Strategic decision processes in international firms.
Lester W. Jacobs, Associate Professor of Operations Management, College of Business, University of Wyoming, Casper, WY, U.S.A.
Willem van't Spijker, Professor of Management, Koninklijk Institute voor de Marine, Den Helder, The Netherlands.
The importance of an organization's strategy -- the extent of fit between its external environment and its internal resources (Andrews 1971, Hofer and Schendel 1978) -- is well recognized as an important determinant of organizational survivability and prosperity. It therefore follows that the decision processes used by an organization in developing and integrating a strategy is critical to the organization's success.
In the decision making literature the value of comprehensive processes for developing and integrating strategic decisions has received a great deal of attention. Fredrickson and Mitchell (1984) defined "comprehensiveness" as the extent to which an organization attempts to be exhaustive or inclusive in making and integrating strategic decisions. The controversy centers primarily on the appropriate level of comprehensiveness given an organization's external environment. Research findings from studies of organizations in different environments (Fredrickson and Mitchell 1984, Fredrickson 1984, Bourgeois and Eisenhard 1988, Eisenhardt 1989) have done little to resolve this controversy.
This paper reports the findings of a research study that tested the relationship between the comprehensiveness of strategic decision processes and organizational effectiveness using a sample of international firms operating in a number of different industries. The implications to management of international firms are provided and the development of theory and future research directions are discussed.
Rational decision processes
For a long time the rational decision processes have received center stage in the management literature. Early organizational decision models were introduced by March and Simon (1958) and Cyert and March (1963). More recently Janis (1989:29) drawing on Simon's (1957) work on administrative decision-making reiterated the importance of rational problem solving processes by stating that "they are more likely to obtain a comprehensive view of the options, to recognize trade-offs among competing values, to choose a course of action that best meets the essential requirements for a satisfactory course of action, and to develop alternative fallback/options in case the chosen option unexpectedly proves to be unworkable or ineffective." Janis and Mann (1977) enumerate the steps in the rational processes:
1. Surveying a diversity of objectives based upon a multiplicity of values derived from the collectivity of stakeholders;
2. Generating a wide range of alternative courses of action;
3. Systematically acquiring relevant information to evaluate alternatives;
4. Objectively evaluating all relevant information;
5. Reevaluating the positive and negative consequences of alternatives initially considered as unacceptable;
6. Carefully evaluating the costs and risks of negative and positive consequences of the preferred alternative;
7. Developing detailed implementation plans and control systems for the chosen alternative, as well as contingency plans for identified risks.
This analytic-rational approach to decision making which general systems theorists such as Van Gigch (1974) label synoptic "requires comprehensiveness of information and analysis" (Braybrooke and Lindblom 1963:40). Since this decision making approach has a main emphasis on comprehensiveness, Fredrickson and Mitchell (1984:402) identified it as an important construct and divided comprehensiveness into two components: analytic and integrative. Analytic comprehensiveness refers to those decision processes designed to produce a complete set of goals and strategic alternatives, whereas integrative comprehensiveness refers to the logical consistency among the decision components that comprise and support the strategy.
Impediments to comprehensiveness
In an organization there are three main obstacles to adopting comprehensive strategic decision processes. First, the organization may lack the physical, financial, human, and systems resources to perform the relevant strategic information search, analysis and integration (Braybrooke and Lindblom 1963, Nutt 1976, Quinn 1978). Second, those individuals responsible for the strategic decisions may have limited cognitive capabilities (Janis 1989). Third, strategic decision makers may be apprehensive about upsetting the organization's existing political structure and dealing with its consequences (Quinn 1978, Janis 1989).
Janis (1989) noted that because of cognitive limitations, strategic decision makers are likely to take any of a number of decision shortcuts. These include:
1. Satisficing -- Choosing the first strategic alternative that minimally satisfices the decision criteria.
2. Simple decision rules -- Relying on existing procedures or a well-known analogy.
3. Incrementation -- Considering only minor variations to the last decision choice beating on the problem.
4. "Nutshell briefing" rule -- Reducing a complicated strategic problem to a few simple issues.
Janis (1989) also identified a number of decision rules an individual may employ in responding to the organization's political structure. These include:
1. Avoid punishment -- Find out and support the strategic position favored by those holding the most power.
2. Power enhancement -- Support the strategic options that will maximize your coalition's power gain or minimize its power loss.
3. Rigging -- Selectively disseminate information to build consensus for the favored strategic option.
4. Group harmony -- Choose the strategic option that minimizes internal disruptions in the strategic group.
The impact of the external environment on comprehensiveness
The external environment has long been recognized as an important variable in explaining many organizational phenomena. Emery and Trist (1965) were among the first to recognize the importance of an organization's environment and identified four types of causal textures: 1. placid, randomized, 2. placid, clustered, 3. disturbed-reactive, and 4. turbulent fields, with turbulent fields representing the highest order of uncertainty. Focusing on organizational adaptiveness Terreberry (1968) suggested that an organization's ability to adapt to changing environmental contingencies is, in part, a function of the organization's perceptual and information-processing capacities. Thompson (1967) offered a series of propositions centering on structural arrangements and strategic maneuvers for coping with uncertainty, and Duncan (1972) empirically identified two relevant environmental dimensions of uncertainty: complexity and dynamism.
Bourgeois (1980) sensitized us to the importance of strategic decision making in aligning the organization to its environment and, drawing upon Duncan's (1972) work, argued that the strategic decision making process is made more difficult under conditions of uncertainty because of a lack of information, lack of knowledge about decision outcomes and an in ability to estimate the environment's effect on firm performance. Along with Gore (1964) and Lindblom (1980), Nutt (1976) criticized the rational decision approach because of the cost and difficulty in obtaining critical information, the overwhelming definitional requirements, and the complexity due to the multiplicity of variables and their interactions. Nutt (1976) proposed six decision making models and contended that the rational model is most appropriate when the environment is predictable, whereas the incremental model is most appropriate when the environment is unpredictable. Fredrickson (1984:447) in summarizing the results of two decision making studies underscored Nutt's (1976) contention by stating that "synoptic processes, which are based on a rational model, are appropriate for organizations in stable environments but incremental processes should be used in unstable environments."
The international environment
An organization that operates internationally has a considerably different external environment from one that operates only domestically. Both the level of complexity and dynamism can be dramatically increased for an international firm. Many of the environmental factors that a domestic firm can treat as constants must now be treated as variables. An international firm often encounters cultural, social, political, legal, physical, economic, and demographic environments so different that its existing model for making strategic decisions simply may not be applicable. New variables must be added to the model and new informational sources developed (often resulting in lower information quality) so that the decision making processes are undertaken with a heightened sense of uncertainty.
In the international arena, events which have a major strategic impact on an organization sometimes can change dramatically. For example, witness the radical political events that have taken place within Eastern Europe in the recent past. Also the events in the mideast beginning with the Iraqi invasion of Kuwait in August, 1990 has induced considerable uncertainty throughout the world. In addition the full effect of the steady movement of West European countries toward greater unity is largely unknown.
In general, an organization that operates internationally must have greater adaptive capabilities. It must be able to process and sort out a larger number of environmental complexities. It must also have the capability of detecting shifts in environmental factors that have strategic implications and be capable of responding strategically to the altered environmental state. For this reason the appropriate strategic decision processes are critical for an international firm.
Fredrickson and Mitchell (1984), Nutt (1976), and Quinn (1978) among others contend that incrementalism is appropriate for an organization operating in an unstable environment because the resource requirements for effecting comprehensive strategic processes are too great. Since an international firm encounters complex and changing environmental conditions, these authors would not advocate comprehensive strategic decision processes. However, what the critics of the rational-analytic approach fail to recognize is that all organizations have strategic decision process deficiencies. These deficiencies may arise in the areas of improper problem definition, omission or misinterpretation of critical information, inaccurate assessment of implications, omission of viable alternatives, faulty strategic algorithms, defective implementation procedures or any number of other areas. Thus while critics of rational decision processes are quick to point out its deficiencies they overlook one important point. That is, the strategic decision processes adopted by an organization do not have to yield an ideal strategic solution; they merely have to produce an implementable strategy which nets the organization a greater ratio of strategic advantages to disadvantages compared to its competitors.
Additionally it is problematic whether a firm relying on incremental decision processes can consistently produce the innovative strategy needed for entering or sustaining a competitive presence in a foreign country. When using incremental processes, the search for strategic alternatives involves generating alternatives which are only minor variations of the existing strategy. These decision processes operate on the premise that radical departures involve too much risk due to the lack or high cost of environmental information and the inability to predict the outcomes of a new strategy. For a firm in a foreign country to operate under the premise that the foreign environment is but a minor variation of its domestic environment and that only minor adjustments to an existing strategy are necessary can often result in disastrous strategic consequences. For example, using the same product and promotion policies is certainly the easiest to implement and can sometimes be the most profitable (e.g. Pepsi Cola). However, decision processes that are non-comprehensive are less likely to differentiate between similar and dissimilar environments. When social, cultural, economic, and political conditions are such that following the existing strategy will not capitalize on existing opportunities and neutralize existing threats, the firm needs strategic decision processes which will detect environmental differences and generate viable new strategies. As Van Gigch (1974:60) pointed out incrementalism does not permit innovation and creativity because "it does not consider the whole problem and the whole system." Only comprehensive strategic decision processes are capable of detecting the full range of environmental conditions and of generating and evaluating strategies ranging from current to innovative. We propose that these are the processes most needed by international firms. In formal terms the following hypotheses reflecting this thinking.
H1 For international firms there will be a positive relationship between the comprehensiveness of strategic decision processes and organizational effectiveness.
H1.1 For international firms there will be a positive relationship between analytic comprehensiveness and organizational effectiveness.
H1.2 For international firms there will be a positive relationship between integrative comprehensiveness and organizational effectiveness.
A questionnaire measuring comprehensiveness of strategic decision making and organizational effectiveness was developed and mailed to a sample of U.S. based firms given in Table 1. A total of 528 questionnaires were mailed. Usable responses were received from 142 firms, for a 26.89 percent response rate. Of the 142 responding firms 70 indicated that at least twenty-five percent of sales, assets, or employees were outside the United States. These 70 firms comprise the sample of international firms in this study.
TABULAR DATA OMITTED
Although the letter stating the purpose of the research study and accompanying the questionnaire was addressed to the CEO, the questionnaire was sometimes filled out by some other executive. Table 2 is a breakdown of respondents' position in the firm. Data on size (number of employees), sales, and age of the responding organizations classified as international are provided in Table 3.
Comprehensiveness of strategic decision processes (COMPRE)
Comprehensiveness of strategic decision processes refers to the extent an organization attempts to be systematic and thorough in developing and integrating decisions designed to relate the organization to its external environment. In this study COMPRE is a composite variable derived by averaging the values of the analytic comprehensiveness and integrative comprehensiveness variables.
Table 2. Response Breakdown by Position (n = 70) Position in Firm Frequency Percent CEO 31 44.3 Executive Vice-President 13 18.6 VP Strategic Planning 5 7.1 Divisional/Functional VP 13 18.6 Other 6 8.6 Missing 2 2.9
TABULAR DATA OMITTED
Analytic comprehensiveness (ANALYTIC)
Analytic comprehensiveness refers to the extent an organization attempts to be exhaustive in generating and evaluating alternatives centering on the organization's basic direction, such as its overall goals and strategy. Analytic comprehensiveness is broken down into the following three categories: a) the development of a strategic model to facilitate strategic decision making (MODEL), b) the insistence that all assumptions underlying each strategic alternative are carefully examined (ASSUMPTN), and c) the recognition of multiple claimants' rights when formulating the strategic goal set (GOALCOMP). Items used to calculate variable scores are given in Table 4. In the instructions respondents were asked to assess their own organization by responding to each item statement using a 1-7 disagree/agree scale.
Integrative comprehensiveness (INTEGRTV)
Integrative comprehensiveness refers to organizational attempts to be logically consistent in developing and linking organizational decisions to overall goals. This variable consists of the following four categories: a) the development of clear overall organizational goals and transmission of these goals to lower organizational levels (CLRGOALS), b) the insistence that organizational goals be time interfaced (TIME), c) the adherence to a participatory goal formulating philosophy (PRTICPTN), and d) the reinforcement of overall goals through their linkages to the resource allocation, performance evaluation and reward systems (REINFORC). Items associated with each variable are listed in Table 4. Respondents were asked to assess their own organization by responding to each item using a 1-7 disagree/agree scale.
Organizational effectiveness (STEFFECT)
In the management literature no concept is more controversial than that of organizational effectiveness. This is because there exists no comprehensive conceptualization of an organization (Cameron 1986). Thus in choosing the criteria of effectiveness, it is important that the criteria are consistent with the perspective from which the organizations are examined.
The perspective of this study is strategic in nature. A strategic perspective requires operating from the open system model. As Yuchtman and Seashore (1967:386) stated "this model emphasizes the distinctiveness of the organization as an identifiable social structure or entity, and it emphasizes the interdependency process that relate the organization to its environment." This interdependency perspective is central to Katz and Kahn (1966:161) who defined "organizations as open systems, dependent on outside agencies in the environment for making available required energic inputs (labor, materials, and others) and for absorbing the organizational product." These planned environmental transactions are centered around a theme. This theme we call a strategy.
Since from an open-systems or strategic perspective, an organization must transact with elements in its external environment to acquire needed resources in order to survive (Pfeffer and Salancik 1978), these transactions provide the field from which effectiveness criteria can be derived. Two points of view may be taken with regard to these organization-environment transactions: the resource holders (stakeholders) in the external environment or the organization. Adopting the resource holders' perspective Pfeffer and Salancik (1978:2) stated that "effectiveness derives from the management of demands, particularly the demands of interest groups upon which the organizations depend for resources and support." Adopting an organizational perspective Yuchtman and Seashore (1967:388) "define the effectiveness of an organization in terms of its bargaining position, or reflected in the ability of the organization, in either absolute or relative terms, to exploit its environment in the acquisition of scarce and valued resources."
We view these two approaches to organizational effectiveness as mirror images of one another. That is to say, resource holders release their resources to the organization in proportion to which their demands are satisfied. Likewise, the organization acquires scarce and valued resources in proportion to the efforts undertaken to satisfy the demands of the various stakeholders or claimants. Therefore, both perspectives were drawn upon in developing items to operationalize organizational effectiveness.
In this research study organizational effectiveness was measured by asking executives to rate their own organization in comparison to other organizations in their major industry using a 1-7 below average/above average scale. The items which were rated are listed in Table 4.
There are two advantages to using this approach in conceptualizing and operationalizing organizational effectiveness. First, the multi-dimensional claimant approach to organizational effectiveness is consistent with an open system, strategic perspective. It recognizes that as an open system an organization can have no single goal which can be maximized, but instead is subjected to a number of conflicting constraints and demands emanating from the other systems which constitute its task environment (Van Gigch 1974, Dill 1958). Second, this approach likely produces a more stable measure, fluctuating less from year to year than a single indicator such as profit. Since the independent variable in this study, strategic decision process, is viewed as a relatively stable organizational factor in that considerable management effort is required to change the level of comprehensiveness, a certain consistency in terms of stability is achieved between the independent and dependent variables.
The major limitation to measuring effectiveness in this manner is that it produces no hard, quantitative data that can be independently verified. This study relied on the perceptual assessments by top management, those deemed most in a position to knowledgeably assess both the organization's strategic decision processes and its exchange relationships with task agents. Guaranteeing respondent and company anonymity precluded obtaining hard data on effectiveness. However, a study by Reimann (1982) demonstrated that subjective evaluation of an organization's effectiveness by its top executives can be an excellent predictor of an organization's subsequent survival and growth.
Table 4 contains the internal reliability coefficients calculated using Cronbach's alpha. With the exception of GOALCOMP, all the variables had an alpha coefficient greater than 0.70. Since GOALCOMP contains only a subset of the total items used in calculating the ANALYTIC variable, the relatively low coefficient was not deemed a major problem.
TABULAR DATA OMITTED
From Table 5 it can be seen that general support was found for the primary hypothesis stating that the more the strategic process is characterized as being comprehensive, the higher the degree of effectiveness (r = 0.63, p|is less than~0.001). However, because SIZE is also significantly correlated with both COMPRE (r = 0.28, p|is less than~0.009) and STEFFECT (r = 0.27, p|is less than~0.002), a partial correlation was run between these two variables, controlling for SIZE. While the COMPRE-STEFFECT partial correlation coefficient is lower, it is still significant (r = 0.60, p|is less than~0.001).
Support was also found for a positive relationship between analytic comprehensiveness and effectiveness (r = 0.59, p|is less than~0.001). Controlling for SIZE only slightly reduced the correlation between these two variables (r = 0.56, p |is less than~ 0.001).
TABULAR DATA OMITTED
Table 6. Partial Correlations Between Comprehensiveness Measures and Effectiveness (n = 70) Variable r (controlling for SIZE) Comprehensiveness 0.60(**) Analytic Comprehensiveness 0.56(**) Strategic Modeling 0.39(**) Challenging Strategic Assumptions 0.55(**) Comprehensiveness Goal Set 0.38(**) Integrative Comprehensiveness 0.56(**) Clear & Communicated Goals 0.50(**) Time Interfacing of Goals 0.56(**) Participating Goal Development 0.43(**) Goal Reinforcement Systems 0.51(**) *p |is less than~ 0.05, ** |is less than~ 0.01.
In addition the three ANALYTIC elements -- MODEL, ASSUMPTN and GOALCOMP -- were correlated with effectiveness (r = 0.44, p|is less than~0.001; r = 0.57, p|is less than~0.001; r = 0.42, p|is less than~0.001 respectively). Controlling for SIZE had very little effect on the strengths of these relationships. The partial correlations between STEFFECT and MODEL (r = 0.39, p|is less than~0.001), ASSUMPTN (r = 0.55, p|is less than~0.001), and GOALCOMP (r = 0.38, p|is less than~0.002) still were significantly positive.
Integrative comprehensiveness also was found to have a strong positive relationship with effectiveness (r = 0.59, p|is less than~0.001). Controlling for SIZE reduced the correlation coefficient to 0.56, p|is less than~0.001. In addition the four INTEGRTV elements -- CLRGOALS, TIME, PRTICPTN and REINFORC -- correlated significantly with effectiveness and the partial correlations between STEFFECT and CLRGOALS (r = 0.50, p|is less than~0.001), STEFFECT and TIME (r = 0.56, p|is less than~0.001), STEFFECT and PRTICPTN (r = 0.43, p|is less than~0.001), and STEFFECT and REINFORC (r = 0.51, p|is less than~0.001) all remain significantly positive.
The universality of comprehensiveness?
Is there a universal maxim with regard to comprehensiveness? Certainly not from a descriptive perspective. There is too much evidence of significant use of such decision making methods as satisficing, logical incrementalism, available heuristics, concensus, and so on to put together a convincing argument for a comprehensiveness imperative.
However, does the same hold true from a normative perspective? Can any statement be made regarding the relationship between the level of comprehensiveness and decision effectiveness? Fredrickson and Mitchell (1984) have argued that the link between comprehensiveness and effectiveness is dependent upon environmental conditions; that low levels of comprehensiveness are appropriate under turbulent environmental conditions and high levels of comprehensiveness are appropriate under stable conditions. The logic is that only under stable conditions is there sufficient time, given a finite amount of organizational resources, to identify the critical strategic variables, gather the necessary information and work out the appropriate algorithm between the variables and the organization.
Analysis of data (Fredrickson and Mitchell 1984, Fredrickson 1984) from firms in two different industries tend to support the effect of the external environment on the comprehensiveness-effectiveness relationship. A sample of firms from the sawmill and planing sector of the forest products industry -- classified by Fredrickson and Mitchell (1984) as operating in a very unstable environment -- exhibited a negative relationship between comprehensiveness and effectiveness, while a sample of firms from the paint and coatings industry -- classified by Fredrickson (1984) as operating in a stable environment -- exhibited a positive relationship between comprehensiveness and effectiveness.
However, research findings by Bourgeois and Eisenhardt (1988) do not support the Fredrickson and Mitchell (1984) hypothesis of a negative relationship between comprehensiveness and effectiveness under unstable environmental conditions. Examining strategic processes of executives for microcomputer industry firms -- an industry whose rate of change was so extreme that Bourgeois and Eisenhardt (1988) termed the environment "high velocity" -- it was found that the more rational-analytic the strategic decision making processes (high comprehensiveness), the better the firm performance. In attempting to reconcile their findings with those by Fredrickson and Mitchell (1984) and Fredrickson (1984), Bourgeois and Eisenhardt (1988:828) offer the following explanation: "Possibly, then, rational-analytic processes may be most appropriate at the extremes of industry stability (stable paints, high velocity microcomputers), while incremental processes are more appropriate at the mid-range of instability (e.g. unstable forest products)." Unfortunately there is little theoretical justification for a curvilinear relationship linking effectiveness to comprehensiveness under varying states of environmental instability and none is offered by Bourgeois and Eisenhardt (1988).
Janis (1989:121) has taken the position that the more there is at stake for the organization -- with strategic representing those of highest stake value to the organization -- the more crucial it is for the organization to adhere to rational-analytic problem solving processes. "For consequential decisions that implicate vital interest of the organization or nation, deliberate use of a problem-solving approach, with judicious information search and analysis (within the contraints usually imposed by limited organizational resources), will generally result in fewer miscalculations and therefore better outcome than any other approach."
Results from this research study point towards a non-contingency and linear relationship between comprehensiveness of strategic decision processes and organizational effectiveness. The international firms in this study represent a wide variety of industries, yet the relationship between comprehensiveness and effectiveness is consistently uniform. In essence there is strong support for Janis' (1989) position that the rational-analytic strategic decision making processes produce higher quality decisions and lead to more favorable organizational outcomes.
To date none of the comprehensiveness-effectiveness research with which these authors are familiar has compared comprehensiveness with other decision making processes. This has often led to conclusions not supported by the research design or data. For example, is the research studies by Fredrickson and Mitchell (1984) and Fredrickson (1984), firms low in comprehensiveness were assumed to have adopted incremental decision making. As a result when a negative comprehensiveness-effectiveness relationship was found for firms operating in the forest products industry and a positive relationship for firms in the paint industry, Fredrickson (1984:464) concluded "that synoptic processes are appropriate for firms in stable environments and incremental processes are appropriate in unstable environments."
What must be recognized is that there are a number of relatively non-analytic decision making methods. These include satisficing, logical incrementalism, available heuristic, and consensus. Each non-analytic method has some distinct characteristics which makes it very difficult to treat them as a whole and reach a uniform conclusion regarding their decision making merits.
In the literature the controversy regarding decision processes centers predominately on the relative merits of comprehensiveness versus logical incrementalism. Both comprehensiveness (Janis 1989, Grant and King 1982, Steiner 1979) and logical incrementalism (Lindblom 1980, Mintzberg 1973, Quinn 1980) have their advocates. Moving towards closure on this important organizational issue can only be achieved if future research studies incorporate two or more decision making approaches in their research design in order to compare the relatively effectiveness of one approach over another.
Implications to management of international firms
When an organization contemplates increasing the scope of its international operation, it must recognize that it faces considerable strategic decision making obstacles. Dymsza (1972) highlighted six of these obstacles.
1. The firm faces considerably different social, cultural, economic, legal, and political environments, whose rates of change are also very different.
2. Interactions between the firm and the multiplicity of foreign environmental elements will be very complex.
3. Communications between the firm's domestic headquarters and its foreign operations will be difficult because of geographical distances, infrastructural obstacles, cultural differences, and variations in business practices.
4. The availability and reliability of information on the different environmental elements may be considerably less than normally required for making strategic decision. In addition, because of infrastructural informational differences, the firm's traditional methods for acquiring environmental information may have to be modified.
5. Differences in industrial structure and business practices make the analysis of competition more difficult.
6. In addition to being confronted by different national environments, the firm can also be confronted with regional organizations resulting from trade agreements among trading countries.
Only when an organization's strategic decision processes are comprehensive will it be able to best engage all possible foreign environmental opportunities and threats, Root (1982) implies this when he identified three rules that can be followed in deciding on a foreign market entry strategy. First is the naive rule which a manager follows by considering only one entry strategy, thereby limiting the generating and evaluating of strategic alternatives. While simplifying strategic decision making this mode often leads to missed opportunities or an inappropriate strategy. Second is the pragmatic rule which is very similar to the incremental approach, whereby the firm begins with a low-cost entry strategy and if successful then adopts a more complex and costly strategy. The advantage of the pragmatic rule is that it saves time and cost in gathering and analyzing strategic information and in generating and evaluating strategic alternatives. While low in risk the pragmatic mode fails to identify many opportunities that might otherwise have surfaced had a more systematic decision making approach been used. Third is the strategic rule which is comparable to the comprehensive approach. According to Root (1982) this mode consists of the following three steps: 1. Find the feasible strategies out of all possible strategies, 2. Through comparative analysis, critically evaluate all feasible strategies, and 3. Rank and choose the appropriate strategy and proceed with implementation. While this mode is the most costly it results in fewer missed opportunities and strategic errors (strategy chosen inappropriate for environmental conditions).
The results of this research study indicate that for international firms, the greater the use of the rational-analytic mode in making strategic decisions the higher the level of firm performance. This means that the factors comprising analytic comprehensiveness -- strategic model development, assumption challenging, and recognizing multiple claimants -- and integrative comprehensiveness -- developing and communicating clear goals, wide participation in strategy development, and linking the budgeting, performance evaluation and reward systems to goals -- should be given serious consideration by an international firm when determining its most appropriate strategic decision mode.
Andrews, K., The concept of corporate strategy. Dow-Jones-Irwin, Homewood, IL 1971.
Bourgeois, L.J. III, Strategy and environment: A conceptual integration. Academy of Management Review, 5, 1980, pp. 25-39.
Bourgeois, L.J. III/Eisenhardt, K.M., Strategic decision processes in high velocity environments: Four cases in the microcomputer industry. Management Science, 34, 1988, pp. 816-835.
Braybrooke, D./Lindblom, C.E., Strategy of decision. The Free Press, New York 1963.
Cameron, K.S., Effectiveness as paradox: Consensus and conflict in conceptions of organizational effectiveness. Management Science, 32, 5, 1986, pp. 539-553.
Cyert, R.M./March, J.G., A behavioral theory of the firm. Prentice-Hall, Englewood Cliffs, NJ 1963.
Dill, W.R., Environment as an influence on managerial autonomy. Administrative Science Quarterly, 2, 1958, pp. 409-443.
Duncan, R., Characteristics of organizational environments and perceived environmental uncertainty. Administrative Science Quarterly, 17, 1972, pp. 313-327.
Dymsza, W.A., Multinational business strategy. McGraw-Hill, New York 1972.
Eisenhardt, K.M., Making fast strategic decision in high-velocity environments. Academy of Management Journal, 32, 1989, pp. 543-576.
Emery, F.E./Trist, E.L., The causal texture of organizational environments. Human Relations, 18, 1965, pp. 21-32.
Fredrickson, J.W., The comprehensiveness of strategic decision processes: Extension, observations, future directions. Academy of Management Journal, 27, 1984, pp. 445-466.
Fredrickson, J.W.,/Mitchell, T.R., Strategic decision processes: Comprehensiveness and performance in an industry with an unstable environment. Academy Management Journal, 27, 1984, pp. 399-423.
Gore, W.J., Administrative decision making: A heuristic model. Wiley, New York 1964.
Grant, J.H./King, W.R., The logic of strategic planning. Little, Brown, Boston, MA 1982.
Hofer, C.W./Schendal, D., Strategy formulation: Analytical concepts. West Publishing, St. Paul, MN 1978.
Janis, I.L., Crucial Decisions. The Free Press, New York 1989.
Janis, I.L./Mann, L., Decision making: A psychological analysis of conflict, choice, and commitment. The Free Press, New York 1977.
Katz, D./Kahn, R.L., The social psychology of organizations. Wiley, New York 1967.
Kirby, W.E., Long range planning: The executive viewpoint. Prentice-Hall, Englewood Cliffs, NJ 1966.
King, W.R./Cleland, D.I., Strategic planning and policy. Van Nostrand, New York 1978.
Lindblom, C.E., The policy-making process. Prentice-Hall, Englewood Cliffs, NJ 1980.
March, J.G./Simon, H.A., Organizations. John Wiley, New York 1958.
Mason, R.O./Mitroff, I.I., Challenging strategic planning assumptions. Wiley, New York 1981.
Mintzberg, H., Strategy-making in three modes. California Management Review, 16, 2, 1973, pp. 44-53.
Nutt, P.C., Models for decision making in organizations and some contextual variables which stipulated optimal use. Academy of Management Review, 1 (2), April, 1976, pp. 84-98.
Peters, T.J./Waterman, R.H., In search of excellence. Harper Row, New York 1982.
Pfeffer, J./Salancik, G.R., The external control of organizations. Harper Row, New York 1978.
Quinn, J.B., Strategic change: Logical incrementalism. Sloan Management Review, 20, 1978, pp. 7-21.
Quinn, J.B., Strategies for change: Logical incrementalism. Irwin, Homewood, IL 1980.
Reimann, B.C., Organizational competence as a predictor of long run survival and growth. Academy of Management Journal, 25, 2, 1982, pp. 323-334.
Root, F.R., Foreign market entry strategies. AMACOM, New York 1982.
Simon, H.A., Administrative behavior: A study of decision-making processes in administrative organizations. The Free Press, New York 1957.
Steiner, G.E., Strategic planning: What every manager must know. Free Press, New York 1979.
Terreberry, S., The evaluation of organizational environments. Administrative Science Quarterly, 12, 1968, pp. 590-613.
Thompson, J.D., Organizations in action. McGraw-Hill, New York 1967.
Van Gigch, J.P., Applied general systems theory. Harper & Row, New York 1974.
Yuchtman, E./Seashore, S.E., A systems resource approach to organizational effectiveness. Administrative Science Quarterly, 32, 1967, pp. 377-395.
|Printer friendly Cite/link Email Feedback|
|Author:||Jones, Robert E.; Jacobs, Lester W.; van't Spijker, Willem|
|Publication:||Management International Review|
|Date:||Jul 1, 1992|
|Previous Article:||Foreign investment in the East European transition.|
|Next Article:||Organization in American MNCs: the perspective of the European regional headquarters.|