Strategy in Turbulent Environments: Investigating Transition Economy Contexts

Abstract

We theoretically and empirically investigate the contingent effects of environmental turbulence on the efficacy of four mainstream strategic management views (theories). We argue the relationships of strategy purity (generic strategy), resources, networks, and governance to performance weaken with increasing environmental turbulence. Our core arguments are based on the unpredictability and uncertainty of turbulent environments and how they influence the logic underpinning each mainstream view. We test our theory using empirical data from 443 firms in the transition economies of former Communist countries in Central and Eastern Europe. This unique context enables our investigation by providing diversity of strategy choices and quantifiable variance in environmental turbulence. We find only governance follows traditional expectations as environments increase in turbulence. As a result, our analysis reveals an important boundary condition on traditional strategy theory and offers contrary recommendations in transition economy contexts.