Asymmetrical Effects in Both Fits and Misfits between Environment and Strategy

Abstract

Fit and misfit are the core concepts to understand the relationships among environment, strategy, and performance. While the existing literature highlights the differential performance consequences of fit versus misfit between environment and strategy, they usually assume symmetrical effects on the performance of both overfit and underfit (two types of misfits), and low-low fit and high-high fit (two types of fits). We challenge these symmetry assumptions by arguing that, overfit has a less negative effect than underfit, and high-high fit has a stronger positive effect than low-low fit. The hypotheses were tested using data from 212 Chinese manufacturing firms. The results revealed that for the fits and misfits between environmental uncertainty and service-dominant logistics flexibility strategy, the less harmfulness of overfit than underfit and the more benefit of high-high fit than low-low fit hypotheses are both supported. In addition, for the fits and misfits between environmental uncertainty and prod...