best results but was used in only one case in five. ‘Persuasion’ and ‘participation’ were next most effective tactics, and ‘edicts’ the least effective. The implications of these findings for strategic management practice and the needs for further research are discussed.
TL;DR: In this paper, the authors propose that organizational decision makers exist in a market for strategic issues where different internal and external trends and developments compete for decision-makers' attention, and describe how an organization's strategic planning process affects the set of strategic issues that do capture decision makers' attention.
Abstract: This paper proposes that organizational decision-makers exist in a market for strategic issues where different internal and external trends and developments compete for decision-makers' attention. The paper describes how an organization's strategic planning process affects the set of strategic issues that do capture decision-makers' attention. It explains how characteristics of the strategic issue array translate into effective and timely initiation and implementation of strategic change.
TL;DR: The relationship between the future time perspectives of individuals and their preferences for short and long planning horizons are explored and implications of the temporal perspective for research and managerial practice are discussed.
Abstract: This paper examines the role of future orientation of organizational members in the strategic planning enterprise. It explores, conceptually and empirically, the relationship between the future time perspectives of individuals and their preferences for short and long planning horizons. Research with 207 corporate executives confirms the relevance of this individual future orientation. Implications of the temporal perspective for research and managerial practice are discussed.
TL;DR: Results show that this field has emphasized the practical usefulness of research results, and some research that is rigorous and has practical usefulness also exists in the field.
Abstract: This paper examines the rigor and usefulness of research programs in strategic management. Using a facet analysis technique, 23 research programs are examined on eight criteria reflecting their relative rigor and usefulness. Results show that this field has emphasized the practical usefulness of research results. Some research that is rigorous and has practical usefulness also exists in the field. Suggestions for generating more such research are discussed.
TL;DR: In this paper, the authors examined predictions drawn from value-based planning models and found that profitability and growth do influence shareholder value in the manner predicted; however, the relationships are conditional, and they also showed that the market-to-book value of equity ratio and Tobin's q-ratio are theoretically and empirically, equivalent measures of value creation.
Abstract: This research examined predictions drawn from value-based planning models. Results indicate that profitability and growth do influence shareholder value in the manner predicted; however, the relationships are conditional. This study also shows that, the market-to-book value of equity ratio and Tobin's q-ratio are theoretically and empirically, equivalent measures of value creation.
TL;DR: It is argued that small firms are just as well, or better, equipped to implement and benefit from these technological advances, particularly in strategic areas.
Abstract: From the descriptions of firms implementing high technology manufacturing programs it would appear that only large companies can benefit from these new manufacturing technologies. In this article the point is argued that small firms are just as well, or better, equipped to implement and benefit from these technological advances, particularly in strategic areas. After describing these new technologies and their benefits and risks, two case studies are presented of small firms that made strategic use of these benefits. The factors that allow this are discussed, and the way that manufacturing technology is altering the competitive equation between large and small firms is then described.
TL;DR: In a recent study, Segev (1987) examined the relationships among strategy, strategy-making, and performance, focusing on the connection between two important typologies: Miles and Snow's concept of strategic types and Mintzberg's (1973) concept of strategy- making modes.
Abstract: In a recent study, Segev (1987) examined the relationships among strategy, strategy-making, and performance, focusing on the connection between two important typologies: Miles and Snow's (1978) concept of strategic types and Mintzberg's (1973) concept of strategy-making modes. The findings of that study clearly indicated links between the two, and partially supported propositions asserting the effects of the strategy/stategy-making fit on organizational performance. In the current study a business game served as the vehicle for examining this tripartite relationship. The two typologies were applied to the firms' in the game, and then an inquiry was made into the relationships between them. An hypothesis regarding the effect of fit on performance was tested, and the findings compared with previously reported empirical results.
TL;DR: The findings provide support for a methodology for measuring and identifying strategy, a basis for research on contingency theories of strategic management, and a practical tool for managers to identify and communicate strategic choices and the implementation issues involved.
Abstract: Field research was conducted in 34 Canadian companies/business units to determine the validity of a generic typology of strategies and the content of each type. Two questionnaires, secondary data, and interviews were used to identify strategic types and explore their strategic characteristics. A typology of generic strategies was proposed and tested, and comprehensive descriptions of their characteristics were developed. The findings provide support for a methodology for measuring and identifying strategy, a basis for research on contingency theories of strategic management, and a practical tool for managers to identify and communicate strategic choices and the implementation issues involved.
TL;DR: In this paper, the authors proposed a hypothesis that a gap tends to develop over an industry's evolution between potential innovators in a company and the organizational mainstream, where the innovative gap is a function of the type of innovation needed for longer run survival and the disposition of the mainstream organization towards innovation.
Abstract: The basic hypothesis in this paper is that a gap tends to develop over an industry's evolution between potential innovators in a company and the organizational mainstream. The innovative gap is a function of the type of innovation needed for longer-run survival and the disposition of the mainstream organization towards innovation. This hypothesis is used to predict which of four popular organizations for innovation is most suited to each stage of an idealized industry's evolution. The predicted organization set is discussed in terms of well-known cases, and tested in an exploratory manner using executive survey data.
TL;DR: In this paper, the authors evaluated the impact of market share on three measures of business-level risk: ROI variation, share instability and the difference between growth in price and growth in cost.
Abstract: This study evaluated the impact of market share on three measures of business-level risk: ROI variation, share instability and the difference between growth in price and growth in cost. The analysis also included conduct variables which might bear upon these relationships. The sample was drawn from the PIMS data base and consisted of mature industrial businesses separated into three types of market environments. Path analysis was employed and yielded partial support for the risk-reduction benefits of market share.
TL;DR: 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.
Abstract: 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.