Knowledge that Transforms

The need for planning in business organizations operating in today's complex environment is widely accepted. Implied is an assumption that planning improves performance. However, the empirical evidence for such a claim is thin. Since planning is an integral part of strategy formulation, the facts to confirm or refute an assumed connection between planning and performance invite attention. Our research focuses on new data from 61 companies which test this linkage and, in addition, reviews the conclusions of prior empirical studies.

Systematic strategic management is a recent and still developing concern of both practitioners and students of management. It is necessary, therefore, to define in this first issue of the Strategic Management Journal (SMJ) both the limits and the contents of the subject which will be welcomed to its pages. Since we hope to attract our readers and contributors from both practice and academia, it is appropriate to describe strategic management from their respective viewpoints.

Market failure concepts together with a corporate strategy taxonomy have important implications for the direction of growth of firms and their possible success. This paper discusses the relationship between these concepts and shows how specific types of market failure give rise to specific classes of firms. Arguments are presented why specific types of firms will be more or less successful than others. Empirical research by Rumelt is then cited which supports the themes developed in the paper.

The conceptual construct, exit barriers, is expanded using both statistical findings and the results of field studies. The immobility of resources, it is suggested, can be overcome by helping marginal competitors to exit from potentially volatile businesses. The implementation of such tactics can be adapted to the firm's own strategic commitment and to the nature of the business in question, although it is expected that firms which might consider purchasing the physical and intangible assets of competitors in order to help them to scale high exit barriers, must themselves perceive the business to be of sufficiently high strategic importance to do so.

This study examines the interrelationships of environmental changes and strategic action variables with each other and with short term success, for 358 large business firms over a 45 year period. Success ( Fortune ratings and ROA) is found to be related to two strategic decision segments. Several strategy‐environment relationships are also found. Some methodological problems are noted in the attempt to move policy research from case analysis to statistical explanation.

In the recruitment of managers it is increasingly necessary to attune the choice of candidate to the strategy of the company or its subsidiary. In this paper—coauthored by specialists in the fields of management recruitment and corporate strategy—the authors develop classifications of strategies and of management archetypes. Linking of these classifications leads to an approach that can assist both managers‐employees and managers‐employers when filling management vacancies. In addition, the approach can be used to assist management development programmes and to relate management planning to strategic planning.

This paper reports the findings of an empirical field study of savings and loan associations. The investigation centres upon whether combinations of environment, strategy, and organization structure of “high”‐performance firms differ from combinations associated with “low”‐performance firms. Results show that such combinations differ, both statistically and with respect to their basic character. There is also evidence that norms held by managers of competing institutions and the nature of relationships between organizations and populations served to influence the vigour and form of interfirm rivalries and, in turn, organizational performance.

Researchers have for some time been interested in the relationship between the strategy and structure of an organization. In this article the authors discuss the most widely‐held view on the nature of this relationship, and then suggest an alternative explanation. For them strategy, structure, and environment are closely linked. Whereas men may build the structure of an organization, in practice it is this very structure which later constrains the strategic choices they may make.

Top management consensus on corporate objectives and on the competitive weapons employed to attain them was studied in 12 non‐diversified public corporations. It was found that while agreement on both is associated positively with economic performance, agreement on means is significantly more important—in fact, agreement on goals without agreement on means correlates with poor performance. This suggests that strategy makers should concentrate on reaching consensus concerning means rather than ends (corporate goals) when formulating strategies for single‐mission enterprises.

The paper presents a systematic approach for early identification and fast response to important trends and events which impact on the firm. Two versions of such an approach are described: a strong signal and a weak signal strategic issue management system . Strategic issue management, which responds to signals in “real time”, is compared to periodic strategic planning, and criteria for choice among the three are proposed.