Environmental dynamism, complexity, and munificence as moderators of strategy-performance relationships

McArthur, Angeline W.; Nystrom, Paul C.

doi:10.1016/0148-2963(91)90020-x

Cited by 150 publications

(118 citation statements)

References 27 publications

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“…For example, Rajagopalan et al (1993) argue that organizations in munificent environments are less likely to be penalised for poor decisions than those in hostile environments; thus, decision processes which are suited to munificent environments may be inappropriate for less munificent ones. Elbanna and Child (2007) and McArthur and Nystrom (1991) demonstrate that the level of environmental hostility-munificence was a significant predictor of the relationship between the strategy process and organizational outcomes. Miller and Friesen (1983) report a positive relationship between environmental hostility and the degree of analysis in the strategy process.…”

Section: Hostility Business Environment Index Computationmentioning

confidence: 99%

How Does Investment Climate and Business Environment Impact Firms’ Efficiency in a Post-Conflict Setting? Evidence from Democratic Republic of Congo

Sebigunda¹

2013

IJBM

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The paper explores links between business environment and firm efficiency in Democratic Republic of Congo (DRC). It builds on 105 firms from the World Bank Enterprise Survey which are observed over 2006-2010, that is the year the first democratic government was installed and five years later, at the end of the political term. The findings of the paper show that, five years after conflict in DRC, firms' efficiency rises from 0.0707 to 0.0742 over a scale spanning from 0 to 1. The mean-comparison test indicates that firm's efficiency in DRC was not significantly improved five years after democratic election 2010. Over the same period, the Hostility Business Environment Index (HBEI) rises from 0.4914 to 0.5765. The essential source of that variation was the deterioration of Business and government relationship. The weight in the index was 28.28% in 2006 against 57.09% in 2010. Using Tobit regression, the study reveals a positive link between hostility business environment and firm efficiency. Quantile Regression outputs show that only firms able to pay the highest bribes, and thus, the most efficient profit from those disorders. This counter intuitive result may find an explanation for the corruption practices used by businesspeople to overcome environment constraint and inefficient barriers.

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Section: Hostility Business Environment Index Computationmentioning

confidence: 99%

How Does Investment Climate and Business Environment Impact Firms’ Efficiency in a Post-Conflict Setting? Evidence from Democratic Republic of Congo

Sebigunda¹

2013

IJBM

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“…Exogenous factors that also influence an industry's rate of growth include business cycles, changes in population size, and expansion or contraction in upstream and downstream industries. Extant literature in general considers higher growth or munificence to make it easier for firms to remain competitive (Hofer, 1975;Dess & Beard, 1984;McArthur & Nystrom, 1991). Based in this postulate, higher industry growth can be expected to exert an equalizing effect on performance in the industry, weakening the effect of firm resources on performance; so, exogenous growth can be expected to moderate the performance effect of firm resources the same way as endogenous growth.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

A longitudinal analysis of the impact of firm resources and industry characteristics on firm-specific profitability

Acquaah

Chi

2007

J Manage Governance

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Abstract:Using a dynamic heterogeneous panel data model, we examine the relationship between firmspecific resources (corporate management capabilities, employee value-added and technological competence) and firm-specific profitability and the potential moderating effects of industry characteristics on this relationship. We find that firm-specific resources enhance both accounting-based measures (return on assets and return on sales) and market-based measure (Tobin's q) of firm-specific performance. Moreover, industry characteristics moderate the relationship between firm-specific resources and firm-specific profitability. Managerial implications are discussed.Chi, Tailan. (2007) AbstractUsing a dynamic heterogeneous panel data model, we examine the relationship between firm-specific resources (corporate management capabilities, employee value-added and technological competence) and firm-specific profitability and the potential moderating effects of industry characteristics on this relationship. We find that firm-specific resources enhance both accounting-based measures (return on assets and return on sales) and market-based measure (Tobin's q) of firm-specific performance. Moreover, industry characteristics moderate the relationship between firm-specific resources and firmspecific profitability. Managerial implications are discussed.

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“…Defined as the ability of an environment to support growth and the degree of resource abundance (Dollinger and Golden, 1992;McArthur and Nystrom, 1991;Palmer and Wiseman, 1999;Sutcliff, 1994), munificence is expected to support greater managerial discretion. Palmer and Wiseman (1999) argue that higher levels of munificence lead to firms undertaking greater risk in their efforts to capture larger portions of industry resources.…”

Section: Munificence and Instabilitymentioning

confidence: 99%

“…Environmental munificence and instability, or dynamism, are both industry factors that may affect strategy and firm performance (Dess and Beard, 1984;Dollinger and Golden, 1992;McArthur and Nystrom, 1991;Palmer and Wiseman, 1999;Sutcliff, 1994). Defined as the ability of an environment to support growth and the degree of resource abundance (Dollinger and Golden, 1992;McArthur and Nystrom, 1991;Palmer and Wiseman, 1999;Sutcliff, 1994), munificence is expected to support greater managerial discretion.…”

Section: Munificence and Instabilitymentioning

confidence: 99%

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When corporate social responsibility matters: an empirical investigation of contingencies

Luxmore

Tang

Hull

2012

IJCG

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Abstract:Rather than re-examine the question of whether doing good generally helps a company to do well, this study draws on contingency theory to empirically examine when doing good helps a company do as well as possible. Using panel data, we examine the effects of industry life cycle, munificence, and instability on the relationship between corporate social responsibility (CSR) and corporate financial performance (CFP). Our findings indicate that life cycle has a significant impact on the CSR-CFP relationship, as does industry instability. These findings suggest that CSR helps the bottom line considerably -if it is applied at the right time. The primary purpose of our study is to broaden our understanding of CSR's financial impact by applying the contingency perspective to the insights offered by the resource-based view (RBV). By doing so, we hope to present a clearer picture of how and under what circumstances CSR affects firm CFP. Given the longstanding contention over the CSR-CFP relationship, it is unlikely that this study can by itself resolve the question. But we hope that our findings help researchers better understand this complex relationship, and that we will have helped with the eventual resolution of the important and hotly-debated CSR-CFP relationship.There are three possible effects of CSR on firm competitiveness: positive, negative, and neutral. Each possible effect enjoys both theoretical justification and supporting empirical evidence. Lee (2008) notes that over 30 years of research has failed to identify a definitive CSRperformance link. The discrepancy in findings may be attributed to competing theories, 3 methodologies and measurement issues (Ditlev-Simonsen and Gottschalk, 2011;Hull and Rothenberg, 2008;Lee, 2008;Lockett, Moon, and Visser, 2006;Margolis and Walsh, 2003;McWilliams and Siegel, 2001;McWilliams, Siegel, and Wright, 2006;Orlitzky, Schmidt, and Rynes, 2003;Russo and Fouts, 1997;Surroca, Tribo, and Waddock, 2010;Wood, 2010;Wood and Jones, 1995).Research that has found a positive CSR-CFP relationship suggests that factors such as improved stakeholder relationships, reduced HRM costs due to improved employee recruitment and performance, enhanced quality, and better market opportunities are the underlying causes of this outcome (Becchetti, Di Giacomo, and Pinnacchio, 2008;Hull and Rothenberg, 2008;McWilliams, Siegel, and Wright, 2006). Meta-analyses by Margolis and Walsh (2003) and Orlitzky, Schmidt, and Rynes (2002) found empirical support for a positive CSR-performance result. Thus, in this paper, we accept the notion that higher levels of CSR in general should lead to better CFP. However, we also accept the premise that there may be circumstances in which the effects of CSR on CFP are reduced. As these circumstances appear to extend across multiple firms at one time, potentially explaining the variance in different studies of the phenomenon (Lee, 2008), it seems likely that these circumstances are environmental rather than firm-specific.The firm strategy-performance relationship...

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Environmental dynamism, complexity, and munificence as moderators of strategy-performance relationships

Cited by 150 publications

References 27 publications

How Does Investment Climate and Business Environment Impact Firms’ Efficiency in a Post-Conflict Setting? Evidence from Democratic Republic of Congo

How Does Investment Climate and Business Environment Impact Firms’ Efficiency in a Post-Conflict Setting? Evidence from Democratic Republic of Congo

A longitudinal analysis of the impact of firm resources and industry characteristics on firm-specific profitability

When corporate social responsibility matters: an empirical investigation of contingencies

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