Revisiting the strategy-performance linkage

Abstract

Purpose– The linkage between strategy and performance is central to strategic management. Empirical studies have nevertheless produced mixed results on the nature of this relationship, and in recent decades, very little advancement has been made in research aimed at elucidating this relationship. Accordingly, the purpose of this paper is to identify the approaches to the strategy-performance linkage in previous studies and defines five principles that should characterize future research on this relationship. The paper develops a novel research design that follows these principles and tests the usefulness of this research design in practice.Design/methodology/approach– This paper is exploratory in nature and its empirical methods include content analysis, multidimensional scaling, and cluster analysis. The primary difference between this paper and studies in the mainstream literature on the linkage between strategy and performance relates to the application of an endogenous strategy typology instead of predefined strategy categories.Findings– The analysis shows that the adopted research design based on five principles is applicable to research on the linkage between strategy and performance and that such a research design produces meaningful results. The results support the findings of earlier studies regarding the potential of “hybrid” strategies for achieving superior firm performance.Research limitations/implications– This paper challenges the dominance of generic strategies in research on the strategy-performance linkage and provides statistical data that lay the foundation for more detailed investigation on this relationship. The paper argues for a contextually bound view of strategic management.Originality/value– This paper invigorates the discussion on the linkage between strategy and performance, which has long been diminishing as a research topic in the literature because of contradictory results and the lack of fresh research opportunities. This paper further introduces a methodology that has been underutilized in the study of strategic management.