ORGANIZATIONAL CONTEXT AND THE INTERPRETATION OF STRATEGIC ISSUES: A NOTE ON CEOS’ INTERPRETATIONS OF FOREIGN INVESTMENT*

Abstract

This paper explores the relationship between organizational context and the interpretation of strategic issues by examining the hypothesis that CEOs' interpretations of foreign investment in the USA are influenced by the organizational context in which they are embedded. Three aspects of organizational context ‐ the global business experience of the firm; the firm's level of organizational inertia (as represented by firm age and size); and the resources available for responding ‐ are examined as predictors of CEOs' perceptions of foreign investment as a threat or an opportunity. Analysis of data from 320 organizations, controlled by industry, shows that global business experience, firm size, and perceived capability are significant predictors of the perception of threat and opportunity. the discussion addresses the implications of these findings for future research on issue interpretation and organizational context.