A Model of the Interaction of Strategic Behavior, Corporate Context, and the Concept of

Strategy
Author(s): Robert A. Burgelman
Source: The Academy of Management Review, Vol. 8, No. 1 (Jan., 1983), pp. 61-70
Published by: Academy of Management
Stable URL: http://www.jstor.org/stable/257168
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?Academy of Management Review 1983, Vol. 8, No. 1, 61-70

A Model of the Interaction of

Strategic
Behavior, Corporate Context,
and the Concept of Strategy1
ROBERT A. BURGELMAN
Stanford University

Based on a review of previous landmark studies and in the light offindings

of recent research on internal corporate venturing, a model of the strategic
process in large, complex firms is presented under which the propositions
"structurefollows strategy" and "strategyfollows structure" can both be
subsumed. Current corporate strategy induces some strategic behavior but
changes in corporate strategy follow other, autonomous, strategic
behavior.

The study of the relationships between strategy
and structure in large, complex firms remains of
central concern to scholars in the fields of strategic
management and macro organizational behavior.
Previous research has, indeed, produced apparently
conflicting propositions regarding the directionality
of these relationships. Depending on which body of
empirical evidence is used to bolster the argument,
"structure follows strategy" and "strategy follows
structure" both seem to be valid propositions (Bow-
er & Doz, 1979; Galbraith & Nathanson, 1979; Hall
& Saias, 1980). The present paper contributes to the
resolution of this apparent contradiction by eluci-
dating further the conditions under which each of
these propositions may be valid.
The analysis presented here rests on two critical
insights. First, both propositions need to be con-
sidered in terms of what they imply about the na-
ture of the strategic process. As previous research-
ers have observed (Bower & Doz, 1979), the strate-
gic process in large, complex firms consists of the
strategic activities of managers from different levels
in the organization. Second, these strategic activi-
'Support for this paper from New York University's Graduate
School of Business Administration and from the Strategic
Management Program of Stanford University's Graduate School
of Business is gratefully acknowledged. Michael L. Tushman
(Columbia University), Eric J. Walton (New York University),
L. Jay Bourgeois, David B. Jemison, and Steven C. Wheelwright
(all of Stanford University) have made helpful comments on
earlier drafts of this manuscript.
61
ties are of two kinds. Most strategic activities are in-
duced by the firm's current concept of corporate
strategy, but also emerging are some autonomous
strategic activities, that is, activities that fall outside
the scope of the current concept of strategy. The
consequences of this distinction for the strategic
process have not previously been made the subject
of systematic analysis.
Autonomous strategic activities have been docu-
mented by the students of unrelated diversification
through internal corporate venturing (ICV) (Big-
gadike, 1979; Burgelman, 1980, Fast, 1979). Fast's
study of new venture divisions in large, diversified
firms, for instance, has provided incidental evi-
dence of the autonomous nature of the strategic ac-
tivities involved in new venturing. As a participant
in one of the firms in Fast's study observed:
Top managementsaw a need for venturesand said,
"Go ahead and do it." Nobody reallymanagedor
directedit. So the whole companybeganto get into
venturesbut therewas no cleardirectionor purpose
(1979, p. 76).
Biggadike's (1979) large sample study of new en-
tries at the business level of analysis also suggests
the autonomous nature of new venture activities.
Even though ICV projects required the commit-
ment of substantial amounts of resources over sub-
stantial periods of time and changed the scope of
the corporate business portfolio when they were
successful, there seemed to come little guidance
from the firms' current corporate strategy for these
ICV efforts.
Neither Fast nor Biggadike has attempted to con-
ceptualize the corporate strategic process in which
new ventures take shape. Yet both researchers have
suggested that the research of Bower (1970) and his
students could be useful to conceptualize the cor-
porate strategic processes involved in ICV. In-
dependent of these suggestions, Burgelman's (1980)
study of ICV project development in the diversified
major firm has found that Bower's model is indeed
useful but needs to be extended. This study has pro-
vided systematic field data from which the category
of autonomous strategic behavior has been in-
duced. It also has provided additional insight in the
corporate context processes in which ICV project
development is embedded (Burgelman, 1982).
These insights concerning the nature of strategic
behavior and corporate context processes provide
the basis for reanalyzing the landmark studies from
which the two apparently contradictory proposi-
tions concerning the relationships between strategy
and structure have been derived.
Structure Follows Strategy
The proposition that structure follows strategy
became firmly established as a result of Chandler's
(1962) study of the historical development of major
U.S.-based industrial firms in the period 1919-1959.
Subsequent empirical research in the multinational
context, and in firms situated in other countries of
the Western world, generally has corroborated the
structure follows strategy proposition (Galbraith &
Nathanson, 1979). Relatively little can be learned
about the strategic process underlying Chandler's
proposition from these large sample, verification-
oriented follow-up studies. The original field study,
however, can be reexamined to evaluate the extent
to which the original theoretical generalizations
were grounded.
Strategy Follows Autonomous Strategic Behavior
Chandler's case materials indicate that major
structural adjustments followed the experience of
severe management problems after strategic initia-
tives had been undertaken in areas unrelated, or on-
ly marginally related, to the traditional lines of
business of the firm.
The case data also indicate that these strategic ini-
62
tiatives were not the result of an a priori clearly for-
mulated corporate strategy on the part of top man-
agement. Rather, the corporate strategy emerged
through a somewhat haphazard process. It was the
result of final authorizations by top management of
strategic projects that had successfully absorbed the
firm's excess resources and promised to do so pro-
fitably in the future.
Chandler raised the important question: "Why
did the new strategy which called for a change in
structure, arise in the first place?" (1962, p. 14). He
refers to the major changes in the external environ-
ment that had created opportunities for the use of
existing excess resources of the firm. At the conclu-
sion of the study, Chandler refers to Penrose's
(1968) work and suggests that his data supports her
theoretical analysis of the growth of the firm.
Penrose's analysis, however, emphasizes the in-
ternal impulse toward growth. She observes that the
recognition of opportunities takes place in the mind
of managers and is often independent of changes in
the external environment. In fact, Penrose fore-
bodes the concept of the "enacted environment"
(Weick, 1979):
In the last analysis, the "environment"rejects or
confirmsthe soundnessof the judgmentsabout it,
but the relevantenvironmentis not an objectivefact
discoverablebeforethe events(Penrose,1968,p. 41).
Implicit in the affirmation of the relevance of
Penrose's analysis seems to be the recognition that
corporate development was not really the result of
top management taking a fresh look at the environ-
ment, then formulating a strategy, and then estab-
lishing the appropriate structural arrangements to
implement the strategy. In reality, the structural
rearrangements reflected efforts to consolidate the
results of autonomous strategic behavior. The new
strategy reflected the recognition of the importance
of these strategic actions. In the final analysis,
Chandler's study seems to indicate that changes in
corporate strategy followed autonomous strategic
behavior.
Heroic View of Top Management
Chandler's case data suggest that multiple layers
of management were involved in the strategic initia-
tives that produced the extensive diversification,
and in response to which the new strategy and the
new structure eventually emerged. The theoretical
generalizations, however, collapse this strategic
process into a top management activity. Even
though the influence of lower levels in the deter-
mination of the content of the strategy is recog-
nized, the major emphasis is on the role of top
management. Yet, as the du Pont case materials
suggest, top management's influence before the
reorganization was very limited, with the real in-
fluence over strategic behavior situated at the
department head level. It was only after H. Fletcher
Brown wrote a penetrating analysis of this situation
(Chandler, 1962) that the strategic role of the ex-
ecutive committee (representing the whole corpora-
tion) became firmly established.
In spite of a preoccupation with the role of top
management in the strategic development of the
firms studied, Chandler presents data that question
the relative importance of this role, ironically even
with respect to the decisions to change the structural
arrangements:
At du Pont, GeneralMotors, and JerseyStandard,
the initial awarenessof the structuralinadequacies
causedby the new complexitycame from executives
close to top management,but who were not them-
selves in a positionto make organizationalchanges.
In all cases, thepresidentgave no encouragementto
theproposersof change(1962,p. 308, emphasispro-
vided).
And after reflecting on the meaning of the data,
Chandler puts forward another key question:
But if the stockholdersand the board becamecap-
tivesof the fulltimeadministrators,werenot the pro-
fessional entrepreneursthemselvescaptivesof their
subordinates?Were not the informationand alter-
natives available to the top determined,possibly
quite unconsciously,by junior executivesdown the
line?Mustnot then the enterpriseor the organization
as a whole be consideredresponsiblefor the basic
economicdecisions?If this is so, then no individual
or team of individualscan be identifiedas the key
decisionmakersin the privatesectorof the American
economy(1962, p. 313).
Chandler concludes that the case data challenge
the view that the role of top management was not
predominant. This conclusion, however, is based
on the observation that the new structure had
facilitated top management's role in strategy for-
mulation and entrepreneurship after it had been put
in place. The case data relating to the situation
before the reorganization do not support the heroic
view of the role of top management. Furthermore,
the proposition that the new type of structural ar-
rangement would lead to a greater role for top man-
agement in the formulation of corporate strategy
63
can be verified in the light of the findings of another
major line of research in the field of strategic
management.
Strategy Follows Structure
The process oriented line of research in strategic
management has taken the concepts of the "deci-
sion making" (Cohen, March, & Olsen, 1972; Cyert
& March, 1963; March & Simon, 1958) and "in-
stitutional" (Selznick, 1957) orientations in
organization theory, and the "incrementalist"
theory in strategy making (Lindblom, 1959) as its
points of departure. These theories allow for a
bottom-up conception of strategy formulation in
which top management's role is not necessarily
critical-one in which the concepts of strategy and
structure are not clearly delineated from each other
(Bower, 1974), nor are operational decisions
delineated from strategic decisions (Ansoff, 1965).
Basically, this is Chandler's view upside down. Im-
portant empirical research has investigated the
usefulness of these theoretical orientations for the
understanding of the process whereby key decisions
are made in complex organizations. It has extended
the theory by clarifying the role of top management
in these processes (Aharoni, 1966; Allison, 1971;
Carter, 1971).
A landmark study concerning the strategic pro-
cess is Bower's (1970) carefully designed, longi-
tudinal field study of the management of strategic
capital investment projects in the "diversified ma-
jor" firm. Probably the most complex type of divi-
sionalized firm, the latter encompasses an agglo-
meration of widely diversified but partially related
businesses grouped into major divisions whose
general managers report to corporate management.
Strategy Making-A Multilayered Process
Bower's study documents the manner in which
the strategic capital investment process in such
firms is spread over the management hierarchy.
Three major subprocesses could be discerned, each
of which, in turn, comprised three major phases
related to activities of managers at particular levels
in the organization.
At the product/market level in a division, pro-
posals are defined in technical/economic terms.
This definition process is triggered by a perceived
discrepancy between strategic business objectives
and existent physical plant capacity available to at-
tain these. Projects survive only if they receive im-
petus from divisional level management. This im-
petus process is highly political, because managers
at the divisional level are aware that their career
prospects depend, to a large extent, on developing a
good "batting average" in supporting strategic pro-
jects. Thus managers will evaluate proposals in the
light of the reward and measurement systems that
determine whether it is in their interest to provide
impetus for a particular project. At the corporate
level, the major contribution is precisely the mani-
pulation of the structural context within which the
proposal generation takes shape. Through the ma-
nipulation of structural context, top management
can influence the type of proposals that will be
defined and given impetus.
Whereas definition and impetus are primarily, if
not exclusively, bottom-up processes, the design of
the structural context is primarily, if again not ex-
clusively, a top-down process. Thus, to the extent
that capital investment proposals reflect strategic
business planning, it is possible to posit that
strategy making is both a bottom-up and top-down
multilayered process (Bower, 1974). Because of the
effects of structural context on the generation and
shaping of strategic projects, it also is possible to
posit that strategy follows structure. However, to
the extent that the structural context reflects a given
concept of corporate strategy, Bower's study ac-
tually indicates that corporate strategy induces
strategic behavior.
A Less Heroic View of Top Management
Bower's study has provided the basis for further
research of the strategic process in various types of
organizations and concerning different classes of
strategic decisions. These have further elucidated
the social and political forces in and around the
strategic process (Hofer, 1976).
Recently, Bower and Doz have articulated a ma-
jor implication of this line of research, which con-
cerns an alternative view of the role of top manage-
ment in the strategic process:
Thus, in contrast to strategy formulation as the
criticaldirection-settinggeneralmanagementactiv-
ity, this new processschool of researchsuggestedan
alternative,that is, managingthe strategicprocess
(1979, p. 158).
Yet, as the authors point out, it is not clear how the
management of the corporate phase can be done:
64
If structureis to shape strategy,what vision shapes
structureand how is that vision to be developed?
Who has a say in the process?Moreresearchis need-
ed (1979, p. 159).
A Model of the Interaction of Strategic
Behavior, Corporate Context, and the
Concept of Strategy
Based on the findings of the process study of
ICV, and on the insights derived from the preceding
review of Chandler's and Bower's studies in the
light of these findings, a new model of the strategic
process in large, complex firms can be constructed.
This new model sheds additional light on the impor-
tant questions raised by Bower and Doz. It provides
a conceptual framework from which the two major,
apparently contradictory, propositions in the field
of strategic management can be deduced simultane-
ously. Figure 1 represents this model.
Variation, Enactment, and Strategic Behavior
This model, inductively derived, is isomorphous
to the variation-selection-retention model currently
emerging as a major conceptual framework for ex-
plaining organizational survival, growth, and devel-
opment (Aldrich, 1979). Its orientation also is in
line with current theoretical efforts (White &
Hamermesh, 1981) to integrate research done in in-
dustrial organization economics, organization
theory, and business policy. The model presented
here, however, integrates the business and cor-
porate levels of analysis and applies to the class of
firms that are large enough and sufficiently re-
source-rich to be relatively independent of the tight
control of external environment selection. Such
firms are able to engage in "strategic choice"
(Child, 1972) and, as pointed out earlier, their
strategic choice process involves substantive inputs
from managers from different levels in the organi-
zation. Internally generated variation, resulting
from the "enactment" (Weick, 1979) of the en-
vironment is, at the minimum, a very important
source of variation in such firms (Penrose, 1968).
Strategic behavior, in the model presented here,
refers to such enactments.
The model proposes that two generic categories
of strategic behavior can be discerned in such large,
complex firms: induced and autonomous. Induced
strategic behavior uses the categories provided by
the current concepts of strategy to identify oppor-
 Figure 1
A Model of the Interaction of Strategic Behavior,
Corporate Context, and the Concept of Strategy
1 (7)
STRONG INFLUENCE
-- - - WEAK INFLUENCE
tunities in the "enactable environment" (Weick,
1979). Being consistent with the existing categories
used in the strategic planning system of the firm,
such strategic behavior generates little equivocality
in the corporate context. Examples of such strategic
behavior emerge around, among others, new prod-
uct development projects for existing businesses,
market development projects for existing products,
and strategic capital investment projects for existing
businesses. Such strategic behavior is shaped by the
current structural context. For instance, it can be
judged relatively easily in the light of current
evaluation and measurement systems. This is the
type of strategic behavior documented by Bower
(1970). It follows corporate strategy. Hence, the
feedback loop (1) in Figure 1 between concept of
strategy and induced strategic behavior.
During any given period of time, the bulk of stra-
tegic activity in a firm is likely to be of the induced
variety. The present model, however, proposes that
large, resource-rich firms are likely to possess a
reservoir of entrepreneurial potential at operational
levels that will express itself in autonomous
strategic initiatives. Autonomous strategic behavior
introduces new categories for the definition of op-
portunities. Entrepreneurial participants, at the
product/market level, conceive new business op-
portunities, engage in project championing efforts
to mobilize corporate resources for these new op-
portunities, and perform strategic forcing efforts to
65
create momentum for their further development.
Middle level managers attempt to formulate
broader strategies for areas of new business activity
and try to convince top management to support
them. This is the type of strategic behavior en-
countered in the study of internal corporate ventur-
ing (Burgelman, 1980; Roberts, 1980). The strategic
initiatives leading up to the corporate managerial
problems documented by Chandler (1962) also
would seem to fall under this category. Such
autonomous strategic initiatives attempt to escape
the selective effects of the current structural con-
text, and they make the current concept of corpo-
rate strategy problematical. They lead to a redefini-
tion of the corporation's relevant environment and
provide the raw material for strategic renewal. They
precede changes in corporate strategy.
Corporate Context and Selection
One of the key insights of the study of ICV, re-
flected in the model presented here, is that the cor-
porate context within which the strategic process
takes place encompasses two distinct, selective pro-
cesses: structural context determination and strate-
gic context determination.
Structural context determination is a broad enve-
lope concept used to denote the various administra-
tive mechanisms that corporate management can
manipulate to change the perceived interests of the
strategic actors in the organization. In the study of
ICV, it was found to encompass the choices of top
management regarding the overall structural con-
figuration, the degree of formalization of positions
and relationships, the criteria for project screening,
the measures of managerial performance, and the
appointment of middle level managers with parti-
cular orientations toward entrepreneurial initiative.
Bower (1970), of course, had identified earlier the
selective nature of this important process.
Structural context determination reflects the ef-
forts of corporate management to fine-tune the
selective effects of the administrative arrangements
so as to keep (or bring) the strategic proposal
generating process in line with the current concept
of strategy. This part of the model corresponds to
Chandler's propostion that structure follows stra-
tegy. Hence, the feedback loop (2) in Figure 1 be-
tween concept of strategy and structural context.
Over time, this fine-tuning may make the struc-
tural context more elaborate, with more rules ap-
plied to the induced strategic behavior. As a result,
the range and scope of these strategic behaviors
may become narrower while their probability of
failure may decrease. One major consequence of
the increased selective efficiency of the structural
context is that fewer of the selected strategic pro-
jects have the potential to force a significant change
in the concept of strategy. Standardized, quantita-
tive procedures for project screening, uniform cate-
gories of strategic planning unit systems, selection
of higher level managers with strong corporate
orientation in their decision making, all tend to
reduce the variation in the strategic proposals se-
lected by the firm and provide the basis for the pro-
position that strategy eventually follows structure.
Thus, structural context intervenes between induced
strategic behavior and the concept of strategy-(3)
and (4) in Figure 1. This part of the model corre-
sponds to Bower's findings.
Chandler's proposition focused on the role of top
management in bringing structure in line with new
strategy. Bower focused on the effects of structure,
given strategy. Both studies paid relatively little at-
tention, at least in the conceptualization of the find-
ings, to the role of autonomous strategic behavior
in the process through which corporate strategy
becomes articulated and changed. The study of ICV
has focused on the latter process. This has allowed
identification of the process of strategic context
determination.
66
Strategic context determination reflects the ef-
forts of middle level managers to link autonomous
strategic behaviors at the product/market level into
the corporation's concept of strategy. To do so, the
middle level managers must make sense out of these
autonomous strategic initiatives and formulate
workable, attractive strategies for the correspond-
ing areas of new business development. In addition,
they must engage in political activities to convince
top management to rationalize, retroactively, these
successful initiatives by amending the concept of
strategy to accommodate the strategic initiatives.
This aspect of the process underlies the proposition
that strategy follows autonomous strategic behav-
ior. Thus, strategic context intervenes between
autonomous strategic behavior and concept of stra-
tegy-(5) and (8) in Figure 1.
The intervening effect of structural context is
limited here. In the ICV study, this influence was
reflected only in the concerns of the actors to
demonstrate large potential size and fast growth
rate for the ICV projects. Hence, the dotted arrow
(6) from structural context to strategic context in
Figure 1.
The degree to which middle management is suc-
cessful in activating the process of strategic context
determination provides guidance for further entre-
preneurial initiatives at the operational level. This is
represented by the dotted feed-forward loop (7) in
Figure 1. It is a feed-forward loop because it guides
further strategic initiatives in a particular new area
before this area has become incorporated in the
concept of strategy of the firm. It is represented as a
dotted line because the guidance is relatively tenta-
tive and ambiguous.
The Concept of Strategy and Retention
From the perspective of a process study, the con-
cept of strategy of large, complex firms can be
viewed as the result of the selective effects of the
corporate context on the stream of strategic
behaviors at operational levels. The present model
proposes that the concept of corporate strategy
represents the more or less explicit articulation of
the firm's theory about its past concrete
achievements. This theory defines the identity of
the firm at any moment in time. It provides a basis
for the maintenance of this identity and for the con-
tinuity in strategic activity. It induces further
strategic initiative in line with it.
 Corporate level managers in large, diversified
major firms tend to rise through the ranks, having
earned their reputation as head of one or more of
the operating divisions. By the time they reach the
top management level they have developed a highly
reliable frame of reference to evaluate business
strategies and resource allocation proposals pertain-
ing to the main lines of business of the corporation.
Top managers, basically, are strategies-in-action
whose fundamental strategic premises are unlikely
to change (Kissinger, 1979). It therefore is not sur-
prising that corporate management focuses on the
manipulation of the structural context to keep stra-
tegic behavior in line with the current concept of
strategy. In the operating system of the firm, this
fosters predictability and integration of strategic ac-
tivity: strategy-making takes on a "planning" mode
(Mintzberg, 1973).
To the extent that the current concept of strategy
is deeply ingrained in corporate management, its
capacity to deal with the substantive issues pertain-
ing to new technological and market developments
can be expected to be low. Rather than activating
the process of strategic context determination, top
management is likely to rely also on the manipula-
tion of the structural context to bring autonomous
behavior under control. Ironically, from this ana-
lytical perspective, the establishment of a new ven-
ture division constitutes a manipulation of the
structural context to reduce the variability in the
operating divisions rather than the implementation
of a strategy of unrelated diversification. Also,
from this perspective, Fast's (1979) finding that the
position of a new venture division in the corporate
context is precarious and Burgelman's (1980) obser-
vation of wide oscillations in new venture activity
are not surprising. Nor is the finding that the activa-
tion of the strategic context requires great concep-
tual and political skills on the part of middle level
managers.
Conclusions and Implications
The widening of the scope of a corporation's
business portfolio as a result of successful autono-
mous strategic activity puts strain on its admini-
strative machinery. Periods of unrelated diversifica-
tion thus are likely to be followed by periods of con-
solidation. Chandler's study has documented such
cycles during the period 1919-1959, out of which the
67
divisionalized firm emerged as a new generic type.
Once the concept of strategy of the firm has been
established through top management's ratification
of successful autonomous strategic behavior, struc-
tures can be designed and refined to select and
shape strategic proposals compatible with this con-
cept of strategy. Bower's study has documented the
latter processes. Structural design, however, does
not work like a well-calibrated sieve. Autonomous
strategic activities continue to escape the selective
effects of the structural context by mere chance or
because alert actors are able to circumvent, or play
to their advantage, the selective mechanisms. In any
case, the result can be strategic activity falling out-
side the established strategy. In a more deter-
ministic sense, structure may motivate or impede
strategic activity in unanticipated ways (Greiner,
1972; Mintzberg, 1978).
Structure and strategy thus exist in a reciprocal
relationship to each other. Depending on which
part of the strategic process is observed, both
"structure follows strategy" and "strategy follows
structure" can be correct propositions.
The present paper has attempted to provide fur-
ther insight in the strategic process of large, com-
plex firms by focusing on the interaction between
the corporate level process of relating structure to
strategy, and the process of strategic behavior at the
product/market and middle levels in the firm. The
model presented here accommodates the conven-
tional, normative proposition that corporate stra-
tegy induces strategic behavior. In addition, and
perhaps more fundamentally, the model reflects the
new proposition that the more dramatic changes in
the corporate strategy of large, complex firms are
likely to have been preceded by autonomous strate-
gic initiatives at the operational and middle levels of
the organization: strategy follows autonomous stra-
tegic behavior. The complete list of propositions
embedded in the model presented in this paper are
summarized in Table 1. It is hoped that these will
stimulate further theoretical and empirical research
in the field of strategic management.
The present paper focuses the attention of practi-
tioners of strategic management on the dilemmas
that result from the opposing tendencies in large,
complex firms toward stability and change. Coher-
ence, continuity, and stability in corporate strategy
require the institutionalization of strategic behavior
through strategic planning systems. Corporate en-
 Table 1
Propositions Concerning the Interaction
of Strategic Behavior, Corporate Context,
and the Concept of Strategy
(1) The current concept of strategy induces some but usually
not all strategic activity in large, diversified firms.
Therefore, at any moment in time, the totality of strategic
activity of such firms is usually a mixture of induced and
autonomous strategic behavior.
(2) The current concept of strategy leads to the establishment
of a structural context aimed at keeping strategic behavior
at lower levels in line with the concept of corporate
strategy. In this sense, structure follows strategy.
(3) Structural context intervenes in the relationship between
induced strategic behavior and concept of strategy. It
operates as a selection mechanism on the stream of in-
duced strategic behavior. In this sense, strategy follows
structure.
(4) Over time, structural context reduces the variation in in-
duced strategic behavior, and may thereby prevent
strategic learning on the part of the firm. This is another
aspect of the strategy follows structure proposition.
(5) Strategic context intervenes in the relationship between
autonomous strategic behavior and concept of strategy.
Through the activation of the process of strategic context
determination, autonomous strategic behavior can become
integrated in the concept of strategy of the firm.
(6) Structural context intervenes only to a limited extent in the
relationship between autonomous strategic behavior and
concept of strategy.
(7) The activation of the process of strategic context determi-
nation has a weak influence on maintaining the volume of
autonomous strategic behavior in the firm.
(8) Over time, changes in the concept of strategy are the result
of the retroactive rationalization of autonomous strategic
behavior. This, in turn, changes the basis for the further
inducement of strategic behavior.
trepreneurship and the resulting strategic renewal of
large, complex firms, on the other hand, require the
interlocking autonomous strategic initiatives of in-
dividuals at operational and middle levels, and an
experimentation-and-selection approach at the cor-
porate level. Maintaining a pragmatic balance be-
tween these fundamentally different requirements
presents a major challenge for top management.
This is evident, for instance, in the problems of
dealing with performance differences between divi-
sions (Hamermesh, 1977) and in the need to provide
strategic guidance for different types of strategic
business units (SBUs) in the corporate business
portfolio. The present paper suggests that such
challenges may be met more readily by recognizing
the different requirements of different strategic
situations existing simultaneously in the organiza-
tion.
The distinction between autonomous and in-
duced strategic behavior in the model presented in
this paper also provides a theoretical foundation for
the deduction of the categories in Miles and Snow's
(1978) typology. "Analyzers" are firms high on
68
both induced and autonomous strategic behavior.
They attempt to strike the kind of balance discussed
in the previous paragraph. "Prospectors" empha-
size autonomous strategic behavior. They, how-
ever, face the problem of maintaining coherence
and continuity in their corporate strategy.
"Defenders" emphasize induced strategic behavior
based on a very clear concept of corporate strategy.
Such firms face the long run danger of a lack of
creativity and renewal in their corporate strategy.
Finally, "reactors" have neither a clear corporate
strategy to induce strategic behavior nor the en-
trepreneurial capabilities related to autonomous
strategic behavior. They find themselves in a
dangerously unstable situation.
The model of the strategic process presented here
seems also relevant for the emerging theory of
organizational learning. The concept of strategy of
a corporation and the corresponding structural ar-
rangements impound the learning of the firm over
time. The concept of strategy provides a more or
less explicit, and more or less shared, frame of
reference or "paradigm" (Duncan & Weiss, 1979;
Jelinek, 1979) concerning the bases of the firm's
past success. Not unlike the sociological notion of a
paradigm (Kuhn, 1970; Masterman, 1970), it pro-
vides guidance for further strategic action in line
with it. At the same time, it crystallizes the at-
titudinal and social factors that were selected
together with the cognitive, substantive factors
underlying the past success. As such, it also is likely
to prescribe, often implicitly and tacitly, attitudes
and managerial styles and an ideology deemed nec-
essary for the prolongation of the firm's success.
Autonomous strategic behavior, identified here as
the major source of strategic renewal, thus is likely
to encounter nonrational obstacles in its efforts to
convince top management that changes in corporate
strategy are necessary.
Further research may find it useful to explore
these less obvious, potentially entropic (Rifkin,
1980) consequences of a concept of corporate stra-
tegy for organizational learning. Such research also
could shed more light on the factors-external
and/or internal to the firm-that influence the
balance between induced and autonomous strategic
behavior at any given moment in time, and the evo-
lution of this balance over time. In the same line of
thought, further research also could investigate the
role of acquisition and divestment as compensatory
mechanisms-positive and negative, respectively
-for the firm's adaptationefforts throughautono-
mous strategicbehavior.
Finally,the presentpaperillustratesan important
characteristicof field research. The conceptual
frameworksinducedfrom such researchseldomex-
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Robert A. Burgelman is Assistant Professor of Manage-

ment in the Graduate School of Business, Stanford
University.

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