This study tests competing theories of how the relationship between rationality in strategic decision processes and firm performance may be moderated by environmental dynamism. Results, based on a survey of 101 manufacturing firms, indicate a positive rationality-performance relationship for firms facing dynamic environments, but no relationship between rationality and performance for firms facing stable environments. Implications for future research are discussed.
Get full access to this article
View all access options for this article.
References
1.
Andrews, K.R. (1971). The Concept of Corporate Strategy. Homewood, IL.: Dow Jones-Irwin.
2.
Ansoff, I.H. (1965). Corporate Strategy. New York: McGraw-Hill.
3.
Argyris, C. & Schon, D.A. (1974). Theory in Practice: Increasing Professional Effectiveness. San Francisco: Jossey-Bass.
4.
Avolio, B.J., Yammarino, F.J. & Bass, B.M. (1991). Identifying common methods variance with data collected from a single source: An unresolved sticky issue, Journal of Management, 17: 571-587.
5.
Bracker, J.S., Keats, B.W. & Pearson, J.N. (1988). Planning and financial performance among small firms in a growth industry. Strategic Management Journal, 9: 591-603.
6.
Cameron, K. (1978). Measuring organizational effectiveness in institutions of higher education. Administrative Science Quarterly, 23: 604-632.
Dess, G.G., Ireland, R.D. & Hitt, M.A. (1990). Industry effects and strategic management research. Journal of Management, 16: 7-27.
11.
Dess, G.G. & Robinson, R.B. Jr. (1984). Measuring organization performance in the absence of objective measures: The case of the privately-held firm and the conglomerate business unit. Strategic Management Journal, 5: 265-273.
12.
Eisenhardt, K.M. (1989). Making fast strategic decisions in high-velocity environments. Academy of Management Journal, 32: 543-576.
13.
Fredrickson, J. W. (1983). Strategic process research: Questions and recommendations. Academy of Management Review, 8: 565-575.
14.
Fredrickson, J. W. (1984). The comprehensiveness of strategic decision processes: Extension, observations, future directions. Academy of Management Journal, 27: 445-466.
15.
Fredrickson, J.W. & Iaquinto, A.L. (1989). Inertia and creeping rationality in strategic decision processes. Academy of Management Journal, 32: 543-576.
16.
Fredrickson, J.W. & Mitchell, T.R. (1984). Strategic decision processes: Comprehensiveness and performance in an industry with an unstable environment. Academy of Management Journal, 27: 399-423.
17.
Garud, R. & Van de Ven, A.H. (1992). An empirical evaluation of the internal corporate venturing process. Strategic Management Journal, 13(Summer): 93-110.
18.
Glick, W.H., Miller, C.C. & Huber, G.P. (1993). The impact of upper echelon diversity on organizational performance. Pp. 176-214 in G.P. Huber & W.H. Click (Eds.), Organizational change and redesign: Ideas and insights for improving performance. New York: Oxford University Press.
19.
Glick, W.H., ogilvie, d.t. & Miller, C.C. (1990). Assessing dimensions of task environments: Irma-industry and aggregate industry measures. Paper presented at the Academy of Management meetings, San Francisco.
20.
Golden, B.R. (1992). The past is pas-or is it?The use of retrospective accounts as indicators of past strategy. Academy of Management Journal, 35: 848-860.
21.
Harrigan, K.R. (1983). Research methodologies for contingency approaches to business strategy. Academyof Management Review, 8: 398-405.
22.
Hart, S.L. (1992). An integrative framework for strategy-making processes, Academy of Management Review, 17: 327-351.
23.
Hatten, K.J., Schendel, D.E. & Cooper, A.C. (1978). A strategic model of the U.S. brewing industry. Academyof Management Journal, 21: 592-610.
24.
Hirsch, P.M. (1975). Organizational effectiveness and the institutional environment. Administrative Science Quarterly, 20: 327-344.
25.
Judge, W.Q. & Miller, A. (1991). Antecedents and outcomes of decision speed in different environmental contexts. Academy of Management Journal, 34: 449-463.
26.
Lee, A.S. (1991). Integrating positivist and interpretive approaches to organizational research. Organization Science, 2: 342-365.
27.
Lindsay, W.M. & Rue, L.W. (1980). Impact of the organization environment on the long-range planning process: A contingency view. Academy of Management Journal, 23: 385-404.
28.
McGrath, J.E., Martin. J. & Kulka, R.A. (1982). Judgment culls in research. Beverly Hills, CA: Sage.
29.
Miles, R.E. & Snow, CC. (1978). Organization strategy, structure, and process. New York: McGraw-Hill.
30.
Miller, D. (1987). Strategy making and structure: Analysis and implications for performance. Academy of Management Journal, 30: 7-32.
31.
Miller, D. (1992). Environmental fit versus internal fit. Organization Science, 3: 159-178.
32.
Miller, D. & Droge, C. (1986). Psychological and traditional determinants of structure. Administrative Science Quarterly, 31: 539-560.
33.
Miller, D. & Friesen, P.H. (1983). Strategy making and environment: The third link. Strategic Management Journal, 4: 221-235.
34.
Miller, D., Droge, C. & Toulouse, J.M. (1988). Strategic process and content as mediators between organizational context and structure. Academy of Management Journal, 31: 544-569.
35.
Miller, G.A. (1956). The magical number seven, plus or minus two: Some limits on our capacity for processing information. Psychological Review, 63: 81-97.
36.
Mintzberg, H. (1973a). Strategy making in three modes. California Management Review, 16(2): 44-53.
37.
Mintzberg, H. (1973b). 77re nature ofmanagerial work. New York: Harper & Row.
38.
Mintzberg, H. & Waters, J.A. (1985). Of strategies, deliberate and emergent, Strategic Management Journal, 6: 257-272.
39.
Pearce, J.A., Freeman, E.B. & Robinson, R.B. (1987). The tenuous link between formal strategic planning and financial performance. Academy of Management Review, 12: 658-675.
40.
Pearce. J.A., Robbins. D.K. & Robinson. R.B. (1987). The impact of grand strategy and planning formality on financial performance. Strategic Management Journal, 8: 125-134
41.
Prescott, J.E. (1986). Environments as moderators of the relationship between strategy and performance. Academy of Management Journal, 29: 329-346.
42.
Rajagopalan, N.;Rasheed, A. & Datta, D.K. (1993). Strategic decision processes: Critical review and future directions. Journal of Management, 19: 349-384.
43.
Ramanujam, V. & Venkatraman, N. (1987). Planning system success: A conceptualization and an operational model. Management Science, 33: 687-705.
44.
Robinson, R.B.Jr. & Pearce, J.A. (1988). Planned patterns of strategic behavior and their relationship to business-unit performance. Strategic Management Journal, 9: 43-60.
45.
Schwenk, C.R. & Shrader, C.B. (1993). Effects of formal strategic planning on financial performance in small firms: A meta-analysis. Entrepreneurship: Theory and Practice, 17(3): 53-64.
46.
Sinha, D.K. (1990). The contribution of formal planning to decisions. Strategic Management Journal, 11: 479-492.
47.
Taylor, L. A. III. (1987). Decision quality and commitment within a probabilistic environment. Organizational Behavior and Human Decision Processes, 39: 203-227.
48.
Van de Ven, A.H. (1992). Suggestions for studying strategy process: A research note. Strategic Management Journal, 13(Summer): 169-188.
49.
Van de Ven, A.H. & Polley, D. (1992). Learning while innovating. Organization Science, 3: 92-116.
50.
Van de Ven, A.H. & Poole, M.S. (1989). Methods for studying innovation processes. Pp 31-54 in A.H. Van de Ven, H.L. Angle & M.S. Poole (Eds.) Research on the management of innovation: The Minnesota studies. New York: Ballinger/Harper & Row.
51.
Van de Ven, A.H. & Poole, M.S. (1990). Methods for studying innovation development in the Minnesota innovation research program. Organization Science, 1: 313-335.
52.
Venkatraman, N. & Grant, J.H. (1986). Construct measurement in organizational strategy research: A critique and proposal. Academy of Management Review, 11: 71-87.
53.
Venkatraman, N. & Ramanujam, V. (1987). Measurement of business economic performance: An examination of method convergence. Journal of Management, 13: 109-122.
54.
Weick, K. (1979). The social psychology of oganizing. Reading, MA: Addison-Wesley.
