How does strategic choice affect the performance of community forest enterprises? A study in the Cascadia region

Abstract

Proponents of decentralized forest governance make a compelling case that community forest enterprises (CFEs) can aid in sustainable and equitable utilization of forest resources. The effectiveness of CFEs is thus dependent on their ability to balance social, environmental, and financial performance. In this paper, we examine the relationship between a commonly recommended differentiation strategy and CFE effectiveness. Using data obtained through a survey administered on 51 CFEs located in the Cascadia region (British Columbia province of Canada; and Oregon and Washington states of the United States), we find that CFEs pursuing a differentiation strategy are able to balance social, environmental, and financial objectives. Further, recognizing that all CFEs cannot pursue a differentiation strategy, and some may not even have a defined strategic orientation, the paper compares social, environmental, and financial performance of CFEs pursuing a differentiation strategy, a hybrid strategy (a combination of differentiation and cost leadership strategy), and no defined strategy. This analysis reveals that CFEs pursuing a hybrid strategy deliver better financial performance than those with no defined strategy, but are similar to those pursuing a differentiation strategy.