Knowledge that Transforms

This paper focuses on the appropriateness of a two‐factor classification of competitive strategy variables as success producers and failure preventers. Theoretical frameworks which provide static and quasi‐dynamic perspectives of the proposed two‐factor classification are outlined. An empirical exposition of the success producing and failure preventing properties of marketing strategy variables is presented using the PIMS data. Strategic implications and directions for future research are discussed.

In this article survivors and non‐survivors of the ‘shake‐out’ in the U.S. color television set industry are compared to determine how and along what dimensions these two classes of businesses differ. Two types of strategy variables are used in 18 hypotheses to probe similarities and differences at both the ‘corporate level’ and ‘business level’ of strategy. Significant differences are found, particularly at the business level. The findings are consistent with those of previous strategy research, but suggest that traditional wisdom regarding size, low costs and market share did not necessarily hold in this industry.

The relationship between corporate‐level planning and information systems was examined empirically. A continuum of planning system sophistication was constructed based on the level of openness to outside influences combined with the planning horizon. Futureoriented, external and environmental types of information were found to be strongly correlated with increased planning sophistication. The impact of environmental turbulence (complexity‐volatility) on planning systems also was examined. Complexity was strongly correlated with planning sophistication, whereas no relationship was found between volatility and planning sophistication.

When an organization tries to realize better its central mission, it is often important to maintain both line and staff units' integration with the central mission while flexibly and innovatively responding to evolving and changing external markets and environments. However, internal flexibility/innovation and integration needs often conflict. Thus, how to resolve these conflicting needs becomes somewhat of a dilemma (Lorsch and Allen, 1973; Nielsen, 1981, 1983d).

Because business policy research has primarily been a series of inductive generalizations of case studies; theories have been typically ambiguous and untested, and have not progressed swiftly. Deductive theorizing, by contrast, yields clear, often non‐obvious conclusions that can be debated effectively and generalized slowly; so realism of current models can be sacrificed for progress towards realistic future models. Deductive theorizing, with more attention to a game‐theoretic definition of equilibrium and to recent ideas from economics, should be one new direction for policy research. Of course, these deductive models will inevitably draw their inspiration from the richness of careful observation and exhaustive checklist‐making that are the hallmarks of induction. Specific avenues for new research are described, and the importance of teaching non‐obvious theories is defended.

A model of cultural control is developed and contrasted with the more familiar bureaucratic control model. This model is used to explain processes of strategic adaptation as observed in Japanese cultural control and American bureaucratic control firms. A discussion of the strategic costs and benefits to the organization associated with each type of control is then presented.

The article describes an applied research project in which existing theory from the policy and organization theory literature was used to develop a rationale for estimating response times of competitors to easily imitated new products. A specific study of commercial banking product introductions is reported.

The New Venture Division (NVD), an important organizational innovation to facilitate corporate entrepreneurship, so far has been used with mixed success. Systematic differences in terms of administrative processes, strategy‐making and participants' orientation create problems in the interfaces between the NVD and the rest of the corporation. Top management should realize that the NVD is a design for ambiguity. It should take steps to provide an adequate structural context for new venture activities, and to create a process for determining the strategic context of such activities in the corporation.

This paper undertakes a critique of experience curves from several angles. It considers the extent to which they can be regarded as an extension of learning curves, and concludes that the benefits from learning‐by‐doing at plant level are exhausted relatively early. It goes on to consider the evidence that there is a common slope to experience curves, their usefulness for forecasting prices, and possible reasons for a spurious correlation between accumulated output and average cost. It concludes by demonstrating the differences in strategic implications between the various possible economic factors which may underlie the experience curve. The conclusion is that experience curves are partly spurious, and of little practical value in forecasting or decision making.

This paper reports on an empirical study of strategic decision‐making processes and organizational learning in 32 business organizations facing complex environments. The decision processes were found to vary in four prototypical patterns described here as the strategic decision‐making models. These models are proposed as an initial step towards the development of a taxonomy of strategic decision processes. The relationships between strategic decision‐making models and organizational learning systems that support them are explored. These models may help researchers to conceptualize and practitioners to manage strategy formulation processes in organizations.