Strategy Formation Patterns, Performance, and the Significance of Context

Abstract

This paper describes a study of the effects of a company’s organization structure and environmental context on the relationship between that company’s dominant strategy formation pattern and its sales growth rate. Data collected, from 112 manufacturing firms operating in 78 industries were analyzed using moderated regression analysis. Results indicate that planned strategies are positively related to sales growth among firms with mechanistic structures and operating in hostile environments. Emergent strategies, on the other hand, are more positively related to sales growth among firms with organic structures and operating in benign environments. This paper concludes with a discussion of the implications and limitations of the research.