Strategy Implementation and Firm Performance: A Configuration Approach

Abstract

The aim of this paper is to give more insights into the riddle of proper strategy implementation. Several previous works indicate that firms seem to have problems implementing their strategies in an appropriate way. This fact should be of great concern as strategy implementation is at least as important for firm performance as strategy formulation. Interestingly, strategy implementation research seems to be virtually neglected by the scientific community as only around 10 percent of previous strategy process literature deals with strategy implementation whereas around 90 percent is concerned with strategy formulation issues. After analyzing important strategy implementation factors, a conceptual framework is proposed incorporating eleven strategy implementation factors. Instead of applying a universal view, it is argued that different strategies require different strategy implementation skills. The findings based on 175 responses from executives of medium and large size Austrian firms support six out of 13 hypotheses. The results of profile deviation analysis show that it is crucial for prospectors and analyzers to align their strategy implementation factors according to their strategy content. Interestingly, the degree of alignment in defender firms has no impact on firm performance. Moreover, the cross sectional data set demonstrates that an “overdoing” (over-fit) of strategy implementation factors does not play any crucial part in influencing firm performance while underemphasizing (under-fit) has a negative impact. Contrary to expectations, strategy implementation still significantly influences firm performance regardless of whether strategy content is aligned with the environment or not.