Impact of Strategy Implementation on Performance of Generic Strategy: Evidence from Thailand

Abstract

IntroductionStrategic management is regarded as an important process for businesses (Bowman and Asch, 1987; Kumar, 2010; Thomson and Strickland, 2003; Viljoan and Dann, 2003). It has been argued that the process of strategic management affects a firm's ultimate success or failure more than any other factors (Porth, 2003). Strategic management process is important for a firm's success because it enables a firm to develop a future direction, provides the ways to achieve its mission, and ultimately leads to value creation (Porth, 2003). A review of literature by Powell (1992) also indicates that firms whom adopt strategic management generally improve their performance. The process of strategic management can be divided into two major tasks: strategy formulation and strategy implementation (David, 1995; Hitt, Ireland, and Hoskisson, 2005; Kazmi, 2008). The former involves the crafting of a strategy, whereas the latter is the managerial exercise of putting a chosen strategy in place (Thomson and Strickland, 2003).One of the most important tasks for management is to search constantly for the best strategy to boost performance. Researchers have attempted to classify business strategies into typologies as an aid to effectively investigate the relationship between strategy and other variables (Namiki, 1989). A number of studies including Covin (1991), Miles and Snow (1978), and Porter (1980) have sought to identify behaviours in the ways organizations compete and to group these behaviours or strategies into typologies or generic strategies. Of the generic strategies proposed in the literature, the Miles and Snow typology is among the most cited in the literature (Galbreath, 2010; Ketchen, 2003). The relationship between Miles and Snow's generic strategy and a firm's performance has been investigated by a number of studies (Conant, Mokwa, and Varadarajan, 1990; Garringos- Simon, Marques, and Narangajavana, 2005; Hambrick, 1983; Jennings, Rajaratnam, and Lawrences, 2003; Parnell and Wright, 1993; Shirokova, 2010; Smith, Guthrie, and Chen, 1989; Snow and Hrebiniak, 1980; Zajec and Shortell, 1989). However, their results were not consistent.Although both strategy formulation and strategy implementation have been highlighted as significant in the literature, strategy implementation has been regarded by some authors as more important than the strategy itself (Harrison and Pelletier, 2000; Hrebiniak, 2006; Robbins and Coulter, 1996; Schneier, Shaw, and Beatty, 1991). Nonetheless, a number of studies indicate that strategy implementation has received less attention from both academics and practitioners compared to strategy formulation. Previous research has empirically tested the relationship between Miles and Snow generic strategy and a firm's performance but there has been little analysis of the role of strategy implementation.The emergence of the so-called 'Tiger economies' in Asia and the rapid growth in newly emerging countries such as China and Vietnam, have prompted a great interest in Asian countries (Deshpande, Farley, and Bowman, 2004). Nevertheless, a review of literature indicated that the research on the link between generic strategy, implementation, and performance is only concentrated in Western countries. Currently, there is little knowledge on the relationship between generic strategy, implementation, and performance in an Eastern context. The improvement in the industry will, in turn, contribute to the economic performance of the country. the chemical industries in 'Tiger economies' of Southeast Asia, that have been reported to have good prospects in the past decade, are now being challenged by China (Wood, 2005). Firms in the chemical industry in those countries including Thailand have to prepare themselves for this challenge; therefore, it calls for a research study that explains performance diversity among these firms.Given the importance of the role of strategic management in business, and the existing gaps in the literature, this study conducts an investigation of issues in strategic management with an emphasis on strategy implementation. …