Environmental Uncertainty, Business Strategy, and Financial Performance: an Empirical Study of the U.S. Lodging Industry

Abstract

A key premise in the normative literature is that an appropriate business strategy will favorably align an organization with its environment (Andrews, 1971; Hofer & Schendel, 1978; Porter, 1980). It is argued that the strategy that will produce the best results is dependent on existing environmental circumstances (Miles & Snow, 1978). This study investigated the tenet that, for firms in the lodging industry, there exists an optimal pattern or ''fit'' between the environment and the firm's business strategy that separates the more successful operations from the less successful ones. The findings of this study indicate that a "match" between the state of the environment facing an organization and its business strategy is required for high performance. The results obtained provide an invaluable planning and analysis tool for all levels of management involved in charting a firm's future.

The environment, involvement, and performance: implications for the strategic process of food service firms

“…Harrington (2001a) pointed out some of the problems in utilizing accepted secondary (environmental) measures in macro-level research specific to hospitality. As a possible result of these problems, an anecdotal assessment of the external environment surrounding hospitality firms is frequently described as turbulent, dynamic, and complex (i.e., Dev and Olsen, 1989;Olsen and Roper, 1998) but direct comparisons of differences in the levels of dynamism or complexity between hospitality firms and other types of firms have not been provided in the literature. Okumus' (2002) review of the literature indicated that hospitality researchers have applied strategic management concepts directly to hospitality firms but have not provided any findings that support particular differences between hospitality and other types of firms.…”

“…Baloglu and Assante (1999) called for more macro-level research, in general, and a review of the literature indicates that hospitality research utilizing industrylevel environmental variables (as independent or control variables) are underrepresented. Hospitality researchers that have utilized external environmental variables have, in most cases, used a perceived uncertainty variable rather than a separate measure of dynamism and complexity (e.g., Dev and Olsen, 1989;Schmelzer and Olsen, 1994). Harrington (2001a) pointed out some of the problems in utilizing accepted secondary (environmental) measures in macro-level research specific to hospitality.…”

“…The majority of hospitality strategic management studies have focused on environmental scanning, the strategy-structure debate, or strategy formulation (e.g., Costa and Teare, 1994;Dev and Olsen, 1989). Very little research has been done to assess the strategic process itself or strategy implementation in hospitality firms (Okumus and Roper, 1999;Okumus, 2002).…”

The relationship among participative management style, strategy implementation success, and financial performance in the foodservice industry

“…This response rate is similar to other studies of a similar population (Dev and Olsen, 1989;Jogaratnam, 2002). However, in order to minimize the possibility of non-response error, Foodservice segment characteristics of the sample were compared with the LRA membership, percentages by ownership-type and numbers of units were compared between our sample and the National Restaurant Association, and all firms that responded were sent a second copy and asked to have a second informant respond to the survey.…”

“…While some past hospitality strategic management studies were based on strategy formulation, strategy structure-debate or environmental scanning, few studies were based on directive or particpative approaches in the strategic process and implementation in the hospitality industry (Dev and Olsen, 1989;Harrington, 2004;Okumus, 2001;Parsa, 1999;Schmelzer and Olsen, 1994).…”