Abstract
This article describes a study of the impact of top management decision sharing on the tendency of firms to adhere to their strategic plans, and the effects of strategic mission and environmental hostility on this decision sharing-adherence to plans relationship. As a secondary focus, the research also examined the impact of environmental hostility on the relationship between adherence to plans and firm financial performance. For the pur- poses of this study, adherence to plans was defined as an organizational outcome reflected in whether firms characteristically persist with predetermined and intended business plans or whether they regularly and extensively adjust their choice of business strategies and tactics in unplanned ways. Data were collected using questionnaires which were sent to the senior executives (presidents and/or CEOs) of 109 independent, nondiversified manufacturing firms. Approximately 20 industry segments are represented in the sample. Moderated regression analysis and subgroup analysis were used to analyze the data. Tests for monotonicity were conducted to clarify the regression analysis findings. Results indicate that firms with a participative or shared approach to top management decision making are no more likely to adhere to their plans than are firms which do not practice decision sharing. However, top management decision sharing was found to be positively related to adherence to plans among firms with “harvest” strategies and among firms operating in benign environments. Conversely, top management decision sharing was found to be negatively related to adherence to plans among firms with “build” strategies and among firms operating in hostile environments. Additional analyses revealed that adherence to plans is more positively related to financial performance among firms in hostile environments than among firms in more benign environments. The implications of these results and the limitations of the research are discussed.
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