Strategy-performance linkage: methodological refinements and empirical analysis

Date01 August 2016
Published date01 August 2016
DOIhttps://doi.org/10.1108/JABS-07-2015-0096
Pages303-317
AuthorJamil Anwar,SAF Hasnu
Subject MatterStrategy,International business
Strategy-performance linkage:
methodological refinements and
empirical analysis
Jamil Anwar and SAF Hasnu
Jamil Anwar is Assistant
Professor and SAF Hasnu
is Professor and both are
based at the Department
of Management Sciences,
COMSATS Institute of
Information Technology,
Abbottabad, Pakistan.
Abstract
Purpose Strategic typologies are applied to investigate strategy–performance relationship. The
typology of Miles and Snow (1978) is one of them, but the methodology applied for identification of
strategic types for archival financial data is questionable on three grounds: no standard procedure for
categorization of strategic types; identification of reactor strategy is always ignored; and the behavior of
firms’ strategic orientation over time is under-researched. Besides, the assumptions that viable
strategies are expected to perform equally well, outperform reactors and distributed evenly are not
overwhelmingly supported. The purpose of this paper is to address these issues.
Design/methodology/approach A refined scoring methodology is developed and used for
identification of all strategic types, including reactors, by investigating the consistency of the firms over
time. Empirical analysis using seven years of data of 121 joint stock firms of the textile sector in Pakistan
is performed to test the assumptions regarding presence, distribution and performance of strategic
types.
Findings There is significant difference in the distribution of the strategic types. Pure defenders and
pure prospectors are non-existing, whereas a reasonable number of reactors are present. Overall
difference in performance among strategies is generally insignificant and viable strategies
outperformed reactors. The effect of size on performance is also insignificant. However, there is
variation in performance of strategies with variation in size. Strategy is the better predictor of
performance than size.
Originality/value The transition of strategic stance of the firms over time and the identification of
reactor strategy from archived financial data are the important outcomes of the proposed methodology.
The proposed methodology can be used for any longitudinal study for identification of all possible
strategic types and can also be used for any other typological research.
Keywords Strategy, Typology, Performance, SAS, Scoring methodology
Paper type Research paper
1. Introduction
The linkage of strategy and performance is central in strategic management research. A
large number of empirical studies applied strategic typologies, which distinguish different
strategies, to investigate these linkages. Of the numerous strategic typologies, Miles and
Snow’s (1978) framework has been the most enduring, scrutinized and validated strategy
classification. It has been debated and supported by many researchers in a wide array of
settings and has provided a host of relationships for various business domains. However,
a number of researchers have commented on the need of further refinements in
methodology and for empirical validation and testing of its underlying assumptions in
different contexts and with different measures (Conant et al., 1990;Shortell and Zajac,
1990;Desarbo et al., 2005). The refinements in methodology are specifically required for
standardization of a procedure to categorize the firms into strategic types along with a
criterion to identify the strategic behavior of the firms over time when archived financial data
are used.
Received 14 July 2015
Revised 6 October 2015
12 December 2015
Accepted 21 December 2015
DOI 10.1108/JABS-07-2015-0096 VOL. 10 NO. 3 2016, pp. 303-317, © Emerald Group Publishing Limited, ISSN 1558-7894 JOURNAL OF ASIA BUSINESS STUDIES PAGE 303

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