Strategy-structure Fit Research Articles

Testing for strategy-structure fit and its importance for performance

1.INTRODUCTIONOne of the key concepts in strategic management and organizational theory is the concept of fit, seen as the corner stone of the organization's strategic development (Hill and Cuthbertson, 2011). Nadler and Tushman (1980) state that fit between the two elements is defined as the degree to which the needs, requirements, objectives, purpose and/or structure of one element is in accordance with the needs, requirements, objectives, purpose and/or structure of another element. The concept itself emphasizes the importance of harmonization between complex organizational elements in order for them to reinforce one another. In other words, as Carmeli and Tishler state (2004: 1261), the interaction amongst the elements becomes complementary in that the value of one element is increased by the presence of other elements.In the context of organization, Siggelkow (2001) makes the distinction between internal fit seen as a coherent configuration of activities inside an organization and external fit defined as an appropriateness of the configuration given the environmental conditions faced by the firm. Miller (1996) states that the internal fit among elements of an organization can be evidenced by the degree to which strategy, structure and systems complement one another. They reinforce each other and this can result in a cycle of mutual cause and effect that tightens the relationship among them (Andrews et al., 2009). Many theorists emphasize that organizations need to have interdependent and mutually supportive strategy, structure and processes in order to be successful (e.g. Venkatraman and Camillus, 1984; Hamilton and Shergill, 1992; Xu et al., 2006; Garengo and Bernardi, 2007; Roberts, 2007; Cunliffe, 2008; Aagaard, 2016). This high mutual reinforcement leads to a high degree of fit that strengthens organizational effectiveness and creates superior performance (Burton and Obel, 2004; Hsieh and Chen, 2011). At the same time, many empirical studies suggest that there is a connection between the existence of the fit and increased effectiveness of the firm (e.g. Olson et al., 2005; Xu et al., 2006; Andrews et al., 2009; Camuffo and Wilhelm, 2016).Miles and Snow typology of strategy (1984) allows us to understand organizational performance with respect to specific relationship between the four strategic types and environment. Each of the strategic types should be characterized by specific internal organizational settings that need to support chosen strategy and its implementation in order for organization to accomplish its strategic goals in a certain environment. The question that rises is how to align these elements in order to achieve strategy-structure fit, and transform these mutual relations into higher levels of organizational performance. In that sense, the aim of the current study is to capture and determine the pattern of relationships between strategy, structure, and strategy implementation processes and their influence on organizational performance. Therefore, we conducted a cross-sectional field research on a sample of 113 organizations to gain a better understanding of the relationship between strategy-structure fit and performance.The paper is structured as follows. After a short introduction, we give a theoretical overview of characteristics and different approaches in the studies of fit, as well as its importance for performance. Additionally, Miles and Snow typology is shortly presented and analyzed in the context of strategy-structure fit. Methodology and main results of our empirical research are presented in the next section. The paper concludes with a discussion on major findings of the study, research limitations and possibilities for further research.2.ORGANIZATIONAL FIT - CHARACTERISTICS AND APPROACHESTwo concepts of fit, internal fit between organizational strategy and structure on one side, and external fit between strategy and environment of the organization, on the other, have been extensively analyzed in the existing literature. …

Does Multi-unit Franchising Aid Differentiation? An Exposition

IntroductionFranchising is key tool in the entrepreneur's tool box (Combs & Ketchen, 2003: 443), perhaps due to its compelling appeal to a variety of entrepreneurs seeking to build a business in retail trade and services. Franchisor-entrepreneurs use it to assemble resources to create large chains rapidly (Michael, 2003: 61) while simultaneously mitigating agency problems associated with operating a network of decentralized production network (Michael, 1999a: 313). Franchisee-entrepreneurs, on the other hand, see franchising as a quick means of starting a business by purchasing a that gives them rights to use an established business format and the associated identity. However, despite the prominence of franchising, research has traditionally remained focused on investigating the rationale for franchising. As a result, the question why firms franchise has been examined many times over the last three decades (see Castrogiovanni, Combs & Justis, 2006, and Combs, Ketchen, Shook & Short, 2011, for recent reviews, and Combs & Ketchen, 2003, for a meta-analysis). Further, franchising research has paid a lot of attention to system characteristics (e.g., age, size, and percent franchised) and contract terms (e.g., royalty rates and initial fees) as variables that can explain success or failure of franchising systems (Shane, 1998) as well as of franchisees (Michael & Combs, 2008), but other approaches are needed (Combs et al., 2011).Although most profitable strategies are built on (MacMillan & McGrath, 1997: 133), very little research has been directed to it in franchising. This gap is addressed here by providing a theoretical examination, as a crucial first step, of how organizational design may be crucial to enhancing differentiation. Conceptual articles play a very significant role in creation of substantive knowledge in social sciences (Yadav, 2010) but efforts at developing conceptual understanding about strategy-structure fit involving non-traditional organizational forms such as franchising have been lacking (Yin & Zajac, 2004) - despite the long-standing seminal works by Chandler (1962) and Rumelt (1974) showing the importance of matching strategy and structure within traditional firms.The issue I explore is: how do franchisors organize their systems so that they can develop competitive advantage relative to other franchisors'? To my knowledge, this issue has not been formulated as the main research question of any franchising study so far. According to Michael Porter (1980), low cost and differentiation are the two generic approaches to competitive advantage. Garg, Priem and Rasheed (2013) have explained the low cost advantage but the differentiation advantage of multi-unit franchising has not been systematically explicated so far.Further, although early research did not explore variations in franchising forms, franchising itself is not a single, monolithic organizational form; franchisors often exploit their single business concept using different forms of franchising (Bradach, 1995, 1998; Kaufmann, 1992). Franchisors use single-unit franchising (SUF), in which each franchisee is restricted to own and operate only one unit, as well as multi-unit franchising (MUF), in which an individual franchisee can own and operate many units. Moreover, there are different forms within multiunit franchising. Some franchisors offer incremental franchising (IF), wherein a franchisee is sequentially awarded several units without a prior commitment for multiple awards. Others offer area development franchising (ADF) under an umbrella contract that assigns rights to multiple units upfront to one franchisee and delegates responsibility to her for developing a pre-assigned territory according to a pre-established time line.Studies have emerged to establish the rationale for these alternative franchising forms (e.g., Bradach, 1995, 1998; Bercovitz, 2004; Garg, Rasheed & Priem, 2005; Hussain & Windsperger, 2010; Kaufmann, 1992; Kaufmann & Dant, 1996; Perryman & Combs, 2012). …

Organizational Design of Franchising Chains and Differentiation: A Theoretical Explanation

Franchising is ‘a key tool in the entrepreneur’s tool box’. This paper advances strategy-structure fit in entrepreneurship research by exploring the role played by the different forms of franchisin...

The Cubic Contingency Model: towards a more comprehensive international strategy-structure model

Various contingency models have been developed to explain the strategy-structure fit for multinational corporations (MNCs). However, these models are fragmented, in that they address different strategic conditions and have been applied to different groups of MNC structures. Along with a critical review of the previous models, this paper develops a new three-dimensional model, which integrates contingencies from the traditional Stopford and Wells Model and the well-established GI (global integration)-LR (local responsiveness) framework. The new model considers a wider range of strategic conditions and aims to specify the strategy-structure fits for a broad array of MNC structures. The explanatory value of the new model is tentatively tested against data from a study of German MNCs.

Revisiting the Strategy, Structure, and Performance Paradigm: The Case of Venture Capital

The strategy-structure-performance (SSP) paradigm has developed a central role within strategy research. However, recent critiques of the paradigm have called for research that uses more appropriate measures of strategy and structure, inductive methods that enable richer exploration of the paradigm, and extension of the paradigm to the expert-focused organizations that have grown in importance since the paradigm was first developed. This paper answers this call by integrating inductive methods with quantitative analysis of a unique panel data set of 317 professional services firms (PSFs) to find new measures of strategy and to understand their linkages to organizational structure within such firms. It shows how the core knowledge required for decision making and the coordination challenges in these firms drive their internal structures and that the degree of strategy-structure fit has important performance implications for those firms.

The Evolution and Restructuring of Diversified Business Groups in Emerging Markets: The Lessons from Chaebols in Korea

This paper proposes an evolutionary model of business groups in emerging economies by tracing the evolution and restructuring of business groups in Korea. Underlying our model are two theoretical premises: (1) the value-creation potential of business group diversification depends on the quality of the economic institutions supporting the economy; and (2) the strategy-structure fit is a key determinant of diversified business groups' performance. Combining these two premises, we link business group evolution with institutional context, sources of competitive advantages, diversification strategy, and structure. To illustrate our theoretical arguments, we provide an overview of the evolution of chaebols in Korea and examine the restructuring of two major business groups, LG and Hyundai Motor. We conclude by discussing implications for management, public policy, and future research.

Performance implications of congruence between product-market strategy and marketing structure: an exploratory investigation

This study examines the performance implications of fit between the product-market strategy of a firm and its structure. The theoretical fit relationships between strategy and structure are developed on the basis of the Miles and Snow strategy framework (Organizational Strategy, Structure and Process. New York: McGraw Hill, Inc.) The study utilizes a novel measurement procedure that not only evaluates the match of several organizational structure elements for a given strategy, but also allows for aggregation of these matches. The procedure involves development of measurement scales that help identify the strategic orientation of a firm on each of its structural elements. Using a sample of 148 firms from the banking industry, the study provides evidence for the impact of strategy-structure fit on firm performance.

THE RELATIONSHIP BETWEEN STRATEGY‐STRUCTURE FIT AND FINANCIAL PERFORMANCE IN NEW ZEALAND: EVIDENCE OF GENERALITY AND VALIDITY WITH ENHANCED CONTROLS*

Journal of Management StudiesVolume 29, Issue 1 p. 95-113 THE RELATIONSHIP BETWEEN STRATEGY-STRUCTURE FIT AND FINANCIAL PERFORMANCE IN NEW ZEALAND: EVIDENCE OF GENERALITY AND VALIDITY WITH ENHANCED CONTROLS* R. T. Hamilton, Corresponding Author R. T. Hamilton Department of Management, University of Canterbury, New ZealandAddress for reprints: R. T. Hamilton, Department of Management, University of Canterbury, Christchurch, New Zealand.Search for more papers by this authorG. S. Shergill, G. S. Shergill Guru Nanak Dev University, Amritsar, IndiaSearch for more papers by this author R. T. Hamilton, Corresponding Author R. T. Hamilton Department of Management, University of Canterbury, New ZealandAddress for reprints: R. T. Hamilton, Department of Management, University of Canterbury, Christchurch, New Zealand.Search for more papers by this authorG. S. Shergill, G. S. Shergill Guru Nanak Dev University, Amritsar, IndiaSearch for more papers by this author First published: January 1992 https://doi.org/10.1111/j.1467-6486.1992.tb00654.xCitations: 49 * This paper stems from an ongoing investigation of company performance in New Zealand. Financial assistance from the University of Canterbury (Research Grant 577017) is gratefully acknowledged. G. S. Shergill was on study leave at the University of Canterbury from April 1987 to November 1989. We also thank our two referees for their very detailed and constructive comments. All the usual disclaimers apply. AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Citing Literature Volume29, Issue1January 1992Pages 95-113 RelatedInformation