Strategy-performance Relationship Research Articles

SMEs’ strategic orientation through Miles and Snow typology: a synthesis of literature and future directions

Purpose The purpose of this research is to present a systematic analysis of consequents and antecedents of strategy and performance. To acheive this, this systematic review article analyzes and synthesizes mainstream research on small and medium-sized enterprises (SMEs) where Miles and Snow typology was used for strategic orientation of the SMEs. The specific focus of the research is to develop a conceptual framework showing consequents and antecedents of the strategic orientation. Design/methodology/approach This study uses systematic literature review (SLR) method to identify, summarize and synthesize literature on Miles and Snow typology. Preferred reporting method for systematic reviews and meta-analyses to ensure adherence to systematic approach. The key words search consists of the words: “Miles and Snow”, “Miles and Snow” and “miles-snow” from Web of Science and Scopus databases for sample articles. Findings The trend of research on SMEs using Miles and Snow typology is on the rise with a shift from developed countries to the developing ones. Support for strategy-performance relationship hypotheses is overwhelming but the traditional view is in decline while new antecedent and consequent variables are being added. Mediator and moderating variables are also identified. Originality/value The SLR where a synthesis approach was applied for finding antecedents and consequent variables of strategy-performance relationship along with a presentation of conceptual framework makes this research unique. Additionally, the article presents the trends of research over the time based on timeframe, regions, methodological approaches and hypotheses support.

Recognizing the ideal patterns of strategic flexibility, IT strategy and business performance: a cluster analysis approach

PurposeIn spite of intensive research that explained the strategic flexibility-performance and information technology (IT) strategy-performance relationships, there is a little insight regarding how these notions ideally affect business performance. Accordingly, this study attempts to investigate how businesses can translate IT directions and strategic practices into actual increases in business performance. More precisely, the primary purpose of this paper is to explore the influential role of strategic flexibility and IT strategy on business performance considering balanced scorecard (BSC) dimensions in the context of the tourism industry.Design/methodology/approachAn empirical investigation of 331 tourism businesses was performed to explore the relationship between strategic flexibility, IT strategy and business performance. A non-probability convenience sampling was applied to select the sample. Factor analysis, descriptive statistics and cluster analysis were used to analyze the data.FindingsThe findings include the clustering of the studied businesses in terms of strategic flexibility and IT strategy. A cluster analysis based on strategic flexibility indicates that businesses can be divided into four main clusters, and based on IT strategy, they can be classified in three main clusters. The results show that businesses with a high level of strategic flexibility and a high level of IT strategic practices have high performance. More importantly, it was known that proactiveness and strategic use of IT have more predictor role on performance.Originality/valueA review of the strategic management literature reveals a lack of empirical studies that adequately explore the significant roles of strategic flexibility and IT strategy on business performance in the tourism industry. This paper provides actionable insights into these two main determinants that explain why some tourism businesses outperform others. The primary contribution of this study is to address the gap in our understanding of the interconnections between strategic flexibility, IT strategy and business performance through cluster analysis in the tourism industry.

THE EFFECT OF ENTERPRISE RISK MANAGEMENT ON FIRM PERFORMANCE: THE MEDIATING ROLE OF RESEARCH & DEVELOPMENT INVESTMENT

This study explores the dynamics of the relationship between Enterprise Risk Management (ERM) and firm performance, including the mediating role of innovation management. While previous research has separately examined various links between ERM and firm performance and between innovation and firm performance, a research gap remains in studying the dynamics of the ERM-firm strategy-performance relationship, also considering the mediating role of innovation management. We used structural equation modelling (SEM) to measure the impact of ERM on firm performance directly and indirectly through its influence on the firm’s innovation management, represented by R&D investment. We gathered data from 2015 to 2019 from a sample of 2,666 companies in Europe, East Asia, and North America. The results reveal that ERM exerts both direct and indirect influences on firm performance, the latter occurring through its effect on the firm’s innovation management. These findings contribute to the literature on the resource-based view of the firm, underscoring the potential of the strategic alignment between innovation management and ERM, and reinforcing ERM’s importance on firm performance.

Nexus between Competitive Business Strategy and Firm Performance: Moderating Effect of Competitive Intensity

ABSTRACT Business strategy literature argues that firm survival and growth in any competitive environment depend on the adaptation of suitable competitive business strategies. Despite the growing interest in strategic management within the fish farming industry, there is a notable lack of empirical evidence exploring how the competitive environment influences companies’ business strategy and performance. This paper examines the direct effect of competitive strategy and the moderating effect of competitive intensity on business strategy-performance relationship. Using hierarchical regression to analyze 306 samples gathered from fish farming firms of south-Benin, empirical evidence shows that competitive strategy including cost-leadership, and both product quality and marketing differentiation strategies impact positively firm financial performance. This research highlights the relative importance of product quality differentiation strategy. In addition, findings indicate that competitive intensity structure contribute to firm success. Surprisingly, findings show that competitive intensity does not significantly moderate the effect of cost-leadership and product differentiation strategies. Besides, the effect of marketing strategy on firm performance becomes more negative under high competition in the domestic market. Study recommends that firms should gain organizational economic outcomes by pursuing cost-leadership strategy and product differentiation strategy whatever competitive intensity states in the domestic market of fish farming.

Strategy research in an African context: A systematic literature review

ABSTRACT This article presents a systematic review of strategy research in Africa. The quantity of management research in general and strategy research in particular is growing on the continent, though from a low level. It is, however, characterized by a strong focus on South Africa and Ghana, hence not reflecting the cultural and economic diversity of the continent in detail. This review consists of 161 articles. The review found that research on strategy-performance relationship dominates the field. The cultural context and how it may influence strategy and strategy-making is still not well addressed. The article ends by suggesting future research directions based on the identified gaps.

Familiness and Business Strategy: Unraveling the Moderating Effect of Familiness on Performance in Family Firms

Existing literature has examined several viewpoints in the field of family business research. Nevertheless, the correlation between strategy and performance in family enterprises has not been extensively studied. Furthermore, the extent to which family influence impacts the link between strategy and performance is not well-defined. The distinguishing factor between family businesses and non-family businesses is the concept of familiness, which refers to the unique qualities and talents that stem from family influence. The current body of research focuses on examining the moderating influence of familiness on the link between strategy and performance in family businesses. This study focuses on examining the impact of business strategy on the development of exceptional performance in family firms. Additionally, it investigates if familiness has a moderating function in this connection. This study aims to conduct an empirical analysis of the connection between strategy and performance in family-owned businesses. Additionally, it seeks to investigate the influence of familiness as a moderating factor in this relationship. The research population consists of individuals who own or manage family businesses. A total of 203 owners/managers were chosen using a simple random sample method from the family businesses located in Multan. Data were obtained using a cross-sectional survey, and the hypothetico-deductive technique was employed in the research design. Partial least squares structural equation modeling (PLS-SEM) was utilized for assessing data. The research findings suggest a direct correlation between familiness and the performance of family businesses. The results also reveal that familiness moderates the association between family business strategy and family company performance. The findings of this research have crucial significance for family company owners/managers by underlining the fact that family business strategy’s influence on family business performance may be strengthened by concentrating on the aspects of familiness; power, experience, and culture. This research also contributes to the family business literature by evaluating the moderating influence of familiness on the strategy-performance relationship in a family company setting.

Assessing Competitive Strategies in UK Manufacturing SMEs

In this comprehensive study, we delve into an exhaustive examination of effective competitive strategies tailored for small to medium-sized enterprises (SMEs). The principal objective of this research centers on scrutinizing the strategic orientation of UK Manufacturing SMEs. Conducting an extensive literature review, we critically evaluated Porter's framework and identified several gaps in its applicability. Notably, critiques assert that the model inadequately captures the intricate nature of strategic behavior within real organizations and fails to provide a fully accurate representation of strategy-performance relationships. Empirical research further highlights the model's limitations, indicating its inability to facilitate the desirable combination of competitive strategies by firms. To address the outlined objectives, we employed a semi-structured questionnaire in our investigation. The ensuing analysis involved the application of factor and cluster analysis to identify strategic variables currently employed by SMEs in the manufacturing domain. Our data analysis revealed a divergence from the adoption of Porter's single generic strategies. Instead, the findings supported the utilization of mixed strategies that integrate elements from both differentiation and low-cost strategies. Significantly, these hybrid approaches were found to be associated with enhanced firm performance. This study contributes valuable insights into the nuanced landscape of competitive strategies within the UK SMEs, shedding light on the dynamic interplay between strategic choices and firm performance.

Managerial capability, business strategy, and performance: the role of external factors

ABSTRACT The purpose of the paper is to investigate (1) the mediating role of business strategies in the managerial capability-performance relationship; and (2) the moderating roles of environmental contingents including market turbulence, technology turbulence, and competitive intensity on the indirect managerial capability-performance relationship through business strategies. The study uses primary data collected from manufacturing firms (n = 203) in a Sub-Saharan nation to examine this vital relationship. Using Hayes PROCESS, the findings reveal that whereas the differentiation strategy effectively mediates the managerial capability-performance relationship, cost leadership offers no mediation effects. Furthermore, the findings show that the contingent role of the three selected environmental conditions on the strategy-performance relationship is positive but insignificant. This implies that although these external factors positively moderate the relationship, weaken the business strategy-performance relationship, signifying a buffering relationship.

Analyzing the strategy–performance relationship in Germany – can we still use the common strategic frameworks?

PurposeThis study examines the strategy–performance relationship within publicly traded German firms. Strategic management literature provides several strategic frameworks that offer guidance on promising strategies. However, given major changes, such as globalization, managers wonder whether strategic frameworks are still applicable.Design/methodology/approachThe authors employ principal component analysis (PCA) to measure competitive strategy and analyze a sample of 6,037 firm-years among 651 firms between 2000 and 2019.FindingsWhile the authors find evidence for the existence of efficiency-based strategies, differentiation-based strategies and mixed strategies, only differentiation-based strategies are positively related to performance.Originality/valueThe study’s results contribute to the discourse on the strategy–performance relationship, as they provide insights into promising strategies that are of interest to researchers and practitioners. Further, the authors introduce a new measure of competitive strategy based on PCA.

Moderating effect of carbon accounting systems on strategy and carbon performance: a CDP analysis

Carbon emissions bring significant risks and opportunities, and organisations have responded by adopting different strategies and environmental control systems, such as carbon accounting systems (CASs). However, it remains unclear whether a CAS can help reduce emissions, and what role is played by a CAS in the relationship between carbon strategy and carbon performance. Therefore, this paper analyses the strategy-accounting-performance nexus by drawing on 1672 firm-year observations of firms participating in the CDP in 2014 and 2015. The results suggest that the quality of a CAS is influenced by strategic choices; with a proactive carbon strategy being associated with a higher quality CAS. Further, proactive strategies and CASs are found to be associated with carbon savings and emissions reduction. The results indicate a moderating role of CASs on the strategy-performance relationship, with carbon strategy enabling higher carbon savings and lower emissions intensity in the presence of a high-quality CAS. Our findings suggest that formulation of carbon strategies and establishment of carbon measures can drive effective carbon mitigation.

State-owned enterprises’ performance in Indonesia: a strategic typology perspective

PurposeState-owned enterprises’ (SOEs) goals are perceived as two-sided blades, providing goods or services to the public on one side and escalating the government’s wealth on the other side. Treating the SOEs, government encounters the problem of injection strategy or privatize them. At the same time, managers have the option to formulate the SOEs strategy to boost performance. By using Miles and Snow’s typology strategy and the above factors, this paper investigates those impacts on Indonesia’s SOEs’ performance. This study aims to propose strategic typology as the main predictor with other variables such as the size, ownership structure, market competitiveness and capital subsidy on SOEs.Design/methodology/approachThe study uses archived SOEs’ financial data from 2014 to 2018 to predict the financial performance using ordinal logistic regression analysis. The additional factors, such as firm size, ownership structure, market concentration and capital subsidy, are incorporated.FindingsThe result demonstrates that SOEs strategic typology, market concentration, size, ownership structure and capital subsidy significantly affect Indonesia’s SOEs’ performance.Originality/valueTo the best of the authors’ knowledge, this paper is the first elaborating government policies for SOEs, such as capital subsidy and state ownership, on the perspective of Miles and Snow’s strategy-performance relationship. Correspondingly, the paper contributes to examine the Indonesian characteristic SOE type with the performance. No single study has previously explored this relationship in the context of SOE in Indonesia.

The context, strategy and performance of the American safety net primary care providers: a systematic review

PurposeThe objective of this research is to synthesize evidence on the relationship between context, strategies and performance in the context of federally qualified health centers (FQHCs), a core safety net health services provider in the United States. The research also identifies prior approaches to measure contextual factors, FQHC strategy and performance. Gaps in the research are identified, and directions for future research are provided.Design/methodology/approachA systematic review of peer-reviewed journal articles published between the years 1997 and 2017 was conducted using a bibliographic search of PubMed, Business Source Premier and ABI/Inform databases.Findings28 studies were selected for the analysis. Results supported associations among contextual factors (organizational and environmental) and FQHC strategy and FQHC performance. The research also indicates that previous research was primarily emphasized on clinical performance with less focus on other types of FQHC performance. In addition, there exists a wide variability in terms of measuring context, FQHC strategy and performance.Originality/valueOperating in resource-scarce and highly constraining environments, FQHCs have demonstrated the ability to stay innovative and competent as serving often unhealthier and costlier patient populations. To date, there has been no study that reviewed the relationships between context, FQHC strategy and FQHC performance. In addition, there is an absence of consensus on how context, FQHC strategy and FQHC performance are measured. This study is the first that examined context–strategy–performance relationships in the context of FQHCs.

Competitive strategies and international new ventures’ performance: Exploring the moderating effects of internationalization duration and preparation

The purpose of this article is twofold: to bring back to discussion the importance of strategy as a key element for international new ventures (INVs) to achieve higher international performance and to assess the relevance of contingency perspective, particularly two organizational contingency factors (internationalization duration and internationalization preparation), in moderating the strategy–performance relationship. The framework developed addresses the effects of four competitive strategies (cost leadership and innovation-based, marketing-based, and quality- and service-based differentiation) as determinants of INVs’ international performance. In addition, internationalization duration and internationalization preparation are included as moderators of these relationships. The hypotheses were tested using a sample of 319 INVs. The findings show that marketing and quality and service differentiation strategies are associated with higher INVs’ international performance and that internationalization duration and internationalization preparation play relevant moderating effects.JEL CLASSIFICATION: M13; M16

Are Strategic Frameworks Still Applicable? Analyzing the Strategy-Performance Relationship in Germany

This study examines the strategy-performance relationship within publicly traded German firms. Strategic management literature provides several strategic frameworks that offer guidance on promising strategies. However, due to major changes such as globalization and fundamental differences between the strategic frameworks, managers wonder whether strategic frameworks are still applicable and, if so, which one is the right one. We introduce a new measure of competitive strategy and analyze a sample of 4,364 firm-years among 543 firms between 2006 and 2017. Our results suggest common strategic frameworks such as the approach of Miles and Snow’s (1978) still fits to the corporate landscape in Germany. We find strategies based on efficiency or differentiation as well as combinations of both to be associated with superior performance within the industry. Our results contribute to the discourse on the strategy-performance relationship as our results provide insights into promising strategies that are of interest for researchers and practitioners.

The mediating role of decentralization between strategy and performance

PurposeThe purpose of this paper is to empirically examine the mediating role of decentralization in the relationship between a firm’s strategy and its performance in the context of an advanced economy where the chief corporate strategy is differentiation.Design/methodology/approachThe study uses data collected by an online survey targeting a stratified sample of 1,238 private firms operating in Denmark. The empirical analysis was carried out by estimating a structural equation model.FindingsThe key finding was that a decentralized organization (DO) can act as a mediator between a firm’s differentiation strategy and its performance. A multi-group analysis revealed that the mediating impact of decentralizing was affected by contingency factors such as firm size, strategic clarity, degrees of business environment risk and industry competition. Thus, a DO can be said to play a more important role in larger firms, in firms with less strategic clarity, and in companies with multiple plants.Research limitations/implicationsAlthough the study offers empirical evidence from a relatively large and representative sample of firms, the specificity of the context should be noted. In particular, firms in Denmark, while facing strong competition, do not compete with low costs. Clearly, studies of the mediating role of decentralization in low-cost strategy environments would be an important next step.Practical implicationsSeveral implications of the findings for organizational design and creation of beneficial conditions for strategy implementations are discussed.Originality/valueThe novel contribution of the study lies in the focus on decentralization as a mediator in the strategy–performance relationship. While previous research has shown that strategy is related to decentralization, and that decentralization is associated with higher performance, an empirical analysis of the relationship between the factors in the strategy-decentralization-performance path had not previously been undertaken.

Strategic Consistency, Flexibility and Reactors: A Comparative Analysis

There is debate in the literature that whether firms should adapt consistent or flexible strategy for competitive advantage? The proponents of both arguments provide substantial evidence in their favour. This study aims to investigate the strategy-performance relationship in this context using financial data of joint stock firms from textile sector of Pakistan applying Miles and Snow typology. The results show that majority of the firms are adapting strategic consistency. Firms with consistency in their strategies produced better results than firms following flexible strategies. Both consistent and flexible strategies outperformed reactors. Although, there is variation in the performance of the strategic types due to the variation in firm size, the effect of firm size is not significant.

Strategic orientations, knowledge management (KM) and business performance

PurposeDespite the huge amount of studies that have investigated the strategy–performance relationships and knowledge management (KM)–performance relationships, there is little consensus regarding the nature of these connections. By reviewing related literature, some notable limitations and inconsistent results are highlighted in extant studies. To address these challenges, this study aims to explore the effects of strategic orientation and KM mechanisms on business performance.Design/methodology/approachThe study conducted an empirical investigation of 227 small- and medium-sized enterprises (SMEs) to explore the relationship between strategy−performance and KM−performance. Business strategy is conceptualized as a comparative construct with six dimensions, KM is conceptualized by two types of KM mechanisms of technical and non-technical KM mechanisms and business performance is measured by four dimensions of balanced scorecard (BSC). The cluster analysis was used to explore different aspects of these three constructs.FindingsUsing cluster analysis, the results indicate that firms with high level of analysis, defensiveness, futurity and proactiveness in strategic orientation have better performance and also the high level of both KM mechanisms another important finding shows that firms with more KM mechanisms have high performance and technical mechanisms have more predictor role on performance.Practical implicationsThis research also has prescriptive implications for strategic managers and KM practitioners. The finding enhanced the understanding of the relationship between strategic orientations, KM and performance. The results assist managers to assess business performance regarding strategic orientations and KM mechanisms of the firms. Therefore, it helps firms to improve strategic resource allocation and exploit KM investment by considering ideal pattern of the performance.Originality/valueBy reviewing strategic management and KM literature, it is revealed that there are little studies about how the interaction of strategic orientation and KM influences business performance. The main contribution of the study is exploring the profile of the firms by considering their strategic orientation and KM mechanisms and their impact on business performance. This study provides an empirical evidence about interaction of strategic orientations, KM mechanisms and business performance in SME context, which is merely investigated in previous researches.

Strategy and the Institutional Envelope

Classical approaches to strategy are built around two dominant pillars to explain firm performance: industry structure and firm strategy and capabilities. Firm performance is typically seen as a result of a “fit,” or complementarity, between industry structure and firm strategic choices. We supplement the classical model of strategy with a third pillar, that of the institutional envelope. We argue that the institutional envelope, as its name suggests, is a pervasive influence on the strategy-performance relationship. Both firm strategy and industry structure are simultaneously shaped by, and shape, the institutional envelope, which is both a primitive to and product of firm strategy and industry structure. It also moderates the relationship between firm strategy and industry structure. Institutional considerations are therefore not simply a subfield of strategy research. The institutional envelope is a critical component of any consideration of strategy. Theories of industry structure and strategic choice are insufficient without a fully formed model of the institutional envelope at their very foundation. All strategies, market or non-market, are consciously or unconsciously related to their institutional envelope—being tailored to conform to the institutional envelope or tailoring the institutional envelope to suit them. We see this institutional project that we are advancing as nothing less than the third great wave of strategy research, building off the previous waves emphasizing industry structure and firm choice and resources. It is in the context of this institutions-based strategy model that we preview the papers in the special issue.

The role of firm-specific factors in the strategy-performance relationship

PurposeThis paper aims to attempt to bring together various organisational aspects that have never been collectively investigated before in the strategic management literature. Its main objective is to examine the relationship between “strategic orientation” and “firm performance”, in the light of two firm-specific factors (“distinct manufacturing capabilities” and “organisational structure”). The proposed research model of the present study is built upon the resource-based view (RBV) of the firm and the organisational aspect of the VRIO framework (the “O” from the VRIO model).Design/methodology/approachThe study proposes a newly developed research model that adopts a four-factor approach, while examining a number of direct and indirect effects. The examination of the proposed research model was made with the use of a newly developed structured questionnaire that was distributed on a sample of Greek manufacturing companies. Research hypotheses were tested using the structural equation modelling technique. The present study is explanatory (examines cause and effect relationships), deductive (tests research hypotheses), empirical (collects primary data) and quantitative (analyses quantitative data that were collected using a structured questionnaire).FindingsThe empirical results suggest the coexistence of three distinct categories of effects on “firm performance”: strategy or “utility” effects, depending on the content of the implemented strategy; firm-specific effects, depending on the content of the organisational resources and capabilities; and organisational effects, depending on the implemented organisational structure. More specifically, the statistical analysis underlines the significant mediating role of “strategic orientation” and the complementary role of “organisational structure”. Finally, empirical results support the argument that “strategy follows structure”.Research limitations/implicationsThe use of self-reported scales constitutes an inherent methodological limitation. Moreover, the present study lacks a longitudinal approach because it provides a static picture of the subject under consideration. Finally, the sample size of 130 manufacturing companies could raise some concerns. Despite that, previous empirical studies of the same field, published in respectable journals, were also based on similar samples.Practical implicationsWhen examining the total (direct and indirect) effects on “firm performance”, it seems that the effect of “organisational structure” is, almost, identical to the effect of “distinct manufacturing capabilities”. This implies that “organisational structure” (an imitable capability) has, almost, the same contribution on “firm performance” as the manufacturing capabilities of the organisation (an inimitable capability). Thus, the practical significance of “organisational structure” is being highlighted.Originality/valueThere has been little empirical research concerning the bundle of firm-specific factors that enhance the impact of strategy on business performance. Under the context of the resource-based view (RBV) of the firm, the present study examines the impact of “organisational structure” on the “strategy-capabilities-performance” relationship, something that has not been thoroughly investigated in the strategic management literature. Also, the present study proposes an alternate measure for capturing the concept of business strategy, the so-called factor of “strategic orientation”. Finally, the study adopts a “reversed view” in the relationship between structure and strategy. More specifically, it postulates that “strategy follows structure” and not the opposite (“structure follows strategy”). Actually, the empirical data supported that (reversed) view, challenging the traditional approach of Chandler (1962) and calling for additional research on that ongoing dispute.

Strategic patterns and firm performance: comparing consistent, flexible and reactor strategies

PurposeFirms face the paradox of adapting change and remaining stable to control uncertainty simultaneously to maintain their competitive position because both aspects are essential for the firm’s effectiveness. This has raised a debate in the contemporary literature that whether firms should remain consistent or adapt flexibility in their strategic choice to produce better performance? The supporters of both the arguments provide substantial evidence in their favor. The purpose of this paper is to investigate the strategy-performance relationship in this context along with contingent effect of firm size and industry.Design/methodology/approachEmpirical analysis using seven years financial data of 307 joint stock firms from 12 industries is done by applying Miles and Snow strategic typology. Scoring method is used to classify the strategic orientation of the firms. Univariate and multivariate regression models are applied to investigate the influence of strategy, firm size, and industry on firm performance both individually and collectively.FindingsThe results show that most of the firms in Pakistan are consistent in their strategic stance (43 percent) followed by flexible (40 percent) and reactors (17 percent). The mean differences in the performance of consistent, flexible, and reactor strategies show that both consistent and flexible strategies performed equally well and outperformed the reactors. However, there is significant variation in the performance of the strategic types due to the variation in firm size and industries whereas the contingent effect of firm size, industry, and strategy is statistically insignificant.Originality/valueThe methodology used for the identification of transition of strategic stance of the firms over time to know the consistent, flexible, and reacting behavior of the firms from archived data is the important contribution to the literature. The methodology can be replicated in longitudinal studies for identification of strategic groups in typological research.