Convergence Versus Strategic Reorientation: The Antecedents of Fast-paced Organizational Change

Abstract

We reexamine and extend the antecedents of strategic reorientation, a change in strategy combined with change in at least two of organization structure, power distribution and control systems, presented by Lant, Milliken, and Batra (1992) by using archival data (1987–1993) for firms in the stable furniture and turbulent computer software industries. While enabling direct comparability of results from the two studies, we specify an extended, integrated model of change forces, and test the hypotheses with a more robust data analytic technique, hierarchical regression analysis. The results support industry turbulence and CEO turnover as precursors to strategic reorientation, and suggest that industry turbulence conditions managers’ external attributions for negative financial performance in influencing strategic reorientation. Alternatively, the results indicate that top management team turnover is negatively related to strategic reorientation. The results do not support the Lant et al. (1992) conclusions that low past financial performance, top management team heterogeneity, awareness of environmental changes, and external attributions for negative financial performance outcomes are significantly associated with strategic reorientation. Structural equation analysis indicated the predictive superiority of the respecified model, and we offer suggestions for theoretical refinement and development of strategic reorientation.

Patterns of strategic change

“…Sales growth was selected as the specific measure for performance because this indicator is widely used to measure a firm's success (Boeker and Goodstein, 1993) and can be used as an early warning system for the validity of current strategy (Gordon et al, 2000). Managers' or other stakeholders' dissatisfaction with the firm's performance can act as a catalyst for change and can help to overcome organizational inertia (Boeker, 1997b;Sánchez et al, 2010).…”

“…While the majority of the literature has focussed on analyzing the CEO's involvement in the firm's strategy, some studies have also examined the role of the TMT (Barker et al, 2001;Gordon et al, 2000;Lohrke et al, 2004;Volverda et al, 2001). Some papers argue that senior managerial succession is the primary agent for a change in company strategy (Boyne and Meier, 2009;Gordon et al, 2000;Lant et al, 1992), while other studies suggest the possibility of reciprocal causality between these two elements (Barker et al, 2001). Some authors even believe that these changes are simultaneous (Virany et al, 1992).…”

“…In their definition of strategic change several studies have linked managerial succession to changes in one or more of the variables listed above: strategy (Barker et al, 2001;Boeker, 1997a;Miller, 1993;Pitcher et al, 2000;Simons, 1994); structure (Barker et al, 2001;Gordon et al, 2000;Hayward and Shimizu, 2006;Lant et al, 1992); and control systems (Miller, 1993;Simons, 1994). CEO succession has also been linked to other changes in the distribution of power, such as changes in the TMT (Miller, 1993;Shen and Cannella, 2002) or in the body of the shareholders (Denis et al, 1997;Weisbach, 1988).…”

“…This model defines the term "strategic reorientation" as large-scale change throughout the company, including simultaneous and discontinuous adjustments to the firm's strategy, structure, power distribution and control systems (Romanelli and Tushman, 1994;Tushman and Romanelli, 1985). However, the majority of studies have focussed on only one component of change (Gordon et al, 2000;Lant et al, 1992), which prevents the complexity of interactions between the different organizational or environmental variables from being captured (Rajagopalan and Spreitzer, 1997). Changes in strategic components are themselves stages in the process within an inputprocess-output model, but the sequence of these changes has never been conclusively established (Amis et al, 2004), and clarifying this temporal sequence would give us a better understanding of how and why organizations change (Armenakis and Bedeian, 1999).…”

Organizing for e-business: the implementation of management principles in electronic commerce

“…The turbulence of external environments has been shown to influence organizational structure by way of the strategy chosen by companies to manage the dynamics of their market [20]. Subject to the mitigating influence of strategic choices, the extant literature has suggested that successful, highperformance organizations (small and large) in dynamic or turbulent environments tend to have certain structural characteristics [3 13.…”