Literature review of strategy implementation and strategy process frameworks

Introduction
Great strategies are worth nothing if they cannot be implemented (Okumus and Roper
1999). It can be etended to say that better to implement effecti!ely a second grade
strategy than to ruin a first class strategy by ineffecti!e implementation. "ess than #$% of
formulated strategies get implemented (&int'berg 199() &iller *$$*) +ambrick and
,anella 19-9). .!ery failure of implementation is a failure of formulation.
/he utility of any tool lies in its effecti!e usage and so is the case with strategy. 0trategy
is the instrument through which a firm attempts to eploit opportunities a!ailable in the
business en!ironment. /he performance of a firm is a function of how effecti!e it is in
con!erting a plan into action and eecuting it. /hus implementation is the key to
performance1 gi!en an appropriate strategy.
In literature1 implementation has been defined as 2the process by which strategies and
policies are put into action through the de!elopment of programs1 budgets and
procedures3 (4heelan and +unger pp1#). /his in!ol!es the design or ad5ustment of the
organisation through which the administration of the enterprise occurs. /his includes
changes to eisting roles of people1 their reporting relationships1 their e!aluation and
control mechanisms and the actual flow of data and information through the
communication channels which support the enterprise (,handler 196*) +rebiniak and
7oyce *$$#).
Evolution
/he field of 0trategic management has grown in the last thirty fi!e years de!eloping into
a discipline in its own right. 8orrowing etensi!ely from .conomics and 0ocial sciences1
it is still fragmented by the presence of number of distinct schools of thought1 di!ersity in
underlying theoretical dimensions and lack of disciplined methodology. /he
fragmentation is due to high degree of task uncertainty and lack of coordination in
research 9a result of lack of uniformity and focus between the strategy field1 its base
disciplines and practitioners (.lfring and :oelberda *$$1 pp 11).
0trategy as a field of en;uiry de!eloped from a practical need to understand reasons for
success and failure among organi'ations. /his led to a focus on o!erall performance and
on the top management. /he works of ,handler (196*) and <ndrews (19=1) created a
!iew that strategy is made at the top and eecuted at the bottom1 further reinforcing the
fields focus on the top management while implementation was seen as secondary (>loyd
and 4oolridge 1996)
/he emergence of corporate planning in the 19=$s further heightened the disconnect
between formulation and implementation1 as operating decisions were made as if plans
did not eist. ?ey insight was that plans were ineffecti!e and line managers needed to be
in!ol!ed in the process (>loyd and 4oolridge *$$$)./he de!elopment of analytical tools
like 8,G1 @I&0 further reinforced the notion that strategy was an eclusi!e top
management function. /he de!elopment of the strategic management paradigm
delineated the formulation and implementation components of strategy1 identified roles
for all mangers ecept the lowest operating le!el in the formulation process.
Implementation was design of standards1 measures1 incenti!es1 rewards1 penalties1 and
controls (>loyd and 4oolridge 1996). &anagers were thought to be more as obstacles. It
1
was &int'berg and 4aters (19-#) whose !iew that strategy is a pattern in a stream of
decisions1 that epanded the role of other than the top management in strategy making
since strategies could be emergent. 8urgelman (19-A) integrated both the top down and
bottom up !iew of strategy by introducing the concept of autonomous de!elopment of
strategy in addition to the normal intended strategy1 reinforcing the obser!ations of
8ower(19=$) who stated that the top management had little control on what pro5ects get
pushed for appro!al.
Bespite these studies) till the 199$Cs strategy formulation and implementation were seen
as separate items1 with a distinct focus on strategi'ing (achie!ing the fit between the
en!ironment and the plan) while effecti!e implementation of it was taken as granted.
,ontent research dominated. /he works of &int'berg (19=-) &iller and >rieson (19-$)1
@ettigrew (19-#) brought into focus the gaps between formulation and implementation.
/his brought into prominence the research stream concentrating on study of change. /his
also challenged the paradigm of eplicit formulation and implementation1 as strategies
could now be emergent1 unreali'ed. It also strengthened the tiny but growing band of
process researchers who were looking at the role of power1 culture as shapers of strategy
outcomes.
Research on strategy implementation1 though neglected1 was taken by few researchers in
form of de!elopment of frameworks (+rebiniak and 7oyce *$$#) 8ourgeois and 8rodwin
19-() 0ki!ington and Baft 1991) &iller 199=) Okumus *$$1) 7oyce and +rebiniak *$$#)
and in the form of e!aluation of indi!idual factors affecting the implementation process
likeD the interests of middle managers (Guth and &acmillan 19-6) or the usage of
implementation tactics (Eutt 19-=).
/he present contet for strategic management has been described as hypercompetiti!e
(BCa!eni 199() which ensures that sustained ad!antage is transitory. Fnder these
circumstances1 strategy and form of organi'ation need to be continuously assessed for
appropriateness. /hus fast paced change makes strategy dynamic in character. "earning
has become a key attribute along with organi'ing of knowledge resources. Fnder such
circumstances1 strategy formulation and implementation are !iewed as intertwined sub
processes in the strategy process.
0trategy research has also undergone changes paralleling these changes. 0tarting with
longitudinal process oriented studies of &arch and 0imon (19#-) chandler (196*)1 bower
(19=$)1 and mint'berg (19=-)1 it shifted to use of ;uantitati!e methods which were cross
sectional in nature. <s the legitimacy of the field grew1 and with ad!ances in research
methods along with liberal inter5ections from social sciences1 the re emphasis on
processual studies has emerged (@ettigrew et al *$$*).
/he de!elopment of the now in !ogue G strategy process research9can be traced to
.urope1 where attention was drawn to the role of power as an influence on strategy
outcomes (@ettigrew 19=A). /he role of culture was probed and later the combined effects
of culture and power were studied (@ettigrew 19-#). < series of large scale empirical
studies (@ettigrew and whipp 19911 @ettigrew et al 199*) de!eloped a process approach
which combined the content1 process1 contet of change with longitudinal data collected
at multiple le!els of analysis1 thereby introducing the element of time into the study and
allowing for multiple le!els of analysis but integrated. /hus process research has opened
up the firmCs internal processes for study1 and gi!en an impetus to the role of time and
*
dynamics in addressing issues of strategic choice and change. @rocess research has been
fragmented1 characteri'ed by limited theory building and empirical testing( @ettigrew et
al *$$*).
/he e!olution can be succinctly summari'ed as gi!en below in the table
Descriptor
1950s and
1960s
190s 19!0s 1990s
"1
st
century
Environme
nt
0table
Bynamic 1
comple
Bynamic
comple
+ighly
dynamic
+yper
competiti!e
Dominant
paradigm
of strategy
content
Growth1
large
corporations
1 control and
coordination
1 production
0trategy as
direction of
company1
production
orientation
,ore
businesses1
competiti!e
ad!antage1
production
orientation
,ore
competencies1
production1
ser!ices
orientation
0er!ices
orientation1
learning1
#ey to
implementa
tion
>it structure
with
strategy and
contet
Resource
allocation
>actors
along with
structure
leading to
efficiency
+ow
structures are
created1
ad5usted and
made to
workH
+ow
structures are
created1
ad5usted and
made to
workH
$esearc%
@rocessual 1
longitudinal
case studies
,ross
sectional1
;uantitati!e1
,ross
sectional1
;uantitati!e1
@rocessual
"ongitudinal
@rocessual
"ongitudinal
&asis of
corporate
value
added
0kills of
general
manager
@ortfolio
planning
:ale based
planning
Be!elopment
capabilities1
learning1
"earning and
knowledge
creation
'trategy
logic
4hat
business to
be in
@ortfolio
management
.conomies
of scale and
efficiency
,ompete on
strengths1
synergy
.conomies of
scope
&ased on (ettigrew et al )"00"*+ ,%ittington )"00"*+ -ould and .amp/ell )1990*
/hus it can be seen that the e!olution of research on strategy implementation is directly
linked with the e!olution of strategy research and the emphasis on implementation has
been seen to be dependent on the dominant approach (perspecti!e) guiding a researcher.
'trategic decision process
/he core of the strategy process (including implementation) in!ol!es decisions and
actions. Becision making is the rational application of knowledge to a choice problem
(0imon 19=6). It in!ol!es seeking answers to ;uestions such as what are the alternati!es1
what are the conse;uences of each alternati!e1 how desirable are the conse;uences and
what criteria to apply to e!aluate the alternati!es. 0uch rationality is possible with highly
structured problems but with highly unstructured problemsD strategic decisions9it is not
possible to get all the information and specify all the set of alternati!es.
A
In e!ent of highly unstructured problems1 humans are boundedly rational. /he search in
this case is local1 limited and attempt is to find a satisfying solution (,yert and &arch
196A). /hus strategy process would consist of decisions and the actions that are dri!en by
these decisions. /he actions are a larger set and many actions are not a result of the
strategic decisions and thus mere study of the decision making process does not co!er the
strategy process.
Becision making under conditions of uncertainty or ambiguity can be achie!ed by a
political process1 especially in conditions where multiple groups eist with each ha!ing
their own legitimate !iews of organisational interests (absence of shared goals). In such
instances power is eercised in the broader interests of the organisation and not for
ser!ing self interests not in line with organisational interests (pfeffer 19-1).
Literature review
0trategic management has de!eloped by contributions from researchers from the fields of
economics) organisational beha!ior) sociology) psychology) and public administration.
Researchers from each field addressed strategic management from a perspecti!e which
dominated that field for e.g.I researchers from the field of economics used the rational
perspecti!e while researchers from the field of organisational beha!ior used the
humanistic perspecti!e.
/hus research on strategy implementation has been dependent on the dominant approach
(perspecti!e) guiding a researcher. <pproaches to strategy ha!e been classified !aryingly
by different authors. /he better known classifications areI
,hafeeCs ( 19-#) linear1 adapti!e and interpreti!e schools
&int'berg et al (199-) ten schools of thought.
>aulkner and ,ampbellCs (*$$*) G rational1 logical incremental1 e!olutionary
and cultural schools of thought.
>a5ourn ( *$$$)D mechanistic and organic
+ut'schenreuter and kleindienst (*$$6)9rationalD mechanistic1 cogniti!e1
upper echelon1 middle management1 organic and micro perspecti!es.
,hafee (19-#) based his classification on the main focus which each type is built upon.
/he linear model has planning as the key focus point. Its emphasis on methodical1
se;uential1 and directed action indicates a rational decision making process) stable
en!ironment and a more simplistic !iew of strategy with a predominant role for the top
management. /ime is !iewed as static. /he adapti!e modelCs focus is on the continuous
e!aluation of the en!ironment and subse;uent organisational adaptation. .n!ironment is
more dynamic) emphasis is more on means and goals are more nebulous and the role of
the other le!els of management is considered more significant. /he interpreti!e model
looks at an organisation as a collection of social contracts and strategy is an organisation
wide acti!ity dri!en by shared !alues and beliefs. Becision making appear truly
consensual1 tending to a political process.
&int'bergCs classification (199-)1 the most famous) is based on what strategy is
!isuali'ed as for e.g. in the design school strategy is seen as a conception while in the
entrepreneurial school it is seen more as a !ision.
/hey can be grouped together into three broad classesI
(
1. /he first three schools are prescripti!e in nature. /hey are concerned with how
strategies should be formulated. /hey thus tell about ideal strategic beha!ior.
/hese concentrate on the beha!ior of the strategist as an indi!idual.
*. /he net si consider specific aspects of the strategy formation process. /hey
describe how strategies get made. /hey concentrate on role of factors beyond the
indi!idual.
A. /he last school is a combination of all the abo!e schools1 it seeks to be
integrati!e. It tries to cluster the strategy making process1 the content1
organisational structures and their contets into distinct stages.
>aulknerCs classification (*$$*) and +ut'schenreuter and kleindienst (*$$6) are a more
abridged !ariants of &int'bergCs classification.
>a5ourn (*$$$) takes a much more conceptual !iew of the strategy process and classifies
all approaches into two main based on how time is treated) how is the flow of e!ents
looked at and finally the ;uality of constructs and models.
/he mechanistic approach looks at time as discreet) with the flow of e!ents being linear1
se;uential1 directional and static and the constructs and models are well de!eloped1
differentiated and emphasis is more on construct than on the relationships among the
constructs. /he organic !iew treats time as incessant and continuous with the flow of
e!ents being non linear1 interactional and dynamic and emphasis on the relationships
between constructs which are integrati!e in nature.
It can be seen that the key parameters on which the approaches differ is the type of
strategic decision process1 the locus of decision making and analysis and the !iew of
strategic change. >a5ournCs (*$$$) classification allows all the approaches to be distinctly
placed in either of the class1 whereby one class (mechanistic) is prescripti!e and
concentrates on the role of top indi!idual as the strategist and therefore the locus of
analysis is an indi!idual1 the locus of analysis can be an indi!idual or a group but
restricted to top management and !iews strategic change as episodic. /hus strategy is
more a static1 episodic acti!ity and therefore is not !iewed as a process but more as an
e!ent. It also distinctly segregates formulation from implementation. /he other class
(organic) focuses on a more inclusi!e role for other le!els of management1 !iewing
participation as necessary for management of en!ironmental dynamism) treats strategy as
a process. /herefore the locus of decision making can !ary from an indi!idual to a group)
locus of analysis is a group and change is seen more as incremental.
/he implications for the strategic decision making process now is dependent on the
re;uirement of en!ironmental sensing mechanisms and the organisational integrati!e
mechanisms ( such as meetings1 committees1 task forces1 feed back mechanisms etc)
which are put in place in line with the percei!ed en!ironmental dynamism. /he type of
decision making process is not as significant as much as the patterns and utili'ation of
en!ironmental sensing and organisational integrati!e mechanisms. .;uifinality is
possible based on !arious combinations of participation (from mere information
pro!ision to consultation to acti!e discussion to finally a stake in decision making) in
decision making and the management of en!ironmental dynamism.
"iterature on implementation of strategy can be categori'ed asI
#
1. 0tream of literature where the predominant focus has been on content such as
literature on di!ersification1 inno!ation1 mergers and ac;uisitions and
collaborati!e strategies and their link to performance.
*. 0tream which deals with organisational structure as proy for implementation
!ariables
A. "iterature on strategic consensus and role of middle le!el managers
(. 0tream which has attempted to de!elop frameworks for implementation of
strategy
#. /he resource allocation process literature
Implementation has to be !iewed along with strategy content. 0trategy content literature
can be grouped as those dealing with di!ersification1 mergers and ac;uisitions1
collaborati!e strategies1 competiti!e strategies1 and inno!ations dri!en strategies.
Implementation of innovations1
Inno!ation has been defined as the adoption of an internally generated or purchased
de!ice1 system1 policy1 program1 process1 product or ser!ice that is new to the adapting
organisation (Baft 19-*). Inno!ati!eness is adoption of multiple inno!ations (Bamanpour
1991). <doption of inno!ation encompasses generation1 de!elopment and
implementation.
< &eta analysis of studies on inno!ations (Bamanpour 1991) has shown that
speciali'ation (?imberly and .!anisko 19-1)1 functional differentiation (representing
di!ersity of knowledge (8alridge and 8urnham 19=#))1 professionalism (@ierce and
Belbecc; 19==)1 managerial attitude towards change1 technical knowledge resources
(Bewar and Button 19-6)1 administrati!e intensity( Bamanpour 19-=)1 slack
resources( Rosner 196-)1 and eternal and internal communication (&iller and >riesen
19-*) ha!e a positi!e effect on adoption of inno!ations in organisations. ,entrali'ation
(/hompson 196=) has a negati!e effect on adoption of inno!ations. >ormali'ation1
managerial tenure1 and !ertical differentiation were found to ha!e no effect. 4hile
formali'ation and managerial tenure did not ha!e any effect on both the initiation and
implementation of inno!ations1 !ertical differentiation ( which represents differential of
power) had a positi!e effect on administrati!e inno!ations and a negati!e effect on
technical inno!ations( Bamanpour 1991).
&echanistic organisations were found to be less conduci!e for generating inno!ations
than organic organisations. /he archetypes of these two types of organisations can be put
at the ends of an 2no inno!ati!e G continually inno!ati!e) continuum1 on which most of
the organisations would tend to fall within the length of the continuum. Organisations
which are more mechanistic are more appropriate for administrati!e inno!ations while
organic form is more appropriate for technical inno!ations.
"iterature on adoption of inno!ations has concentrated on indi!idual !ariables affecting
the process of adoption by way of bi!ariate relationships both at indi!idual and
organisational le!el (dobni *$$6)
Diversification strategies1
Bi!ersification means associated changes in administrati!e mechanism (ramanu5am and
!aradra5an 19-9). Research on di!ersification has concentrated on the concept of
6
relatedness) international di!ersification) mechanisms of strategy and effects of strategy
on performance (8ergh in hand book of strategic management *$$19hitt et al).
/he link between di!ersification and performance is perhaps the most researched link in
the strategic management literature (palich et al *$$$). Bespite ($ years of research1 the
field has yet to show consistent findings and thus consensus on key relationships is
elusi!e1 which lea!es the field as yet to mature (Gary *$$#). Bespite a large number of
studies on the di!ersification Gperformance link1 the results are less clear now (palich)
cardinal and miller *$$$).
/he empirical studies start with that of chandler (196*) who stated that structure has to be
aligned to strategy for ensuring effecti!e performance. It was rumeltCs (19=() study that
related constrained businesses show the best performance which set the trend of research
on di!ersification. .amining rumeltCs results1 betis (19-*) concluded that the
o!errepresentation of an industry in the sample may be the cause) ,hristiansen and
&ontgomery (19-1) concluded that market share eplained the greater part of the results
while &ontgomery (19-#) found insignificant results after controlling for industry
structure factors. >urther stimpert and dubhan (199#) showed that low profitability led to
increased di!ersification. It can be seen that the research on di!ersification is focused on
content rather than implementation issue despite calls for such research (hoskisson and
hitt 199$).
/his conclusion is further corroborated when we look at the basis for undertaking
di!ersification o!er the period 19#$Cs till *$$$ <B.
In the 19#$Cs and 196$Cs the basis for di!ersification was abundance of general
management skills in a firm and implementation was taken for granted as it was belie!ed
that ha!ing general management skills ensured implementation. +owe!er the
performance during these decades was below a!erage. In the 19=$Cs) the basis was
portfolio management and focus on strategies of the firm with little focus on
implementation. /he performance was still found to be below a!erage. /he 19-$Cs saw a
shift to !alue based planning and reduce di!ersification while in the 199$Cs the emphasis
was on creation of synergies) eploitation of core competencies portfolio based on
management style. 0uccess was found to be linked to sticking to similar businesses
(Gould and hicks *$$1Doford hand book of strategy). /he lack of focus on
implementation is e!ident and indirectly gets pro!ed when we see that performance is the
best in di!ersification to related businesses only. /his further gets supported from the
empirical finding that in highly di!ersified companies there was a tendency to spin off the
unrelated businesses into independent units1 after which there was found to be an
impro!ement n performance of those units (0adler et al 199=). Of late there has been a
reali'ation that implementation may hold the key to di!ersification and performance link
(Gary *$$#)
/he di!ersification studies can be categori'ed into two streams9one which look at
di!ersification and performance link and the other which looks at relation between
di!ersification and performance using organisational structure( & form) as inter!ening
!ariable( 4hittington *$$*). /he first stream does not include implementation !ariables
in their study while the other stream tried to look at only one form of organisation as
proy for implementation !ariables. /his only highlights the fact what researchers in
strategic management ha!e been lamenting about non use of organisational and
implementation !ariables in strategy performance link studies (Bess et al 199#) hoskisson
=
and hitt 199$) Ginsberg and :enkatraman 19-#) although they eplain twice as much
!ariance as other factors (+ansen and 4ernerfelt 19-9).
2ergers and ac3uisitions1
&ergers and ac;uisitions continue to be used as a ma5or strategy for growth by firms o!er
the years despite e!idence that more than =$% of these do not impro!e the firmCs
performance(+itt1 Ireland and +arrison *$$*) +itt 1 +arrison and Ireland *$$1). /he
factors cited for such a result are sluggish integration1 illusionary synergies1 managerial
hubris (barfield199-). Bi!erse cultures1 structures and operating systems (haspeslagh and
7emison 1991) make integration of firms ac;uired or intending mergers etremely
difficult1 duly highlighting the added significance of effecti!e implementation of
strategies in the strategy G performance link ("arson and finkelstien 1999) Gary *$$#).
Integration in mergers and ac;uisitions is facilitated when both the firms ha!e similar
management processes1 cultures1 systems and structures (+arrison and 0t 7ohn 199-)
,artwright and 0choenberg *$$6).
'trategic alliances1
,ollaboration between companies has grown at a significant rate in recent years. /hey are
important ways to supplement a firms competencies and addressing competition
(+arrigan 19--). 0trategic alliances are the most common form of such collaborati!e
strategies.
0trategic alliances are !oluntary arrangements between firms in!ol!ing echange1
sharing1 or co de!elopment of products1 technologies1 or ser!ices. /hey can occur as a
result of a wide range of moti!es and goals1 take a !ariety of forms1 and occur across
!ertical and hori'ontal boundaries (Gulati1 199-).
/he failure rates in alliances ha!e been !ery high. Researchers ha!e attributed lack of
cooperation) conflict) poor information echange and opportunistic beha!ior as causes for
a relati!ely high rate of failure in alliances (Bas and /eng 199-1 *$$#) Inkpen *$$11
kauser and 0haw *$$A). Researchers ha!e tried to eplain alliance success by looking at
trust1 control and risk inherent in alliance outcomes. @artner cooperation1 which is the
resultant beha!ior of these antecedents1 determines the alliance performance.
<s can be seen the success of alliances is a function of management of interorganisational
coordination which effecti!ely links it to implementation.
$esearc% on organisational structure1
0tructures are essential part of strategy implementation (4hittington *$$*)
.mpirical studies of the strategy GstructureDperformance ha!e gi!en unclear or e;ui!ocal
results. /hese studies ha!e focused on the formal structure in organisations for e.g.
hoskisson (19-9) showed that relation between unrelated di!ersification and mDform of
organisational structure is positi!e while it is negati!e for !ertical integration strategies
and e;ui!ocal for related di!ersification. It was khandwala (19=A) who showed that
congruence between structure1 processes and systems is more important for performance
(sufficient condition) than organisational fit with en!ironment (necessary condition) and
reinforced in the study by miles and snow(19=-) where organisations following
successful prospector strategies where found to ha!e organic organisational forms. /he
study by miller (19-6) was the first to emphasi'e the configurational elements when he
-
showed that it is essential to ha!e congruence between strategyDstructure and other
systems which was reinforced by @ettigrew et al (*$$*) who !iewed the elements to
represent complementariness. Organisations need to be configured as a whole and not
treat structural elements as isolated factors (?eats and o neill *$$* hand book of
strategy).
/he role of managers in achie!ing this configurational congruence is due to the fact that
managers are the first to notice salient differences in organisational performance) can also
anticipate changes) strategi'e and plan structural changes and finally implement these
changes.
Research on strategy Gstructure which started with chandlerCs monumental work (196*)
!iewing structure as a policy shifted and got obsessed with the &Dform and
di!ersification and did not look at other structural configurations1 with changes in
strategies as time passed by. /his obsession led to structure being !iewed more
conser!ati!ely than what chandler had defined (Gould and luchs 199A)1 resulting in
structure being !iewed as a proy for implementation. 4ith waning interest1 due to
increasingly di!erse topics holding researchers interest1 structure was treated as
peripheral construct as part of studies on change1 culture or control. Research on structure
then graduated to finding out how structures are created and adapted. /hus structure was
treated as an instrument in practice (4hittington *$$*)
4hile literature in the business policy area got obsessed with one type of structure (mD
form) and one type of strategy (di!ersification) 4hittington *$$*)) the organisational
beha!ior literature looked at en!ironmentDstructure adaptation lea!ing out its link to
performance(Ginsberg and :enkatraman 19-#).
Research on content of strategies has either looked at strategy contentDperformance link
without considering the organisation !ariables which represent the implementation
process (Ginsberg and :enkatraman 19-#) Bess et al 199#) or ha!e tended to concentrate
on !ariables of specific interest such as trust (in case of strategic alliances)) culture( in
mergers and ac;uisitions) or structural forms( in di!ersification) or concentrate on a list
of !ariables at the indi!idual le!el( as in inno!ations) due to a predominant emphasis on
content.
'trategic consensus
/he literature on strategic consensus1 started as an attempt to look at factors affecting
strategy formulation at the top management le!el. 4hile ma5ority of the studies ha!e
concentrated on consensus at the top management le!el) there has been a reali'ation that
consensus needs to be looked at all le!els of managers in an organisation to eplain the
link between strategic consensus and performance (4oolridge and >loyd 199$) >loyd and
4oolridge 199*) Booley1 >ryell and 7udge *$$$) &arkoc'y *$$1) ?ellermanns et al
*$$(). +owe!er empirical testing of consensusDperformance link is besieged with
methodological problems and has tended to be in form of bi!ariate relationships
(?ellermanns et al *$$(). /he importance of the strategic consensus is repeatedly stressed
for de!elopment of theory about the strategy process (8ourgeois 19-#) @riem 199$)
@riem and Bess 199#).
9
'trategy implementation frame works and models
< sur!ey of literature (see okumus 1999 for a re!iew) allowed identification of 16
frameworks or models which ha!e eclusi!ely looked at the strategy process or strategy
implementation. < summary of the salient findings of these papers is placed as anneure.
/he frameworks or models can be classified based on three ;uestions
1. whether their orientation is content or process
*. whether their focus is on a partial set of !ariables Jprocess or on full set of
!ariablesJ process
A. 4hether their approach is top down1 prescripti!e and rational process of decision
making or it is bottom up1 descripti!e and participati!e process of decision
making.
8ased on answers to these three ;uestions1 = studies look at content while 9 studies look
at the process. Out of the se!en studies looking at content1 two are conceptual (bourgeois
and brodwin 19-() 4aterman1 @eters and @hilips 19-$)) while fi!e studies are empirical.
One study (7oyce and hrebiniak *$$#) looks at the complete set of !ariables1 is more a
prescripti!e model1 taking a top down approach) and the four look at a partial set of
!ariables such as unit capabilities and manager epertise (Roth and &orrison 199*))
matching locus of control and control mechanisms with strategy (go!indara5an 19-())
implementation tactics (nutt 19-=) or fit between indi!idual !alues and !alues of
inno!ation (?lein and sorro 199*).
Of the studies which look at process1 - are empirical and one is a conceptual (hart 199*)
which looks at the formulation part of the strategy process only. Of the eight empirical
studies1 four look at the entire process. Of the other four studies ) argyris( 19-9) looks at
learning from mistakes made during implementation of strategies) ski!ington and daft
( 1991) look at structure1 market related ependitures) communication and sanctions)
miller ( 199=) looks at implementation of strategic decisions and feurer(199#) looks at
the strategic planning system of hoshin kanri in +ewlett @ackard. In effect it can be seen
that these four studies ha!e not dealt with the entire process or set of !ariables.
/he four studies which ha!e looked at the full process of strategy implementation) two
studies are based on one (hambrick and canella 19-9) or two case studies (okumus *$$1))
one is a cross sectional study (bromiley 199A)) and the other one is a fully de!eloped
model. /he resource allocation process model (bower and Gilbert *$$#) has been
de!eloped o!er the last thirty years through a series of empirical case studies although
literature does not consider it to be a strategy process model (okumus *$$A).
/he list of !ariables that get generated fro the frame works areI
.n!ironment1 structure1 powerJ participation1 incenti!esJ rewards1 control1
alignment of sub goals1 detailed planning1 resource allocation1 e!aluation1
competenciesJ eperience1 learningJ training1 communication and eternal
partners.
/he literature on the implementation frame works while listing out the !ariables affecting
the implementation process1 has not looked at how these !ariables interact and influence
other !ariables and how these interaction effects affect the o!erall implementation
process and the outcome (Okumus *$$A).
1$
$esource allocation process model
/he stream of literature dealing with the resource allocation process looks at the process
of resource allocation as a proy for implementation of strategy (8ower 19=$).
Resource has been defined in this literature as assets tied semiDpermanently to firms and
includes tangibles and intangibles (4ernerfelt 19-().
/he central proposition is that the way the resources are allocated in the firm shapes the
reali'ed strategy of the firm. Fnderstanding the resource allocation process allows one to
understand how strategy is made. /he processes that lead to strategic outcomes are
remarkably stable e!en as en!ironments change. Bespite the compleity of the process1
many of the forces can be managed if they are understood.
/he process of resource allocation is intimately connected to strategy. /his process is a
comple1 simultaneous1 dynamic1 multile!el and multirole phenomenon. ,apital
allocation decisions were made as a part of this comple process by managers who may
ha!e conflicting roles and often are at the middle le!el of the organisational hierarchy. It
also showed that structural contet shaped the strategy (8ower 19=$). /he process of
resource allocation is also influenced by the strategic contet (8urgelman 19-A).
Resource allocation is an iterati!e process (Eoda and bower 1996) and is a bottom up
process. 8ounded rationality pre!ents any single indi!idual from collecting and
processing all rele!ant knowledge for an optimal decision (0imon 19(=). 8ottom up
process relie!es the top management of the need to collect all information and processing
it to make a decision. /his is done by distributing the decision rights to managers who
possess the rele!ant specific knowledge. >urther these managers ha!e the incenti!e to
define and support successful pro5ects to the etent they are in line with their incenti!es
and rewards. /he persistence of the process produces a conser!ati!e bias which eplains
the inertia built up. /he customers and shareholders could influence the resource
allocation process thereby influencing the selection of proposals for in!estment
(,hristensen 199=). Inno!ations that fit the strategic contet were called sustaining
technologies while those that did not fit the contet were called disrupti!e technologies
and these were implemented successfully by setting up a new organisation (,hristensen
199=). /his process can fail when there are institutional barriers around sources of capital
(sull 1999)1 when highly !olatile and uncertain in!estment decisions are made
(eisenmann *$$*) and re;uire corporate inter!ention to set it right or when the magnitude
of in!estment eceeds the authority of the managers proposing and are not willing to bear
the risk associated with the proposal (eisenmann *$$*) or when the middle managers
block proposals due to differences with the operating managers (kuemmerle 199-). <part
from the abo!e mentioned factors1 managerial cognition is another important factor.
Resource allocation to disrupti!e !entures is seen when such e!ents are framed as threats
and yet were attempted to be ad5usted among the eisting strategic and structural contet
(Gilbert *$$$). /hus cogniti!e framing shapes the resource allocation process.
Eormati!e functions of the resource allocation systemI
1. Be!elop capabilities
*. ,reate !alue for the organisation and enhance employee reputation and security
A. allow for inno!ati!e proposals to get resources to facilitate creation of eplorati!e
capabilities
11
>or effecti!e implementation of autonomous or new strategic initiati!es that are not in
line with the present strategic contet1 both recognition and incorporation into the
strategic contet is re;uired.
/he process can be changed. /op management can effect changes in the structural contet
to effect changes in the way definition and impetus is managed. 8y changing the strategic
contet1 and the cogniti!e frames of the managers1 the definition and impetus process can
be managed. .ternal forces (customer and capital market feedback) can also be
harnessed to effect change in the same processes.
In the whole process consensus at all le!els is implicit. <t the definition stage1 the
initiation may be in one department but the acceptance of the final definition is dependent
upon the influence the pro5ect will ha!e on other departments and hence their inputs will
influence it. /he final definition is thus1 implicitly1 a consensusual decision either by
participation or by imposition or a combination of both.
Reali'ed strategy becomes the key outcome !ariable in the resource allocation model.
4%e role of t%e corporate office in t%e resource allocation process1
/he corporate office can inter!ene to support resource allocation to disrupti!e
inno!ations and then either spin it off as a separate organisation or re!ise the strategic
contet to incorporate the strategic implication of the disrupti!e inno!ation. It can also be
re;uired when organisational politics hamper the implementation of the disrupti!e
strategy. 0imilar inter!ention will be re;uired when the en!ironmental changes re;uire
large scale changes in strategic contet or speed of decision making due to speed of
change in en!ironment or both. ,orporate inter!ention will also be re;uired in cases
where units are working based on cooperati!e strategies or in transnational corporations.
/he resource allocation model is a process model. +owe!er it has been eclusi!ely
studied only in large manufacturing organisations and has not considered the link to
performance outcomes. Its strength lies in its ability to gi!e intermediate le!el constructs
which facilitate the de!elopment of a comprehensi!e process model of strategy
implementation (8ower and Gilbert *$$#).
Befinition
Impetus
&anage
rial
cognitio
n
0trategic contet
0tructural contet
Resource
allocation
appro!al
,ustomers
,apital mkts
The resource allocation process (Bower and Gilbert 2005)
,ustomers
Reali'ed
strategy
1*
(ro/lems associated wit% t%e researc% in t%is field
1. 0trategy implementation is still a neglected area for research (hrebiniak and 7oyce
*$$1) hut'schenreuter and kleindienst *$$6).
>ormulation and implementation are complimentary and logically distinguishable
areas of strategic management research (hrebiniak and 7oyce *$$1). .mpirical
research shows many implementation related !ariables are important in
eplaining performance (+anson and 4ernerfelt 19-9).
Implementation of strategy directly or indirectly relates to all facets of
management. Organisations fail to implement more than #$% of their strategic
decisions (miller *$$*) hambrick and canella 19-9) mint'berg 199(). Bespite the
importance of implementation process1 the emphasis of strategic management
research has been on content or formulation (dess1 gupta1 hennart and hill 199#).
/he reasons for such paucity of research on implementation ha!e been stated to
be due to the compleity and difficulty associated with it) the field being less
glamorous and implementation being !iewed as a mere administrati!e eercise1
an etension of the planning process (okumus and roper 1999).
*. /here is no ehausti!e and cohesi!e body of prior literature due to paucity of
research (noble 1999) hut'schenreuter and kleindienst *$$6).
A. /he eisting content of research on strategy implementation is widely spread and
fragmented.
<lthough strategy implementation is a function of multiple !ariables that must
recei!e an integrated approach to understand the interacti!e effects) howe!er they
ha!e recei!ed only differentiated attention in both strategic management and
organisational beha!ior literature (hrebiniak and 7oyce *$$1)
(. /here is no agreed upon and dominant frame work in strategy implementation
(hut'schenreuter and kleindienst *$$6)
/his has hampered both practioners and researchers alike (noble 19991 <leander
1991). /his has resulted in lack of a starting or reference point for practioners to
use for their guidance and researchers1 a model to build upon. /he literature on
the implementation frame works while listing out the !ariables affecting the
implementation process1 has not looked at how these !ariables interact and
influence other !ariables and how these interaction effects affect the o!erall
implementation process and the outcome (Okumus *$$A).
2et%odological issues1
Implementation has to be !iewed along with strategy content. 0trategy content
literature can be grouped as those dealing with di!ersification1 mergers and
ac;uisitions1 collaborati!e strategies1 competiti!e strategies1 and inno!ations
dri!en strategies. .cept literature on inno!ations which has dealt with factors
influencing adoption of it) all other streams ha!e looked at strategy contentD
performance link without considering the organisation !ariables which represent
the implementation process (Ginsberg and :enkatraman 19-#) Bess et al 199#).
Research in strategic management has predominantly been cross sectional in
nature1 concentrating mostly on simple bi!ariate relationships and has been
plagued with the problems of multiple definitions of constructs (Ginsberg and
!enkatraman) hut'schenreuter and kleindienst *$$6). /he use of configurations as
1A
a methodological principle offers potential to help in pro!iding more useful
eplanations of the strategy process (hut'schenreuter and kleindienst *$$6) miller
1996).
In recent times there has been a proliferation of use of in depth single and
multiple case studies1 but large sur!eys still predominate. "ongitudinal studies are
rare1 although as a method are gaining in use (@ettigrew et al *$$*)
hut'schenreuter and kleindienst *$$6).
-aps in literature
/he gaps in literature concerned with implementation areI
1. /he need to look at strategy as an integrated and dynamic process.
Research concerning formulation and implementation is better if done together as
strategy process research. 0trategy process has been identified at !arious times as
an important facet of strategic management research (gopinath and +offman
199#1 @ettigrew et al *$$*1 hitt *$$#). 0tudy of the process is study of
simultaneously occurring acti!ities and their linkages.
*. /he etension of the only process model (resource allocation model) dealing with
strategy process to include performance outcomes and test its application in
ser!ice and public utility organisations.
A. /here is a need for achie!ing integration of the fragmented and dispersed pieces
of research on strategy implementation. /his re;uires a model which would look
at the !ariables in!ol!ed in implementation in an integrated way1 duly looking at
the interacti!e effects of the !ariables( hrebiniak and 7oyce *$$1) ,hakra!arty and
Roderick *$$*) @ettigrew et al *$$*)
(. "ack of a good process model which eplains the implementation process duly
accounting for the interacti!e effects of !ariables influencing it and which would
be more practioner and researcher friendly.
.onclusion
0trategy implementation is important but difficult because implementation acti!ities take
a longer time frame than formulation1 in!ol!es more people and greater task compleity1
and has a need for se;uential and simultaneous thinking on part of implementation
managers (hrebiniak and 7oyce *$$1). In !iew of these factors1 research into strategy
implementation is also difficult for it entails the need to look at it o!er time ( longitudinal
studies)) presents conceptual and methodological challenges as it in!ol!es multiple
!ariables which interact with each other and show reciprocal causality(fa5ourn *$$$).
/opic of implementation is a neglected and o!erlooked area in strategic management
literature. @ublished research re!eals emphasis on strategy formulation. 0trategy
formulation and implementation are complementary and logically distinguishable areas
of strategic management and part of the o!erall process of planning eecuting and
adapting. &ore Research on implementation has been done in organi'ational theory and
de!elopment than in strategic management. Implementation research needs to be
interdisciplinary. /he importance of implementation can be gauged from the study of
7oyce (*$$$) which showed that firms with unusually high performance and firms which
turned around their performance relied upon key acti!ities of strategic direction1 building
a fast and effecti!e organisation1 establishing an adapti!e culture and eecuting against
focus of customer needs and cost (hrebiniak and 7oyce *$$1 hand book of strategy).
1(