Strategy and performance in a volatile environment: a study of the electronic computing industry

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Virginia Tech


This study had two objectives. The first was to extend the strategy paradigm by examining the relationship between strategy type and performance objective. The second was to test the idea of a contingency relationship between strategy and performance. The central research question guiding this effort was: What performance results arise from following different strategies within a given context? The intention of this study was to show that firms within a given environmental context could follow different strategies and be successful provided the strategy was related to a specific performance objective. The implication of this argument is that organizational success is a product of both proper implementation of a selected strategy, and the correct choice of a performance objective.

Strategy was operationalized using the Miles & Snow (1978) typology. The choice of a typology was made in order to compare theoretical “ideal types“ with methodological "ideal types." The empirical tests of the hypotheses demonstrated that each strategy type was related to different performance objectives. Analysis demonstrated that for firms which achieved a higher degree of coalignment with their environment, there was a positive and significant impact on performance for the Defender and Analyzer strategy types. This relationship was not supported for the Prospector strategy types, although the results were in the predicted direction.

The primary contribution of this study was to demonstrate that the basic strategic management research paradigm needs to be extended to allow for consideration of multiple performance objectives when examining the relationship between strategy and performance. While there is no single appropriate strategy for any given context, there are limitations to strategy choice after an organization has determined its objectives. This study was the first to demonstrate a contingency relationship between strategy types and differing performance objectives within a single environmental context. Also, the present study was able to operationalize the Analyzer strategy type using secondary data. This is one of the first studies to have done so.