Environmental munificence, strategic posture and performance: an empirical survey of independent restaurants
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Normative theory holds that strategy should favorably align an organization with its environment. The primary purpose of this study was to provide a test of the contingency effect that environmental munificence may have on the relationship between strategic posture and performance at the level of the business unit. Following the suggestions of Venkatraman (1989) and others (cf. Van de Ven and Drazin, 1985) due consideration was given to developing a precise theoretical position and adopting an appropriate form of fit. In so doing, a secondary purpose was to enhance construct validity and to effect triangulation among measures. This study adopted the independent restaurant establishment as the unit of analysis. A nation-wide sample of 311 independent restaurateurs representing a response rate of 20.7% responded to a mail-out survey. Multi-item scales and multiple methods (representing within-method triangulation) were adopted to measure the primary constructs of strategic posture, munificence, and performance. Moderated regression analysis was used to assess the independent effects as well as the contingency relationships or interaction between the predictor (strategic posture) and the moderator (environmental munificence). The results suggest that both strategic posture and environmental munificence are significant independent predictors of performance. The moderating role of environmental munificence on the effect of strategic posture on performance was not established. However, the independent and additive effects of both strategic posture and environmental munificence were significant. Given the consistency of the results across different operationalizations, these results may be interpreted as being robust. Specifically, in tenus of strategic posture, competitive aggressiveness and a propensity towards risk-loving policies tended to have a negative effect on performance while quality service, as might be expected, tended to have a positive impact on performance. With respect to munificence, growth oriented environments were much better predictors of performance. Taken together, munificence explains a greater proportion of the variance in performance than does strategic posture. Given the nature of the restaurant industry, and the evidence suggesting that environment may be the primary determinant of performance, success for independent restaurateurs may perhaps be more serendipitous than strategic.