Grand Strategies Re-visited—Lessons for High Technology

Small and Medium Sized Firms

 Nicholas O'Regan, Bristol Business School, Bristol, UK 

Gerhard Kling, Bristol Business School, Bristol, UK 

Abby Ghobadian, Henley Business School, UK 

THIS IS !T TH" FI#L $%!ST-R"&I"'( &"RSI!

)!* FI+ TH" FI#L &"RSI! H"R",

O’Regan, N., Kling, G., Ghobadian, A. and . !erren "#$%#& Strategic ositioning and

grand strategies (or high)technology S*+s, Strategic Change #%")-& %//)#%.

  Keywords: Grand strategies, inno0ation, strategy, co1etiti0e ad0antage

 

2orresonding author Nicholas.O’Regan3u4e.ac.u5 

  6elehone 7 88 %%9 :#; :9:

 Nicholas O’Regan is !ro(essor o( Strategy<+nterrise and =nno0ation atBristol Business School, Uni0ersity o( the >est o( +ngland. His research

interests include the organisational culture, leadershi and the strategic

 lanning rocesses o( s1all and 1ediu1 si?ed organisations.

Gerhard Kling is Senior ecturer in Strategic *anage1ent at Bristol Business

School. His research interests include the ad0ance1ent o( co1etiti0e

ad0antage in 1anu(acturing high technology s1all (ir1s and cororate(inance. He 4as re0iously ractice secialist 4ith *cKinsey @ 2o1any,

 based in *unich.

Abby Ghobadian is !ro(essor o( Organisational !er(or1ance and irector o(

the School o( !roects !rocesses and Syste1s at Henley Business School,

Uni0ersity o( Reading. His research is (ocused on identi(ying (actors that

contribute to di((erential er(or1ance a1ong organisations. His researchdra4s on conte1orary 1anage1ent theories and relies on sound

1ethodologies 4ith a strong bias to4ards rele0ance to racticing 1anagers

%

 

Grand Strategies Re-visited—Lessons for High Technology

Small and Medium Sized Firms

#stract

Based on sur0ey data on the engineering and electronic industry, the study unco0ers the

grand strategies ursued by s1all high technology (ir1s and, in articular, analy?es the

i1act o( (or1al strategic lanning and industry seci(ic e((ects on strategic choice. 6he

e1irical 1odel disentangles the interrelationshi bet4een the (ir1’s co1etiti0e osition, 1ar5et en0iron1ent "technological and regulatory change, threats (ro1

substitutes, ne4 entrants, and 1ar5et stability& and the ursued grand strategies. 6he

(indings indicate that (ir1 si?e, in ter1s o( turno0er, a((ects strategic decisionssigni(icantly. 6echnological change and 1ar5et stability sti1ulate roduct de0elo1ent

and inno0ation. An inno0ation strategy see1s to be the only grand strategy that

guarantees higher short and long)ter1 er(or1anceC ne0ertheless, concentrated gro4th,1ar5et and roduct de0elo1ent (oster long)ter1 er(or1ance.

 Keywords: Grand strategies, inno0ation, strategy, co1etiti0e ad0antage

Grand Strategies Re-visited—Lessons for High Technology small and medium sized

Firms

./ Introduction

Organisational strategies are classi(ied into three di((erent le0elsC cororate, business and

(unctional le0els D"HaE and *alu(, "/;8C, Bourgeois, %/;$&. +ach le0el has distinct

characteristics. For eEa1le, the cororate)le0el strategy is concerned 4ith do1ain

selection or which  industry sector"s& to co1ete in "Bourgeois, %/;$&, 4hereas the

 business)le0el strategy is concerned 4ith do1ain na0igation, 4hich includes how  to

co1ete in a selected 1ar5et seg1ent "Ha1bric5, %/;$&. Functional)le0el strategies are

deri0ed (ro1 the business strategy and (ocus on the 1aEi1isation o( resource

 roducti0ity. =n general, cororate)le0el strategy is too aggregated to enable a satis(actory

understanding o( strategic resonses to en0iron1ental in(luences 4hile (unctional le0el

strategies rarely indicate a strategic resonse on their o4n. =t is at the le0el o( business

strategy that the 1aority o( research has (ocussed on, largely as business)le0el strategies

deict the 1ar5et orientations adoted by organisations in their chosen industry sectors as

4ell as re(lect organisational er(or1ance. Accordingly, any eEa1ination o( strategic

#

 

orientation and its i1act on cororate er(or1ance should, in the (irst instance, (ocus on

 business le0el strategies. Ho4e0er, s1all and 1ediu1 si?ed (ir1s S*+s di((er

1ar5edly (ro1 large (ir1s. =ndeed, 4e contend that the distinction bet4een cororate and

 business le0el strategies is not al4ays clear cut and in 1any cases the business strategy is

also the cororate strategy. Accordingly, this aer (ocuses on generic strategies that

tyi(y the beha0iour o( the (ir1. Generic strategies are generally described in ter1s o(

tyologies "e.g. *iles @ Sno4, %/9;C !orter, %/;$&. 6yologies are theoretically deri0ed

di1ensions 4hich rely on identi(ying and 1easuring the 5ey traits o( the strategy and

assessing di((erences and si1ilarities across a ro(ile consisting o( a set o( characteristics

that collecti0ely describe the strategy "Robinson and !earce, %/;;&. 6his tye o( strategy

classi(ication has attracted greater attention because it assists in understanding the

 riority o( acti0ities. Ho4e0er, little research has been carried out on generic strategies in

S*+s articularly in the area o( ho4 the (ir1 4ill co1ete in its chosen 1ar5et"s&. =n an

e((ort to deter1ine strategic thrust, !earce and Robinson "%//8& de0ised the concet o(

grand or 1aster strategies, 4hich they describe as the Ibasic direction (or strategic

actionsJ and conseuently the Ibasis o( coordinated and sustained e((orts directed

to4ards achie0ing long)ter1 business obecti0esJ. Studies to)date on grand strategies

(ocus on larger (ir1s "see Ku1ar and Subra1anian, #$$$C Ku1ar, Subra1anian and

Lauger, %//;C Nar0er and Slater, %//$&. 6here is a dearth o( research on s1aller (ir1s

4ith little indication o( the li5ely otential o( grand strategies to S*+s.

Grand Strategies

!earce, Robbins, and Robinson "%/;9& de(ine a grand strategy as Ia co1rehensi0e

general lan o( 1aor actions through 4hich a (ir1 intends to achie0e its long)ter1

obecti0esJ and contend that this is suorted by a Icoordinated and sustained strategic

1anage1ent e((ortsJ. Grand strategies tend to be associated 4ith a to do4n

1anage1ent style, 4hich underin Isustained e((orts directed to4ard achie0ing long)

ter1 business obecti0esJ "!earce and Robinson, #$$, .#$&. !earce et al. "%/;9&

suggest (our generic grand strategies stability "(or eEa1le. concentration&, internal

gro4th "inno0ation, R@, 1ar5et de0elo1ent&, eEternal acuisiti0e gro4th "0ertical

:

 

and hori?ontal acuisition, di0ersi(ication, oint 0entures& and retrench1ent "turn)around,

di0estiture and liuidation&. 6able % deicts otential grand strategies. Ho4e0er,

Robinson and !earce "#$$& contend that any one o( the strategies Icould ser0e as the

 basis (or achie0ing the 1aor long)ter1 obecti0es o( a single (ir1J, and that (ir1s

in0ol0ed in 1ultile industries 1ight co1bine se0eral grand strategies. +ach grand

strategy has an internal or eEternal orientationC strategies 1ar5ed i are internal

orientated 4here resources are redirected 4ithin the (ir1, and strategies 1ar5ed e are

eEternal orientated.

6able % here.

!earce and Robinson "#$$& suggest that the gro4th rate o( the general 1ar5et and the

(ir1’s osition 4ithin that 1ar5et deter1ine the grand strategy chosen. Ha0ing an

understanding o( the rationale behind the strategy otion chosen is 0ital i( e1loyees are

to deloy the strategy e((ecti0ely. Such an understanding also ro0ides an indication o(

the longer ter1 0ision (or the co1any. For eEa1le, FoE)>ol(gra11, Boal and Hunt

"%//;& contend that, Isecond)order change, a shi(t (ro1 one strategic orientation to

another, is atyical e0en in ti1es o( en0iron1ental uhea0al "M&.J 6hey note that

organi?ations tyically con0erge around a re0ailing archetye Istrategic orientation and

inertia tend to bind the organi?ational change to that 4hich is consistent 4ith the

archetye reresenting (irst)order changeJ. Ho4e0er, in contrast to !earce and Robinson

"#$$&, this study accounts (or additional 1ar5et (actors that could in(luence grand

strategies and, in seci(ic, considers 1ar5et stability, regulation, technology, threat (ro1

substitutes, and 1ar5et entry, 4hich all contribute to 1ar5et attracti0eness. =n addition,

this aroach is consistent 4ith contingency theory 4hich osits that the en0iron1ent,

1anagers, and organisational (actors all lay a role in deter1ining strategic direction.

2ontingency theory resu1es that the ability o( 1anagers to in(luence organisational

outco1e is restricted "*eindl, et al, %/;& by en0iron1ental (actors "Fin5elstein and

Boyd, %//;& and organisational (actors "2arenter and Golden, %//9&. 6he otions are

1any and by selecting the 1eans o( adatation, 1anage1ent eEerts so1e in(luence on

the organisational outco1e "6ho1as and Ra1as4a1y, %//-&. 6he e((ecti0eness o( the

adati0e resonse is deendent on the (it bet4een the resonse and the en0iron1ental

8

 

de1ands "Ha1bric5, %/;:C ee and *iller, %//-&. 6his reuires rele0ant in(or1ation on

changes in the en0iron1ent and an assess1ent o( conseuences o( alternati0e resonses

"Astley and an de en, %/;:&. 6he use o( contingency theory to underin Fig. % is

 articularly aroriate (or S*+s as they are ore 0ulnerable to the e((ects o( the

en0iron1ent, are less able to control the en0iron1ent, and their sur0i0al deends on ho4

they interact 4ith the en0iron1ent "’A1boise and *uldo4ney, %/;;&. Hence,

contingency theory ro0ides the do1inant theoretical (ra1e4or5 to underin this

aroach. Accordingly, the study asserts that the selection o( grand strategies deends on

t4o criteria, the (ir1s’ osition and 1ar5et attracti0eness.

Fig. % here.

6yologies o( generic strategies ha0e recei0ed signi(icant attention in the literature "see

(or eEa1le, *iles and Sno4, %/9;C !orter, %/;$&. Ho4e0er, the testing o( these

tyologies (ocuses on larger (ir1s in the United States 4ith an e1hasis on clari(ying thestrategy)er(or1ance relationshi. 6he literature uses both the *iles and Sno4 "%/9;&

and !orter "%/;$& tyologies. >hile the t4o aroaches eEhibit si1ilarities, Ithe t4o

tyologies are di((erent, each stressing so1e4hat di((erent asects o( business le0elstrategyJ "Sege0, %/;/&. Follo4ing a nu1ber o( (ocus grou discussions, both tyologies

4ere discounted as being too restricti0e (or S*+s. =n !orter’s "%/;$& 1odel, a (ocus

strategy is the only real choice oen to S*+s, 4hereas in the case o( *iles and Sno4’s"%/9;& 1odel, 1anaging directors (eel that in choosing a strategic orientation, they 4ere

 being IcorralledJ into being classi(ied as rosectors or de(enders. Accordingly, this

study see5s a 4ider ranging tyology that could ta5e on board strategic orientation in a

1ore ractical and (ocused 4ayC hence(orth, it (ollo4s !earce and Robinson’s grandstrategy aroach.

6his aer is structured as (ollo4s the literature re0ie4 describes the changing 1ar5eten0iron1ent, S*+s and strategic lanning, S*+s and lanning (or1ality, 1ar5et

conditions and organi?ational er(or1ance. 6he second section highlights the

1ethodology including the sa1ling 1ethod and construction o( 0ariables. 6he thirdsection sho4s the e1irical (indings and econo1etric 1ethods. Finally, the study

concludes, outlines the li1itations and suggests a0enues (or (urther research.

0/ Literature revie1

Changing Market Environment and Strategic Thrust 

6he literature ac5no4ledges and docu1ents the changing 1ar5et en0iron1ent. For

eEa1le, ohnson and Greening "%///, .-8& strongly contend that Istrategic decision

1a5ers in the %//$s ha0e seen the e1ergence o( a hyerco1etiti0e global 1ar5et lace.J Arguably 4ith the #$$; sub)ri1e crisis, the global 1ar5et lace has beco1e

 

1ore co1leE than e0er be(ore. Ho4e0er, 4hile re0ious research has little doubt on the

changing 1ar5et en0iron1ents, straight(or4ard solutions (or business are di((icult to

deri0e. =ndeed, in uggling 4ith the (actors needed to (ace the ne4 co1etiti0een0iron1ent, so1e (ir1s succeed 4hile others (ail. 6he uestion as to 4hy this haens

has taEed the 1inds o( strategists and researchers (or so1e ti1e. Arguably oor

 er(or1ance results (ro1 the (ailure to recogni?e the i1ortance o( eEternal (actors or the(ailure to 1aEi1i?e the bene(its o( internal resources. 6his 1eans that the rearation,

de0elo1ent and deloy1ent o( strategic thrust is crucial to enhance the chances o(

success. 6his is consistent 4ith the contention by Ki1 and *auborgne "%//9& that thedi((erence in er(or1ance bet4een high gro4th (ir1s and their less success(ul

co1etitors lies in their resecti0e aroaches to strategy. =n doing so, the degree o(

e((ecti0eness is enhanced 4ith the degree o( align1ent o( organi?ational strategy 4ith the

(ir1’s eEternal en0iron1ent "see Ha1bric5, %/;:C *iles and Sno4, %/9;&.

=n addition, the literature suorts the long)ter1 nature o( strategic thrust. For instance,

FoE)>ol(gra11, Boal and Hunt "%//;& state that organi?ations tyically con0ergearound a re0ailing generic strategic thrust. =t is there(ore reasonable to suggest that a

holistic aroach that ac5no4ledges the generic strategic direction o( the (ir1 can be

used to deter1ine the otential acti0ities (or co1etiti0e ad0antage. 6he basis o( thisthin5ing is the ro0ision o( generic or grand strategic choices to (ir1s, each o((ering the

5ey to gain, attain or regain sustainable co1etiti0e ad0antage. !earce and Robinson

"#$$, . #$$& argue that general consensus eEists on the need (or generic strategies thatIro0ide basic direction (or strategic actionsJ in order to achie0e long)ter1 business

obecti0es. 6hey describe grand strategies as Iindicating the ti1e eriod o0er 4hich long)

range obecti0es are to be achie0edJ. Accordingly, grand strategies are the o0erall dri0ero( strategic actionsC ho4e0er, using the concet o( grand strategies reuires caution as

1any (ir1s 1ay oerate in 1ore than one en0iron1ent or indeed ha0e di((erent

interretations or ercetions o( an en0iron1ent "see a(t and >eic5, %/;8&. Ho4e0er to

date, little research has been carried out on the strategic thrust o( S*+s.

 SMEs and Strategic Planning 

6he literature suggests that S*+s are o(ten seen as s1aller 0ersions o( larger (ir1s "see

O’Neill and uc5er, %/;-C Bradburd and Ross, %/;/& 4ith resultant ad0antages as 4ell

as disad0antages. ennings and Bea0er "%//9& contend that the search (or co1etiti0ead0antage in 1any S*+s is accidental rather than relanned as S*+s are s1aller in si?e

and scoe and ha0e (e4er resources co1ared 4ith larger (ir1s. Ho4e0er, others argue

that s1aller (ir1s ha0e greater (leEibility and roensity to inno0ate e((ecti0ely

co1ared 4ith larger (ir1s desite their resource constraints D >einrauch et al "%//%&.Accordingly, strategic thrust is esecially i1ortant (or S*+s due to their higher degree

o( 0ulnerability "Bruderl and Schussler, %//$&, 4here the strategy 1a5ing rocesses hel

the 1anagers o( these (ir1s to a0oid or 1ini1i?e obstacles to co1etiti0e ad0antage"Ara1 and 2o4an, %//$&. 6he relationshi bet4een strategic lanning and the

 er(or1ance o( S*+s is borne out by the literature "e.g. Brac5er and !earson, %/;-C

Olson and Bo5or, %//C Kargar and !arnell, %//-&.

-

 

Atte1ts so (ar to establish a generic de(inition o( s1all and 1ediu1 si?ed (ir1s "S*+s&

(ocus on (inancial and e1loy1ent si?e criteria, 4ith each atte1t dra4ing its o4n critics

"see O’Regan, #$$8&. Ho4e0er, the 1ore co11only acceted de(inition is that roounded by the +uroean 2o11ission "%//-& based on less than #$ e1loyees. =t

should be noted that the 1aority o( re0ious studies used 0arying de(initions ranging

(ro1 $ to #$$$ e1loyees, 4ith 1ost studies de(ining (ir1s e1loying u to $$e1loyees as s1all "e.g. *cKiernan and *orris, %//8&.

=n any e0ent, re0ious research on strategic orientations did not incororate si?e as an

eElanatory 0ariable "see Ghobadian et al %//;&. Only a0ig "%/;-& eEa1ines theeEistence o( *iles and Sno4’s (our strategic orientations 4ithin the conteEt o( s1all

1anu(acturing (ir1s in aarel, (oundry and (abricated 1etal roducts industries. His

results are encouraging and contribute to the understanding o( the strategic 1anage1ent

o( s1all (ir1s. Ho4e0er, the *iles and Sno4 tyology (ocuses on three 1ain strategictyes D de(ender, rosector or analy?er, 4hereas !earce @ Robinson’s grand strategies

are 1ore co1rehensi0e and relate to strategies ursued rather than strategic orientation.

>e 4ere unable to locate any study that eEa1ined the use o( grand strategies in S*+s.Accordingly, this led us to deri0e the (ollo4ing research uestions

 R1 What are the principal grand strategies, if any, used by manufacturing small firms?,

 R2 o firms in engineering and electronics use different strategies?,

!2erating "nvironment

As +isenhardt and *artin "#$$$, .%%$& ointed out, (ir1s in less dyna1icen0iron1ents can enact Idetailed, stable rocesses 4ith redictable outco1esJ that are

consistent 4ith the (or1ali?ed lanning aroach. Ho4e0er, the oerating en0iron1ent is

(ar (ro1 stable (or 1ost (ir1s. Follo4ing *iller "%/;;&, this study (ocuses on narro4lyde(ined arts o( the en0iron1ent rather than on o0erall industry ara1eters because

1anagers select seci(ic 1ar5et seg1ents and custo1ers (or attention. 6he (or1er can

only be gauged by assessing 1anagers’ ercetion o( their actual target 1ar5ets "seeess and Beard, %/;8&, as industry 4ide statistics that could ser0e this urose are not

a0ailable "see *iller, %/;;&. !ercei0ed 1easures ha0e the strongest association 4ith

 business strategy, since strategists tend to act on their ercetions "see *iller and Friesen,

%/;8&. Arguably, (ir1s that ercei0e their oerating en0iron1ents to be turbulent ordyna1ic 1ight ursue a 1ar5et tye strategy. =n this case, ee and *iller "%//-&

highlight the i1ortance o( Io((erings rele0ant and attracti0e in a changing settingJ. =n

addition, (ir1s adoting this aroach are li5ely to also in0est in research andde0elo1ent as 4ell as 1ar5eting "see Ha1bric5, %/;:&. 6his suggests that (ir1s are

li5ely to adot a co1bination o( grand strategies rather than one grand strategic aroach.

6he literature also suggests that (ir1s ercei0ing their oerating en0iron1ent to be stable1ight (ocus on the e((iciency based grand strategy "see Ha1bric5, %/;:C ee and *iller,

%//-&. =n addition, auch and Osborn "%/;%, . 8/#& contend that Ithe robability o(

organi?ational sur0i0al increases as the congruence o( en0iron1ental, conteEtual, and

structural co1leEity increasesJ.

9

 

All (ir1s, e0en in the sa1e industry grouing, do not resond to the oerating

en0iron1ent in the sa1e 4ay. For eEa1le, so1e (ir1s 1ay Ianchor their reactions ri1arily to the beha0ior o( other (ir1s that are strategically si1ilar to the1J "Garcia)

!ont and Nohria, #$$#&. Others 1ay adot a 1ore indeendent stance co1rising 0arious

aroaches. 6he resonses to the oerating en0iron1ent can be categori?ed according tothe strategic orientation o( each (ir1. =t there(ore (ollo4s that the align1ent o( an

organi?ation’s strategic orientation to its en0iron1ent is o( ara1ount i1ortance (or

success.

6his led us to deri0e the (ollo4ing research uestion

 R! oes the competiti"e position and the degree of mar#et attracti"eness affect the

 selection of grand strategies?

 R$ %s the alignment of grand strategies and percei"ed operating en"ironment associated

with organi&ational performance?

3/ Methodology and research design

As it ro0ed i1ossible to locate a rele0ant data set, and in any e0ent, archi0al 1easures

cannot 1easure internal organi?ational rocesses recisely "Boyd, ess and Rasheed,

%//:&, 4e choose a sel( reorting ostal sur0ey. 6he literature indicates strong suort(or the use o( sel()reorting data collection "Ra1anua1 and en5atra1an, %/;9C !earce

and Robinson, %/;9C *cKiernan and *orris, %//8C Kargar and !arnell, %//-C Shrader,

2hac5o, Herr1ann, and *ul(ord, #$$8&. !ugh, Hic5son, Hinings and 6urner "%/-;&

argue that sel()reorting 1easures are suerior in this tye o( research to alternati0e datacollection 1ethods because they elicit the in(or1ed oinion o( organi?ational insiders.

*anage1ent research uses ercetual 1easures 4idely because they ro0ide an accurate

descrition o( the (ir1 "Hill1an and Kei1, #$$%&. !ercetions eEert a signi(icantin(luence on shaing strategic beha0ior "2hattoadhyay et al. %///C Sanos and iou5as,

#$$%&. !ercetual 1easures ha0e distinct ractical utility, as they roduce the 1ost

 recise assess1ent o( conditions 4ithin a (ir1 as 4ell as enhancing the interretabilityand co1arability o( data "yon et al. #$$$&.

6he initial sa1le (or this study consists o( %,$$$ rando1ly selected 1anu(acturing

S*+s oerating in the UK’s engineering and electronics sectorsC thus, the study choosessectors that are high technology orientated. ue to eEcluding (ir1s that do not 1atch the

selection criteria, the e((ecti0e sa1le si?e is 9$# (ir1s. 6he reasons (or (ocusing on the

engineering and electronics sectors are the (ollo4ing (irst, both sectors are econo1icallyand strategically i1ortant. Second, the already large and signi(icant oulation o(

%,$$$ S*+s in both sectors "6=, #$$$&. 6hird, the di((erence bet4een the roduct li(e

cycles o( the t4o sectors, 4hich is a 5ey contingency (actor "Ho(er, %/9&. Fourth,changes in organi?ational categori?ations and<or aradig1s are o(ten established using

S*+s "Kleer, %//-&.

;

 

6he sa1le 4as selected rando1ly according to sector and si?e band seci(ications using

the +uroean 2o11ission’s +2<6=’s de(inition o( S*+s ) a (ir1 e1loying u to #$

 eole. !earce and Robinson "#$$& highlight the need to eElore grand strategies byde0eloing a robust concetual (ra1e4or5 or ideally by conducting sound e1irical

studies based on such a (ra1e4or5. Although so1e sound e1irical studies ha0e been

conducted in recent years on grand strategies, e1irical studies on high technology S*+sin articular are lac5ing. 6he strategies 4ere ta5en (ro1 the grand strategies de0ised by

!earce et al. "%/;9& 4ith resondents being as5ed to select the strategy that best described

their o0erall strategic orientation.

6he contacts resulted in %/8 0alid resonses ) a #9 ercent resonse rate. 6his resonse is

relati0ely high as tyical resonse rates (or studies addressing strategic issues are in the

region o( %$)%# er cent "Gelet5anyc?, %//9C Koch and *cGrath, %//-&. 2ontact rior tothe disatch o( the uestionnaire and (ollo4 u calls robably account (or the high

resonse. 6he otential i1act o( non)resonse bias 4as assessed by (irst contacting all

non)resondents in0iting the1 to ans4er a li1ited nu1ber o( uestions concerned 4iththe le0el o( e1hasis laced on strategic thrust. Second, to analy?e sa1ling di((erences,

6)tests co1are the 1eans (or the sa1le o( #- 2+Os 4ho articiated in the short

telehone sur0ey 4ith the 1eans (or the 1ain sa1le, and di((erences are statisticallyinsigni(icant.

>e used 6)tests to eEa1ine the di((erence bet4een early and late in(or1ants’ resonse to

5ey uestions. 6his ro0ides an e((ecti0e test (or assessing non)resonse bias because late

resondents are li5ely to resond in a 1anner si1ilar to non)resondents "Ar1strong and

O0erton, %/99C a1bert and Harrington, %//$&. 6he analysis suggests that non)resonse

is not a serious roble1 and should not a((ect conclusions. Finally, 4e too5 1easures to

1ini1i?e 2o11on 1ethod 0ariance "2*&. 2* re(ers to the a1ount o( surious

co0ariance shared a1ong 0ariables because o( the co11on 1ethod used in collecting

data "Buc5ley et al. %//$&. 6he literature suggests that sel()reorting sur0eys in0ol0ing a

single resondent 1ay be suscetible to 2* "Ke1ery and unla %/;-C indell and

>hitney #$$%&. 6he constructs used in this study reuired the resondents to reort on

discrete e0ents reducing the li5elihood o( distorted sel()reorts and < or socially desirable

resonses. Hence, the 2* roble1 is 1ini1ised to a large eEtend. >e also used the

one (actor test roosed by Har1an "%/-9& that o((ers a statistical rocedure (or testing

the 1agnitude o( otential 2* roble1s.

4/ "m2irical analysis

/

 

6able : highlights the grand strategies (a0ored by S*+s and indicates that roduct

de0elo1ent, 1ar5et de0elo1ent and inno0ation are ro1inent generic strategies used.

 Need a bit 1ore here Arguably the 1aority o( S*+s ai1 to deli0er inno0ati0e and high)

uality roducts, 4ith 1any tending to concentrate on a single roduct, single 1ar5et and

a single do1inant technology. 2ororate le0el strategies related to ort(olio 1anage1ent

are not at the heart o( S*+s’ strategic thin5ing, 4hich is, arguably, due to their roduct,

geograhical and organi?ational concentration.

6able : here.

ue to ordered data, na1ely 0alues (ro1 % to indicating the degree o( i1ortance to the

indi0idual, linear regression 1odels (ail in analy?ing ran5ings, as they treat the di((erence

 bet4een 8 and the sa1e as bet4een % and #. =n (act, di((erences bet4een categories

cannot be interreted in a linear 4ay, as they reresent di((erences in ran5ings and not

continuous 0ariables. Hence(orth, to account (or sel()anchoring scales, ordered logit and

 robit 1odels reresent the best econo1etric 1ethod "Pa0oina and *c+l0ey, %/9&.

Besides using ordered logit 1odels instead o( linear regressions, ordinal le0el data

reuire ran5 correlation coe((icients 4hen analy?ing the interrelation bet4een t4o grand

strategies. 6he Sear1an’s ran5 correlation and Kendall’s "%/:;& 1easure are both non)

 ara1etric esti1ators and do not reuire a linear relationshi bet4een the t4o tested

0ariablesC hence, they ro0ide correct esti1ates (or the correlation bet4een resonses.

Kendall’s "%/:;& 1easure is suerior in 1ediu1 and s1all si?ed sa1les. Stars indicate

statistical signi(icance on the // ercent le0el o( con(idence and are based on Bon(erroni

adust1ents, 4hich account (or the nu1ber o( statistical tests carried out. 6able 8 (ocuses

on the (our do1inant grand strategies "see 6able :& and dislays ran5 correlations. 6he

grand strategy roduct de0elo1ent (osters inno0ation and 0ice 0ersa, 4hereas 1ar5et

de0elo1ent eEhibits only a 4ea5 ositi0e correlation 4ith roduct de0elo1ent and

inno0ation. =nterestingly, the strategy concentrated gro4th is not strongly lin5ed to any o(

the other three (a0orite strategic choices.

6able 8 here.

%$

 

A(ter unco0ering S*+s’ strategic thrust re(erences, the study analy?es the i1act o(

(or1al and in(or1al lanning on the choice o( grand strategies. 8 ercent o( the

resondents do not ha0e any 4ritten strategic lanC hence, one could consider that these

(ir1s ursue in(or1al strategic lanning. 6able su11ari?es the descriti0e statistics,

na1ely the a0erage ran5 in both grous, and the results o( ordered robit 1odels, 4hich

eElain the ran5 o( the resecti0e grand strategies dri0en by (or1al or in(or1al lanning.

6able indicates the di((erence bet4een (or1al and in(or1al lanning and test (or its

signi(icance.

6able here.

=n(or1al lanning (ir1s tend to ran5 nearly all grand strategies lo4er, eEcet 0ertical

integration and concentric di0ersi(ication. Ho4e0er, signi(icance le0els deri0ed (ro1

ordered robit 1odels indicate that the obser0ed di((erences bet4een (or1al and in(or1al

 lanning are not statistically signi(icant D hori?ontal integration and roduct de0elo1ent

 being an eEcetion.

=ndustry seci(ic e((ects see1 to 1atter 4ith regard to re(erred grand strategies. Fig. #

 lots the strategic ro(ile o( engineering and electronics (ir1s and indicates 4hether the

obser0ed discreancies are o( statistical signi(icance. 6his re(ers to ordered logit 1odel

4ith indicator 0ariables (or industries as eElanatory 0ariables. High technology S*+s in

electronics tend to (a0or roduct de0elo1ent 1ore co1ared to engineering co1anies,

4hereas the latter (ocus 1ore on conglo1erate di0ersi(ication and turnaround strategies.

A(ter con(ir1ing industry seci(ic e((ects, the study considers the interrelation bet4een

co1etiti0e osition, 1ar5et en0iron1ent and alied grand strategies. =n articular, the

e1irical 1odel 1easures the co1etiti0e osition based on turno0er and gross ro(it

1arginsC hence, si?e and ro(itability deter1ine the (ir1’s osition. *ar5et en0iron1ent

as ercei0ed by the resecti0e resondent consists o( an o0erall assess1ent o( 1ar5et

dyna1ics "stable, dyna1ic, turbulent& and 1ore seci(ic (eatures that i1ose an

i11inent threat to the organi?ation "technological change, substitutes, ne4 do1estic and

%%

 

(oreign entrants, regulatory changes&. 6he technological co1onent is (urther re(ined into

an o0erall change in technology a((ecting the 4hole 1ar5et, roduct related technological

ad0ances, and decreasing roduct li(e cycles. Based on ordered robit 1odels, 6able -

reorts the esti1ated artial i1act o( co1etiti0e osition "turno0er and gross ro(it

1argin&, 1ar5et dyna1ics and threats due to technology, substitutes, entrants and

regulatory changes.

6able - here.

6he analysis indicates that the co1etiti0e osition and en0iron1ental (actors deter1ine

strategic decisions. =n articular, high technology S*+s (a0or a concentrated gro4th

strategy i( the single 1ar5et in 4hich they oerate is stable and regulatory changes are

unli5ely. *ar5et de0elo1ent, in contrast, is highly dri0en by the threat (ro1 substitutesC

thus, co1anies (acing co1etition (ro1 substitutes try to establish stronger custo1er

relationshis by adding 1ore distribution channels and re(ining their ad0ertising.

6echnology in ter1s o( o0erall technological change, roduct technology, and shortening

o( roduct li(e cycles (orces co1anies to (ollo4 a roduct de0elo1ent strategy. Let

1ar5et stability is a crucial (actor (or high technology S*+s that aly a roduct

de0elo1ent strategy. Freuent changes and i1ro0e1ent o( roduct o((erings

"inno0ation& deends on technological (actors D but in contrast to a roduct de0elo1ent

strategy, si?e in ter1s o( turno0er lays an essential role. Hence(orth, s1aller co1anies

see1 to be reluctant to ursue an inno0ation strategy and (a0or instead roduct

de0elo1ent due to their 4ea5er 1ar5et osition and (inancial constraints. Gro4th

through acuisitions "hori?ontal integration& is hea0ily in(luenced by si?e in that larger

co1anies 4ith regard to turno0er see5 eEternal gro4th oortunities, (or their organic

gro4th otential see1s to be li1ited. =n addition, technology 1ight lay a role in the

decision to acuire hori?ontally, as atents or rocess inno0ations could be an attracti0e

co1onent o( acuisitions. 2o1anies eEeriencing lo4 gross ro(it 1argins tend to

consider conglo1erate di0ersi(ication to change their (ortune. A turnaround strategy

see1s to be a 0iable ath (or high technology S*+s 4ith lo4 gross ro(it 1argins but

su((icient turno0er in an unstable 1ar5et en0iron1ent. 6hreats i1osed by substitutes

%#

 

dri0e di0estitures to so1e eEtent. 6he 1odel re0eals an interesting di((erence bet4een

 oint 0entures and strategic alliances in that both strategies are dri0en by si?e, technology

and 1ore li5ely to be (or1ed in less stable 1ar5ets "in ter1s o( 1ar5et gro4th& D but

 oint 0entures and hence euity sta5es 1atter i( co1anies (ace a otential threat o(

1ar5et entry. Again technology 1atters in the (or1ation o( consortiaC yet, other (actors

do not ossess a signi(icant e((ect.

Finally, the uestion arises 4hether the grand strategies (a0ored by high technology

S*+s and dri0en by the co1etiti0e osition and 1ar5et en0iron1ent really enhance

oerational er(or1ance in the long)ter1. Accordingly, the e1irical 1odel uses

subecti0e er(or1ance, relati0e (ir1 costs, the change in turno0er and ro(its o0er the

last three years as indicators (or oerational er(or1ance to e0aluate the i1act o( grand

strategies on these er(or1ance 1easurers. Besides these general er(or1ance 1easurers,

resondents assess 4hether their strategic choices a((ect their short and long)ter1

 er(or1ance. Accordingly, 6able 9 reorts the artial i1act o( the resecti0e grand

strategy chosen and its statistic signi(icance on the siE oerational er(or1ance 1easures.

6o circu10ent the inherent endogeneity and causality roble1 4hen analy?ing the

strategy<er(or1ance relationshi, 6able 9 sho4s the i1act o( ast er(or1ance

"1easured by the change in turno0er and ro(its during the ast three years& on grand

strategies. 2onseuently, high technology S*+s that su((ered (ro1 a decline in turno0er

and ro(its tend to adot a turnaround strategy. =nterestingly, a turnaround strategy does

not see1 to (oster current and (uture er(or1ance. An inno0ation strategy due to its

related in0est1ent is 1ore li5ely 4hen ast er(or1ance is strong and it see1s to

enhance current and (uture er(or1ance. =n site o( lac5ing current and short)ter1

success, concentrated gro4th, 1ar5et de0elo1ent and roduct de0elo1ent are belie0ed

to increase (uture er(or1ance. Follo4ing an inno0ation strategy see1s to be the best

choice (or guaranteeing higher short and long)ter1 er(or1ance.

6able 9 here.

5/ +iscussion

%:

 

'(1( )ain findings and concluding remar#s

Generic strategies are rele0ant to high technology S*+s as 4ell as larger (ir1s.

Ho4e0er, high technology S*+s (a0or (ocusing and de0eloing on a single 1ar5et,

4hereas ort(olio strategies are only rele0ant (or larger S*+s and large (ir1s that see5 to

gro4 through acuisitions. Accordingly, the i1act o( (ir1 si?e on strategic decisions

e0en in the (ield o( high technology S*+s, is signi(icant. =ndustry seci(ic e((ects eEist D

 but are not do1inant, as the study eEa1ines rather si1ilar industries, na1ely engineering

and electronics. Ne0ertheless, high technology S*+s in the electronics sector tend to

(a0or roduct de0elo1ent 1ore co1ared to engineering co1anies, 4hereas the latter

(ocus 1ore on conglo1erate di0ersi(ication and turnaround strategies. 6he co1etiti0e

 osition and 1ar5et (actors shae strategic decisions considerably. 6urbulent 1ar5ets

1a5e oint 0entures and strategic alliances attracti0e, (or they allo4 better di0ersi(ication

o( ris5s. 6echnological changes (orce high technology S*+s to adot roduct

de0elo1ent and inno0ation strategies. By incororating ast, current, and (uture

oerational er(or1ance, the e1irical 1odel can 1itigate the inherent causality and

endogeneity issue 4hen analy?ing the strategy)er(or1ance relationshi. Fir1s su((ering

(ro1 declining turno0er and ro(its try to i1le1ent a turnaround strategy, 4hereas

strong ast er(or1ance enables high technology S*+s to in0est in inno0ation.

=nno0ation in turn is the only grand strategy that signi(icantly boosts current and (uture

 er(or1ance. Let, concentrated gro4th, 1ar5et de0elo1ent, and roduct de0elo1ent

 ro1ise higher long)ter1 er(or1ance.

Strategic 1anage1ent is a continuous, cyclical rocessC the lanning art is not a one)o((

e((ort. !earce and Robinson "#$$& oint out that 0ie4ing strategic 1anage1ent as a

 rocess 1eans that a change in any co1onent has an e((ect on all or on at least se0eral

other co1onentsC that lanning, (or1ulation, and i1le1entation are seuentialC that

(eedbac5 is the 1eans by 4hich ost i1le1entation results can enhance (uture decision

1a5ingC that 0ie4ing strategic 1anage1ent as a rocess underlines the need to regard it

as a dyna1ic yet interdeendent syste1. 6he study cannot detect a ronounced i1act o(

(or1al strategic lanning on ursued grand strategies, 4hich indicates that in the case o(

%8

 

high technology S*+s (or1al strategic lanning is less rele0ant. 6his 1ight suggest that

the traditional to)do4n 1anage1ent aroach in high technology S*+s does not

reuire (or1al strategic lanning (or i1le1entation o( strategies.

6he 1ost i1ortant lesson (or high technology S*+ 1anaging directors is that strategic

direction can a((ect short and long)ter1 er(or1anceC hence, selecting the right grand

strategy gi0en the (ir1’s o4n co1etiti0e osition and 1ar5et attracti0eness is the 5ey to

enhancing er(or1ance and guaranteeing longer ter1 sur0i0al. 2oncentrated gro4th,

1ar5et and roduct de0elo1ent ro1ise higher long)ter1 er(or1anceC thus, high

technology S*+ 1anaging directors are strongly ad0ised to (ollo4 these strategies.

=nno0ation is the 1ost ro1ising grand strategy (or boosting short and long)ter1

 er(or1ance D but a strong ast er(or1ance see1s to be essential (or choosing this ath.

'(2( *imitations

A nu1ber o( li1itations occur in this study. 6he 0ariety and nu1ber o( generic strategies

are such that any single in0estigation o( generic strategies is unli5ely to be eEhausti0e.

6he study (ocuses on the generic strategies roounded by !earce and Robinson.

6he study suggests that increased inno0ation i1ro0es er(or1ance, but 4ithout

longitudinal obecti0e 1easures the si?e o( the bene(it is di((icult to uanti(y. Ho4e0er,

(ro1 a ractical stand, ractitioners need to 5no4 not only that it is bene(icial, but also

the otential 1agnitude o( the bene(it. Aug1enting the subecti0e 1easures 4ith

te1oral obecti0es 1easures 4ould ha0e strengthened the study by ans4ering this

uestion as 4ell as o((ering additional suort (or the use o( subecti0e 1easures.

6his study relies on data collected using a sel()reorting ostal uestionnaire. =deally, this

should be aug1ented 4ith real)ti1e longitudinal studies to obtain a better understanding

o( causal relationshis "both degree and direction& bet4een the 0arious generic strategies

and o0erall cororate er(or1ance. ongitudinal studies 4ill illu1inate ho4 the generic

strategy being ursued e0ol0es in the conteEt o( en0iron1ental and other in(luences.

%

 

6he study only includes 1anu(acturing high technology S*+s oerating in the

engineering and electronics sectors. Accordingly, the generalisability o( the results to

other industries, or (ir1s o( larger si?e, 1ust a4ait (uture research. *oreo0er, the study

only establishes 4hether the le0el o( e1hasis on a generic strategy is related to

 er(or1ance. Ob0iously, as other organi?ational and en0iron1ental (actors a((ect o0erall

 er(or1ance, any causal relationshis are eEtre1ely di((icult to uanti(y.

 Not4ithstanding the li1itations the article 1a5es a ositi0e contribution to the strategic

literature by (ocusing on generic strategies in 1anu(acturing high technology S*+s.

References

  Ara1, .., and 2o4an, S.S., "%//$&, QStrategic lanning (or increased ro(it in s1all

 business’, ong Range !lanning, ol.#:, No.-, . -:)9$.

Ar1strong, .S., and O0erton, 6.S. "%//9& +sti1ating non)resonse bias in 1ail sur0ey,

ournal o( *ar5eting Research %, :/-)8$#.

Astley, >.G., and an de en, A.H., "%/;:&, 2entral !ersecti0es and ebates in 

Organi?ation 6heory, Ad1inistrati0e Science uarterly, un;:, ol. #; =ssue #, #8, #/

Bourgeois, .., "%/;$&, !er(or1ance and 2onsensus, Strategic *anage1ent ournal, ul)

Se;$, ol. % =ssue :, ##9, ##C

Boyd, B.K., ess, G.G., and Rasheed, A.*.A. "%//:& i0ergence bet4een ercetual

and archi0al 1easures o( the en0iron1ent 2auses and conseuences, Acade1y o( 

*anage1ent Re0ie4 %;, #$8)##-.

Brac5er, ., and !earson, ., "%/;-&, !lanning and (inancial er(or1ance o( s1all, 1ature

(ir1s, Strategic )anagement +ournal, 9"-&, $:)##

Bradburd, R.*. and Ross, .R. "%/;/& 2an s1all (ir1s (ind and de(end strategic niches

A test o( the !orter hyothesis, Re0ie4 o( +cono1ics and Statistics 9%"#&, #;D-#.

Bruderl, ., and Schussler, R., "%//$&, Organi?ational *ortality 6he iabilities o( Ne4ness 

and Adolescence,  Ad1inistrati0e Science uarterly, Se/$, ol. : =ssue :, :$, %;,

%-

 

Buc5ley, *. R., . A. 2ote, S. *. 2o1stoc5. %//$. *easure1ent errors in beha0ioral sciences

6he case o( ersonality<attitude research. +ducational !sych. *easure1ent $":& 889)898

Burt, ., "%/9;&, Q!lanning and er(or1ance in Australian retailing’, *ong   Range lanning ,

ol.%%, .-#)-;.

2arenter, *.A. and Golden, B. "%//9&, !ercei0ed *anagerial iscretion A study o(

cause and e((ect, Strategic *anage1ent ournal. %; %;9)#$-

2hattoadhyay, !., Glic5, >.H., *iller, 2.2., and Huber, G.!., "%///&, eter1inants o( 

eEecuti0e belie(s co1aring (unctional conditioning and social in(luence, Strategic

*anage1ent ournal #$, 9-:)9;/.

’A1boise, G., and *uldo4ney, *., "%/;;&, *anage1ent 6heory (or S1all

Business Atte1ts and Reuire1ents, Acade1y o( *anage1ent Re0ie4, Ar;;,

ol. %: =ssue #, ##-, %

a(t, R.., and >eic5, K.+., "%/;8&, 6o4ard a 1odel o( organi?ations as interretation

syste1s, Acade1y o( *anage1ent Re0ie4 /, #;8)#/.

a0ig, >. "%/;-& Business strategies in s1aller 1anu(acturing (ir1s, ournal o( S1all

Business *anage1ent. #8"%&, anuary, :;D8-.

ess, G., and . Beard "%/;8& i1ensions o( Organi?ational 6as5 +n0iron1ents,

Ad1inistrati0e Science uarterly #/, #)9:.

6= "#$$$&, S1all Fir1s in Britain Reort, ondon eart1ent o( 6rade and =ndustry.

+isenhardt, K. "%/;/&, *a5ing (ast strategic decisions in high 0elocity en0iron1ents.

Acade1y o( *anage1ent ournal, :#":& 8:)9-.

+isenhardt, K. *. and *artin, . A. "#$$$& yna1ic 2aabilities >hat Are 6hey

Strategic *anage1ent ournal #%"%$<%%&, %%$)%%#%.

+uroean 2o11ission "%//-&, 2o11ission reco11endation : Aril %//- O((icial

ournal %$9 o( :$.8.%//-, .8.

Fin5elstein, S., and Boyd, B.K.., "%//;&, Ho4 1uch does the 2+O 1atter 6he role o(  

1anagerial discretion in the setting o( 2+O co1ensation.  Acade1y o( *anage1ent

ournal, Ar/;, ol. 8% =ssue #, %9/, #%,

FoE)>ol(gra11, S.., K.B. Boal and .G. Hunt "%//;& Organi?ational Adatation to

=nstitutional 2hange A 2o1arati0e Study o( First)Order 2hange in !rosector and

e(ender Ban5s, Ad1inistrati0e Science uarterly 8:, ;9)%#-.

%9

 

Garcia)!ont, 2., and Nohria, N. "#$$#& ocal 0ersus global 1i1etis1 6he yna1ics o( 

alliance (or1ation in the auto1obile industry, Strategic *anage1ent ournal #:"8&, :$9.

Gelet5anyc?, *. A. "%//9& 6he salience o( Tculture’s conseuencesT 6he e((ect o(

cultural 0alues on to eEecuti0e co11it1ent to the status uo, Strategic *anage1ent

ournal

%;, -%) -:8.

Ghobadian, A., iney, H., iu, ., a1es, !. "%//;& +Etending linear aroaches to

1aing cororate en0iron1ental beha0ior, Business Strategy and +n0iron1ent 9"%&,%:

#:.

Ha1bric5, .2., "%/;$&, Oerationali?ing the 2oncet o( Business)e0el Strategy in 

Research, Acade1y o( *anage1ent Re0ie4, Oct;$, ol. =ssue 8, -9, %$,

Ha1bric5, .2. "%/;:& High ro(it strategies in 1ature caital goods industries A

contingency aroach, Acade1y o( *anage1ent ournal #-, -;9)9$9.

Har1an, H. H. "%/-9&. *odern (actor analysis "second ed.&. 2hicago 6he Uni0ersity o(

2hicago !ress. "898 .&

HaE, A.2., and *alu(, N.S., "%/;8&, Strategic *anage1ent ) an =ntegrati0e

 ersecti0e, N !rentice Hall.

Hill1an, A.., and Kei1, G.. "#$$%& Shareholder 0alue, sta5eholder 1anage1ent, and

social issues >hat’s the botto1 line Strategic *anage1ent ournal ##"#&, %#)%8$.

Ho(er, 2.>., "%/9&, So1e reli1inary research on atterns o( strategic beha0ior,

Acade1y o( *anage1ent !roceedings %/9:, 8-, /.

auch, .R. and R.N. Osborn, %/;%, 6o4ard an integrated theory o( strategy, Acade1y o( 

*anage1ent Re0ie4 - ":&, uly, 8/%D8/;.

ennings !, and Bea0er G "%//9&. Q6he er(or1ance and co1etiti0e ad0antage o(

s1all (ir1s a 1anage1ent ersecti0e’, =nternational S1all Business ournal, %

"#& -:)9

ohnson, R.A., and Greening, .>. "%///& 6he e((ects o( cororate go0ernance and

institutional o4nershi tyes on cororate social er(or1ance, Acade1y o( 

*anage1ent ournal.8#, -8)9-.

Kargar, ., and !arnell, .A. "%//-& Strategic lanning e1hasis and !lanning satis(action

in s1all (ir1s an e1irical in0estigation, ournal o( Business Strategies %:"%&, 8#)-8.

%;

 

Ke1ery, +. R., @ unla, >. !. "%/;-&. !artialling (actor scores does not control 1ethod

0ariance A rely to !odsa5o(( and 6odor. +ournal of )anagement, 12, #)88.

Kendall, *. "%/:;& A Ne4 *easure o( Ran5 2orrelation, Bio1etri5a :$, ;%);/.

Ki1, >.2., and *auborgne, R. "%//9& alue inno0ation the strategic logic o( high

gro4th, Har0ard Business Re0ie4, anuary)February

Kleer, S. "%//-&, +ntry, +Eit, Gro4th and =nno0ation o0er the !roduct i(e 2ycle,

A1erican +cono1ic Re0ie4 ;-, -#);:.

Koch, *. ., and *cGrath, R. G. "%//-& =1ro0ing labor roducti0ity Hu1an resource

1anage1ent olicies do 1atter, Strategic *anage1ent ournal %9, ::):8.

Ku1ar, K., and Subra1anian, R. "#$$$& Na0igating the eEternal en0iron1ent through a

1ar5et orientation, SA* Ad0anced *anage1ent ournal -"%&, .%-.

Ku1ar, K., Subra1anian, R., and Lauger, 2. "%//;& +Ea1ining the 1ar5et orientation

 er(or1ance relationshi a conteEt)seci(ic study, ournal o( *anage1ent #8"#&, #$%

#:#.

a1bert, ., and Harrington, 6. "%//$& *easuring nonresonse bias in custo1er ser0ice

1ail sur0eys, ournal o( Business ogistics %%"#&, )#.

ee, . and *iller, . "%//-& Strategy, +n0iron1ent and !er(or1ance in 64o

6echnological 2onteEts Strategic 2ontingency 6heory in a Korean Setting,

Organi?ation Studies %9"&, 9#/)9$.

indell, *. K., @ Brandt, 2. . "#$$$&. 2li1ate uality and cli1ate consensus as 1ediators o(

the relationshi bet4een organi?ational antecedents and outco1es.  +ournal of -pplied

 sychology, .$, ::%:8;

yon, .>.C u15in, G. 6.C ess, G.G.. "#$$$&, +nhancing +ntrereneurial Orientation 

Research Oerationali?ing and *easuring a Key Strategic ecision *a5ing !rocess, 

ournal o( *anage1ent, ol. #-., =ssue , . %$)%$;-.

*cKiernan, !. and *orris, 2. "%//8& Strategic lanning and (inancial er(or1ance in UK

S*+s does (or1ality 1atter, British ournal o( *anage1ent , Secial =ssue, :%)8%.

*eindl, .R., +hrlich, S.B., u5erich, .*., "%/;&, 6he Ro1ance o( eadershi. 

Ad1inistrati0e Science uarterly, *ar%/;, ol. :$ =ssue %, 9;, #C

*iles, R.+. and 2.2. Sno4 "%/9;& Organi?ational Strategy, Structure and !rocess, Ne4

Lor5, *cGra4DHill.

%/

 

*iller, ., "%/;;&, Relating !orter’s Business Strategies to en0iron1ent and structure,

Acade1y o( *anage1ent Structure, Acade1y o( *anage1ent ournal :%, #;$):$;.

*iller, . and Friesen, !. H., "%/;8&, A longitudinal study o( the cororate li(e cycle,

*anage1ent Science :$"%$&, %%-%, #:.

 Nar0er, .2., and Slater, S.F. "%//$& 6he e((ect o( a 1ar5et orientation on business

 ro(itability, ournal o( *ar5eting 8"8&, #$):.

Olson, !. .,and Bo5or, . >. "%//&, Strategy rocess)content interaction +((ects on

gro4th er(or1ance in s1all start)u (ir1s. +ournal of Small /usiness

 )anagement, ::"%& :8)88.

O’Neill, H.*., and u5er, . "%/;-& Sur0i0al and (ailure in s1all business, ournal o(

S1all Business *anage1ent #8"%&,:$):9.

O’Regan, N. "#$$8& 6esting the Ho1egeneity o( S*+s, +uroean Business Re0ie4

%-"%&, -8)99.

!earce, .A., and Robinson, R.B. "%/;9& A 1easure o( social o4er in strategic decision

1a5ing, Strategic *anage1ent ournal ;, #/9):$8.

!earce, .A., and Robinson, R.B. "%//8& Strategic *anage1ent For1ulation,

=1le1entation and 2ontrol, th ed., =r4in, Boston, *A.

!earce, .A., and Robinson, R.B. "#$$& Strategic *anage1ent For1ulation,

i1le1entation and control, NL *cGra4)Hill.

!earce, . A., Robbins,.K. and Robinson, R. B. "%/;9& 6he i1act o( grand strategy and

 lanning (or1ality on (inancial er(or1ance, Strategic *anage1ent ournal ;, %#D%:8.

!orter, *.+. "%/;$& 2o1etiti0e Ad0antage 2reating and Sustaining Suerior

!er(or1ance. Ne4 Lor5 Free !ress.

!ugh, S., Hic5son, . ., Hinings, 2. R., and 6urner, 2. "%/-;& i1ensions o(

Organi?ation Structure, Ad1inistrati0e Science uarterly %:"%&, -)%$-.

Ra1anua1, ., and en5atra1an, N. "%/;9& !lanning and er(or1ance a ne4 loo5 at

an old uestion, Business Hori?ons :$, %/)#.

Robinson, RB, and !earce, A., "%/;;&, !lanned atterns o( strategic beha0ior and their

relationshi to business unit er(or1ance, Strategic *anage1ent ournal, /"%& 8:)-$.

Sege0, +. "%/;/& A syste1atic co1arati0e analysis and synthesis o( t4o business)le0el

strategic tyologies, Strategic *anage1ent ournal %$, 8;9)$.

#$

 

Shrader, 2. B., 2hac5o, 6.=., Herr1ann, !., and *ul(ord, 2. "#$$8& !lanning and (ir1

 er(or1ance e((ects o( 1ultile lanning acti0ities and technology olicy, =nternational

ournal o( *anage1ent @ ecision *a5ing "#<:&, %9%, #.

Sanos, L.+., and iou5as, S. "#$$%& An eEa1ination unto the causal logic o( rent

generation 2ontrasting !orter’s 2o1etiti0e Strategy Fra1e4or5 and the Resource)

 based !ersecti0e, Strategic *anage1ent ournal ##"%$&, /$9)/:8.

6ho1as, A.S., and Ra1as4a1y, K.,"%//-&, *atching *anagers to Strategy Further 6ests o(  

the *iles and Sno4 6yology,. British ournal o( *anage1ent, Se/-, ol. 9 =ssue :C

>einrauch, .., *ann, O.K., Robinson, !.A. and !harr, . "%//%& ealing 4ith li1ited

(inancial resources a 1ar5eting challenge (or s1all business, ournal o( S1all Business

*anage1ent #/"8&, 88D8.

Pa0oina, R., and *c+l0ey, >., "%/9& A statistical 1odel (or the analysis o( ordinal le0el

deendent 0ariables, ournal o( *athe1atical Sociology, %$:)%#$.

#%

 

Tale ., %earce and Roinson grand strategies

Strategy Main "m2hasis 6haracteristics

6oncentrated the ursuit o( ro(itable gro4th o( a single roduct ability to assess 1ar5et needs, 5no4ledge o( buyer 

Gro1th 7i8 in a single 1ar5et 4ith a single do1inant technology beha0ior, custo1er rice sensiti0ity, e((ecti0e

!ro1otion, builds on co1etencies

!verall result, increased use of technology9 increased 2roductivity and etter coverage of

2roduct-mar:et segment

Mar:et 1ar5eting eEisting roducts to custo1ers in related areas additional geograhic outlets

+evelo2ment 7i8  by adding channels o( distribution and<or changing attracting other 1ar5et seg1ents

the content o( ad0ertising and ro1otion!verall result, increased sales

%roduct substantial 1odi(ication o( eEisting roducts, or the rolong roduct li(e cycle

+evelo2ment 7i8 creation o( 1ore but related roducts that can be build on eEisting brand

1ar5eted to current custo1ers 0ia eEisting channels!verall result, retain satisfied customers

Innovation 7i8 (reuent changes and i1ro0e1ents to roducts create a ne4 roduct li(e cycle

!verall result, high 2rofits $if 2roduct is Successful(

Horizontal 7e8 gro4th through acuisition o( si1ilar (ir1s oerating access to ne4 1ar5ets

Integration at the sa1e stage o( the roduction)1ar5eting chain

  !verall result, eliminate some com2etitors

&ertical acuisition o( (ir1s sulying inuts or (ir1s that are eEansion o( oerations, greater 1ar5et shareIntegration 7e8 custo1ers (or its outut econo1ies o( scale

  !verall result, increase staility of 2roduction and;or demand

6oncentric see5ing unrelated in0est1ents 4ith otential (or increased gro4th<earnings, high co1atibility

+iversification 7e8 higher ro(its. 4ith eEisting business

!verall result, increases synergy

6onglomerate acuisition o(   otentially ro(itable business based on ro(it considerations only

+iversification 7e8 !verall result, increased 2rofit

Turnaround 7i8 (orti(y the (ir1’s distincti0e co1etencies by cost or changes in 1anage1ent

  Asset reduction during declining ro(itability

!verall result, entrenchment and recovery

+ivestiture 7i8 sale o( 1aor co1onents o( the (ir1 i1ro0e cash (lo4, i0est units unable to ro0ide

Synergy

!verall result, address cor2orate financial needs

<oint ventures 7e8  oining (orces 4ith another (ir1 to succeed in a shared costs articular co1etiti0e 1ar5et entry to ne4 1ar5ets

!verall result, Shared ris:s and shared 2rofits

Strategic si1ilar to oint 0entures 4ith the eEcetion that licensing agree1ents, ti1e li1ited outsourcing

#lliances 7e8  artners do not ta5e an euity osition in one another 

!verall result, increased mar:et share;2roductivity

6onsortia 7e8 see5ing interloc5ing relationshis bet4een businesses o( industry coordination

an industry

!verall result, cost sharing and increased economies of scale

!ther li=uidation;an:ru2tcy

##

 

Tale 0, +escri2tive statistics

Mean Standard deviation

2oncentrated

gro4th:.% %.:#

*ar5et

de0elo1ent:.8 %.%%

!roduct

de0elo1ent:.- %.##

=nno0ation:.: %.%8

Hori?ontal

integration#.# %.#$

ertical

integration%.; $./;

2oncentric

di0ersi(ication%.; %.$:

2onglo1erate

di0ersi(ication%.- $./$

6urnaround:.$ %.#9

i0estiture%. %.;;

oint 0entures#.8 %.#

Strategic

alliances#.- %.#8

2onsortia#.: %.%/

#:

 

Tale3, 6orrelation matri>

2oncentrated

gro4th

*ar5et de0elo1ent !roduct

de0elo1ent

=nno0ation

2oncentrated

gro4th

%.$$

*ar5et

de0elo1ent

$.%;V %.$$

!roduct

de0elo1ent

$.%;VV $.#;VVV %.$$

=nno0ation $.%# $.##VVV $.8VVV %.$$

Stars indicate le0el o( signi(icance

VVV W$.$%, VV W$.$, V W$.%

#8

 

Tale 4, +ifference et1een firms 1ith formal and informal 2lanning

Mean formal

2lanning

Mean informal

2lanning

+ifference in means

2oncentratedgro4th

:.%: :.$9 $.$-

*ar5et

de0elo1ent

:.88 :.#9 $.%9

!roduct

de0elo1ent

:.9# :.:/ $.::V

=nno0ation :.:/ :.#$ $.%/

Hori?ontalintegration

#.:9 %./$ $.89VVV

ertical

integration

%.9 %.;# )$.$9

2oncentric

di0ersi(ication

%.-- %./% )$.#

2onglo1erate

di0ersi(ication

%. %.9# )$.%9

6urnaround :.%: #.; $.#;

i0estiture %.9 %.% $.$-

oint 0entures #.8; #.8% $.$9

Strategic

alliances

#.9 #.% $.#8

2onsortia #.:- #.%% $.#

Stars indicate le0el o( signi(icance

VVV W$.$%, VV W$.$, V W$.%

#

 

Tale 5, Interrelation et1een com2etitive 2osition9 mar:et environment and the choice of grand

strategies

2o1etiti0e osition *ar5et (orces

Gross

 ro(it

1argin

6urno0er Sub)

stitutes

+ntrant Re)

gulation

6ech)

nology

Sta)bility

2oncentrated

gro4th

$.$$ $.$- $.%% $.%% )$.%9VV $.%: $.%9V

*ar5et

de0elo1ent

$.$% $.$/ $.#/VVV $.$ )$.$8 )$.$- $.$

!roduct

de0elo1ent

$.$$ $.$8 $.%: )$.%9 )$.$: $.::VVV $.%V

=nno0ation )$.$% $.%%V )$.$- )$.% )$.$% $.VVV $.%-

Hori?ontal

integration

$.$$ $.%VVV $.%# )$.%: )$.$8 $.#$V $.$9

ertical

integration

$.$$ $.$8 $.%$ )$.%$ $.$% )$.%% )$.%#

2oncentric

di0ersi(ication

$.$$ )$.$8 $.%: )$.$# $.$: )$.$- $.$

2onglo1erate

di0ersi(ication

)$.$%V $.$# $.%% )$.$% )$.$ )$.%8 $.$9

6urnaround )$.$%VV $.%$V )$.$9 $.$; )$.$% )$.%% )$.#%VV

i0estiture $.$$ $.$8 $.%-V )$.%# $.$; )$.$9 )$.$

oint 0entures $.$$ $.%%V $.$- )$.#8VV $.%$ $.#$V )$.#$VV

Strategic

alliances

$.$$ $.%#V )$.$: )$.%$ $.$# $.#-VV )$.%;VV

2onsortia $.$$ $.$; $.$9 )$.%% $.%$ $.##V )$.%8

Stars indicate le0el o( signi(icance

VVV W$.$%, VV W$.$, V W$.%

#-

 

Tale ?, Interrelation et1een grand strategies and o2erational 2erformance

%ast 2erformance 6urrent 2erformance Future 2erformance

6urn)o0er

last : years

!ro(it last :

years

Subecti0e

 er)(or1ance

Relati0e

(ir1 costs

Short)ter1 ong)ter1

2oncentrated

gro4th

$.$: $.$8 $.%$ $.$% $.$8 $.%#VV

*ar5et

de0elo1ent

$.$$ )$.$ $.%: )$.$% $.%% $.%-VV

!roduct

de0elo1ent

$.$- $.$; $.$/ $.$- $.$/ $.##VVV

=nno0ation $.##VVV $.##VVV $.%/VV )$.%% $.#$VVV $.:$VVV

Hori?ontal

integration

)$.$- )$.%VV $.$8 )$.$; $.$9 $.$#

ertical

integration

)$.$/ )$.$; )$.$; )$.$: $.$: $.$-

2oncentric

di0ersi(ication

)$.$% $.$ )$.$# )$.%% )$.$# $.$%

2onglo1eratedi0ersi(ication

)$.$: $.$# )$.$# )$.% $.$# )$.$:

6urnaround )$.%VV )$.#8VVV )$.$- $.$: $.$$ )$.$

i0estiture )$.$ $.$9 )$.$9 )$.$ $.$ $.$#

oint 0entures )$.$% )$.$8 $.$$ )$.$# )$.$/ )$.$

Strategic

alliances

$.$: $.$% $.$ )$.$: )$.$# $.$/

2onsortia $.$; $.$ $.$- )$.$/ $.$% )$.$#

Stars indicate le0el o( signi(icance

VVV W$.$%, VV W$.$, V W$.%

#9

 

Fig/ ., Selecting a grand strategy

  Ra2id Mar:et gro1th ; High mar:et attractiveness

2oncentrated gro4th Hori?ontal integration

ertical integration i0estiture2oncentric di0ersi(ication

Strong com2etitive 'ea: com2etitive

%osition 2osition

2onglo1erate di0ersi(ication 6urnaround

oint 0entures

Slo1 mar:et gro1th ; Lo1 mar:et attractiveness

#;

 

Fig/ @, Strategic 2rofiles in engineering and electronic

 

% # : 8 ,

2oncentrated gro4th

*ar5et de0elo'1ent

!roduct de0elo'1ent

=nno0ation

Hori?ontal integration

Nertical integration

2oncentric di0ersi(ication

2onglo1erate di0ersi(ication

6urnaround

Ai0estiture

Ooint 0enture

Strategic alliances

2onsortia

+ngineering +lectronic

Arro4s indicate a signi(icant di((erence in the resecti0e strategic co1onent on the /ercent le0el o(

con(idenceC signi(icance is based on ordered robit 1odels (or sur0ey data

#/