Strategic patterns and firm performance: comparing consistent, flexible and reactor strategies

Abstract

Purpose Firms face the paradox of adapting change and remaining stable to control uncertainty simultaneously to maintain their competitive position because both aspects are essential for the firm’s effectiveness. This has raised a debate in the contemporary literature that whether firms should remain consistent or adapt flexibility in their strategic choice to produce better performance? The supporters of both the arguments provide substantial evidence in their favor. The purpose of this paper is to investigate the strategy-performance relationship in this context along with contingent effect of firm size and industry. Design/methodology/approach Empirical analysis using seven years financial data of 307 joint stock firms from 12 industries is done by applying Miles and Snow strategic typology. Scoring method is used to classify the strategic orientation of the firms. Univariate and multivariate regression models are applied to investigate the influence of strategy, firm size, and industry on firm performance both individually and collectively. Findings The results show that most of the firms in Pakistan are consistent in their strategic stance (43 percent) followed by flexible (40 percent) and reactors (17 percent). The mean differences in the performance of consistent, flexible, and reactor strategies show that both consistent and flexible strategies performed equally well and outperformed the reactors. However, there is significant variation in the performance of the strategic types due to the variation in firm size and industries whereas the contingent effect of firm size, industry, and strategy is statistically insignificant. Originality/value The methodology used for the identification of transition of strategic stance of the firms over time to know the consistent, flexible, and reacting behavior of the firms from archived data is the important contribution to the literature. The methodology can be replicated in longitudinal studies for identification of strategic groups in typological research.

The mediating role of decentralization between strategy and performance

“…Inspired by the contingency theoretical perspective on organizations (e.g. Anwar and Hasnu, 2017;Moss et al, 2014;Huber, 2011, Donaldson, 2001Burton et al, 2015), the current study adopted firm size, strategic clarity, industry, whether the company is a multi-/single plant firm, exporter status, business environment risk and level of industrial competition as contingency factors. The study then tested the impact of these factors on the mediating effects, as previous studies indicated that they might have a bearing on those variables and relationships (e.g.…”

A firm’s age and size as determinants for its organizational innovativeness

“…The evidence that has been released is highly contradictory. According to Anwar and Hasnu (2017) firms' external relations moderate more by the specific industry then by the firm size. Kalkan et al (2011) and Campos-Climent and Sanchis-Palacio (2015), carrying out their research in different contexts, found that there is no relation between size and firm performance including any innovation activity.…”

How to enhance performance effectiveness

“…The review is based on: “Strategic patterns and firm performance: comparing consistent, flexible and reactor strategies” by Anwar and Hasnu (2017), published in Journal of Organizational Change Management . Choice of strategy can significantly impact on organizational performance.…”