Environmental Uncertainty, Copetition Strategy, Inter-functional Competition, and Organizational Performance in Korea

Abstract

To survive and prosper in a competitive marketplace, an organization must strive to respond continuously to opportunities and threats posed by the uncertainty of environments. CEOs typically play a leading role in this task through promoting internal competition or cooperation. There is general consensus among managers and researchers that either internal competition or cooperation among members has respective positive effects on organizational performances. However, so-called inter-functional copetition, that indicates the simultaneous approach of internal competition and cooperation among functional departments, has not been taken into the spotlight, even though cooperation among competitors is currently considered a major strategic orientation. This study investigates the role of organizational strategies in the causal process between environmental uncertainty and inter-functional copetition, and the role of inter-functional copetition in the causal process between organizational strategies and performances, and the moderating effect of evaluation system by CEOs for reward. Using a survey methodology, this study tests the research model with data collected from a nation-wide sample of 250 IT manufacturers. The results of the regression analysis show that (1) SSP (i.e., a strategy of simultaneously pursuing both efficiency and innovation) has a significantly positive influence on organizational performances under the environmental uncertainty; (2) inter-functional copetition significantly mediates the influencing process between SSP and organizational performances (both financial and technological performances); (3) Evaluation of performance by CEO significantly moderates the relationship between SSP and inter-functional copetition. The results of this study are synthesized and the implications for future theory-building and practical management are discussed.JEL Classification: L21, O53