Top-down, bottom-up, or both? Toward an integrative perspective on operations strategy formation

Abstract

Operations strategy is formed via complex processes that transpire in multiple directions at multiple organizational levels. While most previous studies focus on the “macro-level” process of strategy formation from the dominant top-down perspective, this study investigates the “micro-level” process of strategy formation that governs interactions among competitive priorities, objectives, and action plans within operations. Using 111 (59 top-down and 52 bottom-up) action plans collected from six German manufacturing plants, we build on Kim and Arnold's (1996) framework and propose an integrated process model of operations strategy formation that encompasses both top-down planning and bottom-up learning. We also identify a contingency factor that affects their balance: centralized versus decentralized organizational structure. Finally, based on the analysis of their respective strategic content, we provide evidence concerning the complementary roles of top-down and bottom-up action plans in operations strategy.