Business strategy and firm performance: a multi-industry analysis

Abstract

Purpose – The purpose of this paper is to investigate the strategy-performance relationship in a multi-industry setting for joint stock firms operating in Pakistan using Miles and Snow typology. The impact of firm size and industry on performance along with strategy is also investigated. The empirical research evidence on strategy-performance relationship for Miles and Snow typology is updated as well. Design/methodology/approach – Scoring methodology is applied for identification of strategic types, including the reactor strategy. The consistency of the firms over time is also checked. Seven year archived financial data of 320 Pakistani joint stock firms from 12 industries are used for analysis. Descriptive statistics and analysis of variance is used for analysis. Findings – Hybrid strategies are practiced by firms rather than pure strategies. The distribution of strategic types is uneven. There are mixed results for performance difference among strategic types for different industries and firm size. Defending and analyzing strategies are better than the prospecting strategies. Reactors performed better in some industries as well. Originality/value – Proposed scoring methodology can be applied to identify all strategic types including reactors in the longitudinal studies. This can be replicated for other typologies or strategic group classifications. The process for identification of reactor strategy through a consistency check is a unique contribution to the literature, especially when archived financial data are used.

Foreign ownership and sustainability performance in Indonesia

“…The type of business strategy based on Miles and Snow (1978) is defender, analyzer, prospector and reactor. In this study using a type of business strategy developed by Anwar and Hasnu (2016) on the basis of its distribution is based on Miles and Snow (1978).…”

“…Reactor is a business strategy that does not have specific competencies that are run by the company. This strategy is not feasible for long-term use (Miles and Snow, 1978;Anwar and Hasnu, 2016). Jensen (2001) states that decisions made by companies must be adjusted for all stakeholders including customers, employees, and communities.…”

The Strategic Behaviour of SMEs

“…The typology of Miles and Snow (1978) is one of the most used approaches for the study of the strategic behaviour of organizations (e.g., Anwar and Hasnu 2016;Bouhelal and Mohamm 2016;Frambach et al 2016;Lin et al 2014) and one of the most validated typologies (Fiss 2011;Parnell et al 2015). This typology has been widely applied to large enterprises, and different results could be obtained for small and medium-sized enterprises (SMEs) due to their own characteristics (Akman et al 2015).…”

“…This will provide greater richness and detail about the strategic behaviour of SMEs, as well as knowledge on the degree of alignment of each one of the problems • From the methodological point of view, this paper introduces new systems of measurement and validation that are more in line with the complex strategic reality of firms (among others, DeSarbo et al 2005). The Rasch Measurement Theory (Rasch 1980) presents, through a polytomous scale, the joint measurements of items and firms along a linear continuum (This theoretical and methodological approach is in line with the new interpretations of the strategic types of Miles and Snow (1978) closer to trends than to pure types (e.g., Anwar and Hasnu 2016;Sollosy 2013;Woodside et al 1999). Until now, tools and measurement systems have been used to establish clusters of firms in a somewhat 'artificial and manipulated' way.…”

“…Reactor strategic behaviour: usually characterized as a type of non-viable strategy (Anwar and Hasnu 2016). In addition, reactors only respond to competitive events when they are forced and do so in an inconsistent or unstable manner (Hughes and Morgan 2008).…”