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Strategic ManagementJournal
Strat. Mgmt. J., 23: 561-594 (2002)
Published online 28 March 2002 in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/smj.239
ON
TOWARDSAN ORGANICPERSPECTIVE
STRATEGY
( MOSHE FARJOUN*
Leon Recanati Graduate School of Business Administration, Tel Aviv University,
Ramat Aviv, TelAviv, Israel
Copyright t 2002 John Wiley & Sons, Ltd. Received 14 September 1999
Final revision received 25 October 2001
562 M. Farjoun
perspective,it providesa unifiedset of conceptual, ideas and applications.Once the organic set of
explanatory,and prescriptiveelements. Particu- assumptionson time, flow, andcouplinghavebeen
larly,it introducesa conceptof strategyas an adap- isolatedfrom their originalcontributionsthey can
tive coordinationof goals and actions. It presents be appliedand recombinedin ways otherthanthe
the Organization-Environment-Strategy-Petfor- one describedhere.5
mance (OESP) model, an integrativetheoretical We begin by describing the mechanisticper-
structurethat links different middle-rangetheo- spective on strategy.We then introduceorganic
ries andsynthesizesmechanisticandorganicideas. thinkingby discussing the developmentof perti-
Lastly, it includesan organic model of the strate- nent researchstreams.The bulk of the paper is
gic managementprocessin whichthe iterativeand devotedto buildingon these two developmentsto
integrativequalities of the process are stressed. proposea three-pillaredfoundationfor an organic
These three parts of the organic perspectiveare perspectiveon strategy.In conclusion, we sum-
internallycompatible,representthe field's con- marizethe contributionsandpotentialimplications
tinuity and progress, and are better suited to a of the new perspective,and proposeavenues for
morecomplex,interconnected,uncertainandever- futurework.
changingworld.3
The developmentof an organicperspectivecan
contributeto the field in several respects.4First, THE MECHANISTICPERSPECTIVE
withoutsacrificingkey insights and contributions
of the mechanisticperspectiveand its attentionto The mechanisticperspective consists of a con-
prescription,an organicperspectivecanhelp renew cept of strategy,relatedexplanatorymodels, and
mechanisticconceptsandmodelsby aligningthem managerialframeworks.Thesethreeelementshave
with organicthemes. Second, an organicperspec- commonepistemologicalassumptions.
tive can integratevarious research streams that
share its epistemologicalorientation,and foster
cross-fertilizationof conceptual,theoretical,and A concept of strategy
analyticmodels. Lastly,beyondrenewaland inte- In the mechanisticperspective,strategyis mainly
grationthe organicperspectivecan stimulatenew viewed as a posture a relatively stable config-
uration a fit or alignment between mutually
3Wesee globalstrategicmanagement as a distinctivebutintegral supportingorganizationalelements,such as activi-
partof strategyandstrategicmanagement. Therefore,theorganic
perspectivealso pertainsto globalizationandrelatedissues. ties and organizationalstructure,and environmen-
40ur work follows the trail of priorworks that stressedthe tal elements,such as a customergroup.Two main
importanceof dynamics,process,integration, andmutualdeter- types of strategyposturesareposition (e.g., differ-
mination(e.g., Bourgeois,1984;HaspeslaghandJemison,1991; entiationstrategy)andscope (e.g., verticalintegra-
Porter, 1991), or that infused prescriptiveframeworkswith
descriptiveideas(e.g., Quinn,1980;BowmanandHurrey,1993; tion) (Chandler,1962;Rumelt, 1974, 1984;Porter
MacIntoshandMacLean,1999).In addition,it is bothcomple- 1980, 199l; Wernerfelt,1984). Strategypostures
mentaryandorthogonalto panoramicviews of the fieldof strat- have been the traditionalfocus of research on
egy (Rumelt,Schendel,andTeece, 1994;Mintzberg,Ahlstrand,
andLampel,1998;Ghemawat,1999).Wedifferfromtheseprior strategicgroups (e.g., Cool and Schendel, 1988),
contributions in thatwe do not simplyprovidea review,explain diversification(e.g., Montgomery,1982),andstrat-
a particularphenomenon(e.g., acquisitions),developa singular egy-structure (e.g., White, 1986). In addition,
model,or advocatea particular theoreticalviewpoint(e.g., com-
plexitytheory).Rather,we makesense of the field's evolution early treatmentsof strategy, rooted in strategic
by using epistemologicalas opposedto chronological,theoreti- planningmodels, have viewed it primarilyas a
cal or conceptuallenses,focus on developmentandnot merely rationalplan. In this view, which still guidesmuch
advocacy,providea perspectiveon broadissues, and highlight
bothtimeandintegration. Moreover,thoughwe providea broad of the thoughtin the strategyfield, action is pur-
reviewof the field, it is not meantto be exhaustiveand fully posive and prospective,and strategiesare realized
representative,butratherto presentcertaindevelopmentswe see as planned (Mintzberg,Ahlstrand,and Lampel,
as central,and serve as a logical step for developingthe new
perspective.We do not intendto proposea fully developednew 1998).
theoryof strategyor strategyphenomenaeither.Rather,we aim
to illustrateone way in whichthe consistentuse of a smallset of
epistemological assumptionscanaidin developingmorecompat- 5Van de Ven and Poole (1995) presentanotherapproachto
ible andrelevantconceptsandmodelsfor strategyresearchand modelbuildingthatbearssomesimilaritiesto ours.Theyextract
practice.To thisend we sketcha preliminary, yet self-contained, four processmodelsfrom existingstudiesand show how they
structureuponwhichfutureextensionscan be made. can be usedto generatenew applications.
Copyright
t 2002JohnWiley& Sons,Ltd. Strat. Mgmt. J., 23: 561-594 (2002)
564 M. Farjoun
Each of the main researchprogramsreviewed (e.g., Porter, 1980) and of internal resources (e.g.,
has contributedto the design model. Derived Barney, 1991). A prime reason for this coher-
from the SCP are the five forces model and ence is the shared but largely implicit views on
its dynamic counterpart-the industrylife cycle time, flow, and coupling. These were influenced
model -which became the dominantmodels for to a large extent by Newtonian mechanics and its
analyzingthe externalenvironment(Porter,1980). application to microeconomics, and by the ideas
The SSP has provided a theoretical basis for prevailing in the behavioral and economic disci-
the formulation-implementation link in the design plines when the formal study of business strategy
model. In addition,by focusing on internalfirm began.
attributes,the RBV model,togetherwith the value
chain model of firm workflow activities (Porter,
1985, 1996), has become a standardtool for ana- Conceptof time:discrete
lyzing the internal(i.e., organizational)side in the
In the mechanistic perspective firm strategy, the
design model (Barney,1997). environment, and the firm's stock of resources,
The SWOTmodel is often used to prescribethe structure, and work flow technology are often
strategicchoice (i.e., strategyformulation)partof treated as given discrete categories or states that
the design model. In this model, strategy needs coalesce to create static efficiency (e.g., economies
to match the firm's internalresources and dis- of scale), fit, and configuration (e.g., Galunic and
tinctive competencieswith environmentaloppor- Eisenhardt, 1994). Strategic management is viewed
tunities and threats,so as to better meet overall as a one-time sequence of formulating and imple-
goals and objectives (Andrews, 1971). The deci- menting a single choice rather than a continuous
sion rule used is to choose a strategythat capital-process. Strategy-making mechanisms are assumed
izes on the firm's strengths,fixes its weaknesses, to be in place, and learning, history, and processes
exploits its opportunities,and defends or neu- are downplayed. Strategy formulation and imple-
tralizes threats(Barney, 1997). Strategyneeds to mentation activities are condensed in time and their
exhibitexternal consistency firmresourcesneed duration is inconsequential. The choice part of the
to be matchedwith environmentalopportunities, model often involves once-and-for-all choices for
and internal consistency- a fit between strategywhich past and subsequent choices are not con-
and organizationalelements. In addition,strategy sidered, and where there is no distinction between
needs to be in line with managerialvalues and initiation of a new alternative and the continuation
with societalexpectations(Andrews,1971;Porter, of an existing one (March and Simon, 1958).
1980). The differentresearchprogramsreviewed The discrete view of time is also evident in
have also provided support for these different the research models being used. Most mechanis-
forms of fit (e.g., Chandler,1962). tic studies use variance models, cross-sectional
in design. Variance models are concerned mainly
with what the relative explanatory power of differ-
Common epistemologicalunderpinnings
ent determinants of abstract entities (i.e., strategy
Despite differences in content and emphasis, and performance) are ratherthan how these entities
the field's main issues- the nature of strategy, are formed (Mohr, 1982). Although process expla-
its relations, and the ways it is managed and nations featuring the role of history and learning
selected- are addressedin the mechanisticper- were central in the founding of the main theo-
spective in a consistentand mutuallyreinforcing ries (e.g., Selznick, 1957; Penrose, 1959; Chandler,
manner.A view of strategyas a positionor posture 1962), they have been largely neglected by subse-
implies that strategicchoice is mostly a selection quent research.
amongstaticconfigurations.Furthermore, the view Underlying this particular view of time and the
of strategy as mainly determinedby the indus- focus on variance models is the idea of eXcient
try environment,implicit in the SCP, is paral- historicalprocess an evolutionary process that
leled in the design model by the relativeneglect moves rapidly to a unique steady-state equilibrium
of strategies that change the environment(e.g., solution, conditional on current environment con-
Child, 1972). Finally,the SWOTmodel of strate- ditions, and thus independent of the historical path.
gic choice is now characteristicallyaccompanied A static alignment at a given time is the product of
by explanatorymodelsof the externalenvironment a rapid optimizing process. The process is assumed
Copyright (C)2002 John Wiley & Sons, Ltd. Strat. Mgmt. J., 23: 561-594 (2002)
566 M. Farjoun
to lead to improvementof fit and ultimatelyto the and reciprocal causality between these distinct
one most suitable(March,1994). elements(Hendersonand Mitchell, 1997).
This fragmentationhas close parallels in the
designmodel.Despitethe recognitionthatstrategy
Concept offlow:
directional formulationand implementationare interrelated
In early versionsof the main underlyingresearch (Andrews, 1971), the design model describes
programscausalityran from environmentto strat- them as separate activities (Mintzberg et al.,
egy and performance(in the SCP model), from 1998). Strategyimplementationhas been viewed
strategyto structure(and performance)in the SSP as administrativerather than analytic activity
model, and from resources to strategy and per- involvingchoice,andexternalaspectsof managing
formancein the RBV model. Moreover,as pos- change (e.g., Chen, 1996) have been treated
tures,strategiesaremainlyresponsesto given con- separatelyfrom internalones (e.g., Quinn, 1980).
straintsratherthan means to influence them or Panel A of Table 1 summarizesthe underlying
createnew environments(Porter,1980).Addition- influencesand contextof the mechanisticperspec-
ally, at its core, positioninganalysisoften assumes tive. It then focuses on the mechanisticepistemo-
no responses from competitorsand other play- logical assumptionsand theirimprintson the way
ers (Ghemawat,1991), and value chain analysis the perspectiveapproacheseach of the field's main
largelyrepresentssequentialinterdependence (Sta-concerns.
bell and Fjeldstad,1998). The sequentialflow of
the design model and the view of strategicchoice TOWARDSAN ORGANIC
also illustratedirectionality.Feedbackloops are PERSPECTIVE:PRIOR ORGANIC
either implicit, as from implementationto for- DEVELOPMENTS
mulation, or absent, as in the case of perfor-
mance influenceson other elements.Choice con- Alongsidethe progressmadein the fieldin particu-
stitutesa constrainedoptimizationproblemwhere lar contentareasgrew severalstreamsof ideasthat
the choice set is exogenous and given (Porter, questioned,complemented,and partiallyadapted
1991). the prevailingapproachesat a more fundamen-
tal level. Particularlychallengingandextendingin
Coupling within and across models: diffierentiated theirimpacton the core assumptionsof the mecha-
nistic perspectiveon time, flow, and coupling,and
Because of their disciplinaryand historicalroots, its predominatelyrationaland prescriptivetone,
the main models have been developed from the were researchon strategyprocesses,evolutionary
ground up as fragmentedmiddle-rangetheories and process models, models highlightinginterac-
ratherthan as lower-leveltheoriesstemmingfrom tion, and integrativeresearch.
an integratedoverviewof strategy.Moreover,each
of the researchprogramshas focused on a dif-
ferent element of the strategy picture: environ- Strategy processes
ment,resources,and organizationalstructure.This Complementingthe focus of mechanisticmodels
division of labor between programsof research on strategyas a fully blown andperfectlyrealized
has facilitatedscientific progress- but at a price 'product',grew streamsof researchthatfocusedon
(Schendel,1994). The SCP and the industrystruc- the processesof strategyformationand implemen-
ture model have been criticizedfor lackinga the- tation.These topics were by and large studiedby
ory of the firm's organization(Teece, 1984) and behavioraland organizationaltheory researchers
as generally ignoring the inner context of strat- and had a more descriptive and dynamic tone
egy (Pettigrew, 1987). The SSP has been criti- (Hirsch, Friedman,and Koza, 1990; Schendel,
cized for not payingattentionto competition(Gal- 1994;Mintzberget al., 1998). Complementingthe
braithand Nathanson,1978), andresearchin RBV SSP model,studiesof strategyimplementation and
has only recently begun to explore the mutual strategicchange have focused on the administra-
dependenceof internalresourcesand competition tive actions and processes involved in initiating,
(Levinthal and Myatt, 1994; Priem and Butler, developing,and institutionalizingstrategy-related
2001). By and large,theoreticaldifferentiationhas changes. Joining earlier organizationaldevelop-
considerablyhamperedthe recognitionof multiple ment approachesto managementof change (e.g.,
Copyright (C)2002 John Wiley & Sonst Ltd. Strat. Mgmt. J., 23: 561-594 (2Q02)
o
8 Panel A Panel B
_
or
3
Mechanistic
perspective Organic
pers
3
D
Context: stable and predictable environment, early stages of the field's Context: dynamic and uncertainenvironment, advan
development development
Ct
Key influences: Newtonian mechanics logic and ideas prevailing in the Key influences: new ideas in naturaland social scien
3
behavioral and economic disciplines at the field's formation (strategy process research, evolutionary and proces
r research) and selected key mechanistic ideas
What is strategy? A plan and a Static alignment A response to Restricted view Co-aligning planned Continuous Adap
posture constraints or actual co-alignment and infl
coordination of dynamic balance. env
goals and actions Includes states and
trajectories.Active
Explanatory SCP, SSP, RBV Static constructs. Linear flow. Single Disciplinary-based Organization- History and Multi
(causal) models Reductionism. causes and middle-range Environment- (co)evolution. Self- Co
Variance determinism theories. Key Strategy-Perfor- influences. Paths. Str
models (why concepts narrowly mance (OESP) Process models. How env
questions). defined and poorly and why questions. Per
Efficient history connected Imperfect adaptation ind
Ce Model of the Design model; Static constructs. Sequential activities of Separationof The organic model Continuous process. Feedb
:N strategic SWOT; One-time formulation and formulation and of strategic Process needs to be str
management Rational choice. Static implementation. implementation. management created and facilitated Dia
process Unitary alignment. A Internaland (i.e., recurrentmode). for
:N
Q
o
-
568 M. Farjoun
Lewin, 1951), works such as Quinn (1980), Pet- A relatedbranchof strategyinquiryhas high-
tigrew (1985), and Baden-Fullerand Stopford lighted the significantrole of strategicleadership
(1994) have dealt with the political, cultural,and in the strategicmanagementprocess (e.g., Ham-
psychologicalaspects of strategictransformation. brick and Mason, 1984). This streamof research
These and related studies have highlighted the has highlightedthe role of the CEO, board, and
difficultiesof realizing intentions,the interactive top managementin formulatingand implement-
natureof internalchange, and the importanceof ing strategies(e.g., McNultyandPettigrew,l999).
realistic and people-sensitivestrategic initiatives It served as a counterpartto the mechanisticand
(Ansoff, 1984). rationalviews of strategy making by highlight-
A more direct challenge to mechanisticideas ing humanengagementandmultiparty(e.g., board,
came from studiesof strategicchoice and strategy consultants)interactionin these processes,andthe
formation.Most researchunderlyingthe mecha- critical role of strategicleaders in mediatingthe
nistic view is guidedby the conceptof a decision- firm's internaland externalcontexts.
making process based on a plannedand rational A final and most significantdevelopmentalong
unitaryactormodel (Rumelt,Schendel,andTeece, these lines suggests that realized strategies can
1994). In this model, decision-makingprocesses be a result of prior plans but can also be an
are viewed as black boxes that have no conse- emergentstreamof actions recognizedas a pat-
quencesfor the decision itself (Simon, 1986). The tern after the fact (Mintzbergand Waters,1985).
choice is guided by the comparisonof discrete Ratherthenbeing distinctprocessesas depictedin
alternatives(Pettigrew,1992; March, 1994; Dosi the design approach,formulationand action (i.e.,
implementation)are better viewed as constantly
et al., 1997). By contrast,strategicdecision mak-
coevolving: following and affecting each other
ing and cognitive research(e.g., Mintzberg,Rais-
througha process of strategiclearningand con-
inghani,andTheoret,1976;RegerandHuff, 1993)
trol.Good strategiescan be formedanddiscovered
have suggested that the decision-makingprocess
by experimentingandobservingthe organization's
mattersto the plansanddecisionsreached(Simon, actionsratherthanby conductingformalanalyses
1986). Sociopoliticalinfluences such as negotia- of strengthsand opportunities(Mintzbergetal.,
tion and proceduraljustice, learning, and other 1998). In contextswhere plans provedinadequate
informationprocessing activities can affect the at times, such as in an increasinglyturbulentenvi-
kinds of strategiesand plans selected, and con- ronment,the conceptof emergentstrategyoffered
sequentlyalso affect performanceoutcomes(e.g., a viable alternative.
Hart and Banbury, 1994). Choices are viewed Ultimately,these various contributionsuncov-
as nested (e.g., March, 1994) and multistaged ered a persistenttension in the field: strategyis
(Brehmer,1992) ratherthan discrete, and choice an attemptto constructa rationaland predictable
sets can be modifiedendogenously(Kleindorfer, world in the face of a reality that quite often
Kunreuther,and Schoemaker,1993). resists it.
Otherstudieshave highlightedthe role of vision
and cognition, and of other cultural,social, and
political influences in strategy folllwation(e.g., Process approaches and models
Chakravarthyand Doz, 1992; Pettigrew, 1985). A secondorganicdevelopmentstems not so much
They emphasizedthe incrementalnatureof deci- from dealing with topics largely ignored by the
sion making,initiallyas a disjointedprocess(Lind- mechanisticapproaches,but ratherfrom a differ-
blom, 1959), and subsequentlyas a more inte- ent orientationto process and time. It particularly
gratedone (Quinn, 1980). Quinn's (1980) model includes the rise of new evolutionarymodels of
particularlyblendeddescriptiveideas of an incre- the strategyprocess, and the growing interestin
mental and nonlinear process with the logical viewing strategy in dynamic and process terms
and prescriptive marks of more rational mod- (Porter,1991; Melin, 1992; Academyof Manage-
els. Bower (1970) and Burgelman(1983) added ment, 1997). Inherentto models of evolutionary
a view of strategyformationas dialectic involv- processes is the idea that 'historymatters' (Nel-
ing rationalizationand structuringby top manage- son and Winter,1982; North, 1991; March,1994;
mentand strategicinitiativesof lower levels in the Arthur,1995). Some of these models suggest that
organization(Noda and Bower, 1996). particularpathsmay influenceoutcomesexamined
Copyright (D 2002 John Wiley & Sons, Ltd. Strat. Mgmt. J., 23: 561-594 (2002)
Towardsan OrganicPerspectiveon Strategy 569
at a particulartime, and that history does not loops havebeen addedin eachof the mainresearch
necessarilywork efficiently to producethe opti- programsof the mechanistic perspective. They
mal configurationsand alignmentssuggested by accounted for firm conduct and firm structure
the mechanisticviews. In contrastto the traditional effects on industrystructure(Caves etal., 1980;
modelof the environment(e.g., industrystructure), Caves, 1980;Porter,1991), highlightedthe effects
more attentionis given to marketprocesses(Nel- of organizationstructureon strategy (Hall and
son and Winter, 1982; Dosi etal., 1997). Static Saias, 1980), and recognizedthe effects of strat-
conceptionsof resourceshave been augmentedby egy and environmenton resources(Porter,1991;
models that highlight process and learning(e.g., Rumelt et al., 1994). These latter new linkages
McGrath,MacMillan, and Venkataraman,1995; in particularhave pointed to new connections
Teece et al., 1997). Similarly,studiesof organiza- across the original models. The focus on strate-
tional structurehave shiftedthe focus to its evolu- gic (external) interactionis also the main fea-
tionarynature(e.g., GalunicandEisenhardt,1995), ture of the game theoreticalmodels in the new
andto organizing the processualqualityof orga- Industrial-Organization (I-O) economics (Tirole,
nizationalsystems and participants(e.g., Weick, 1989; Brandenburger and Nalebuff, 1996). Mod-
1969; Pettigrewand Fenton,2001). els admittinginteractionview capabilities,com-
A relateddevelopmentis the adventof action- petition, and performanceas both affecting and
based notions of strategy.In the new evolution- being affectedby strategy,and are less concerned
ary and process models, strategy involves more with the differential contributionsof resources
than a static position in the marketplace(Inkpen and environmentto performance(e.g., Hender-
andChoudhury,1995), andincludespaths,moves, son and Mitchell, 1997). Differences between
and actions (Pettigrew, 1992). Models of strate- firms are traceablenot only to their contempo-
gic interaction(Chen, 1996), real options (e.g., raryconditions,but also to the historyof interac-
Bowman and Hurrey, 1993), commitment(Ghe- tions betweenthem and with otheractors(March,
mawat, 1991), and dynamic capabilities (Teece 1994).
et al., 1997) still see strategyas being subjectto Reciprocal causality has also penetratedthe
planning,but highlight its continuousand path- design model of the strategic managementpro-
dependentnature. By highlightingthe idea that cess. It is implicit in the notion of dynamic fit
firms need to conduct experimentsand not only (Itamiand Roehl, 1987). It is also evident in the
analysisandplanning,recentapproacheshave fur- dialectic view of formulationand implementation
ther promoted a more active view of strategy (Burgelman,1983; Mintzbergand Waters,1985).
(e.g., Miller and Chen, 1996; Brown and Eisen- Finally,it is representedin the renewedinterestin
hardt,1998). internalfirmattributes,such as organizationstruc-
Process models and designs have moved the ture, culture,and decisionprocesses,as important
focus from what determinesstrategyand perfor- influenceson, ratherthan derivativesof, strategy
mance to how they are determined(Mohr, 1982). formulation(Barneyand Zajac, 1994).
The new models do not necessarilyrejectthe idea
of steady states and strategicpositions but rather
seek to explain firm success and failureby look- Integrative works
ing at historicaldevelopments,and observingthe A final set of organicdevelopmentshas helped to
pace and path of change (Hodgson, 1993; Bar- counteractthe growingproliferationof alternative
nett and Burgelman,1996). They examine how views and approachesto strategy,and to emulate
initialconditions,timing,managerialchoices,deci- earlier works that provided a more holistic pic-
sive moments,learning,and path-dependentpro- tureof strategy(e.g., Chandler,1962). In addition
cesses enable and constraincurrentstates and in to the integrationgainedby the increasedrecogni-
turn provide platforms for future developments tion of reciprocalcausation,integrativeworkshave
(Doz, 1996;Mitchell, 1989;LiebermanandMont- offeredmore eclectic views of concepts and phe-
gomery, 1998). nomena,linkedpreviouslydisconnectedconstructs
and levels of analysis,andattemptedto furtherthe
Interaction bridgingof fragmentedmodels.
With the growing appreciationof interactionand Examples of such integrative work are the
reciprocalcausation of key constructs,feedback developmentof comprehensivemodelsof business
Copyright (D 2002 John Wiley & Sons, Ltd. Strat. Mgmt. J.. 23: 561-594 (2002)
570 M. Farjoun
environment.The firm's strategyco-aligns it with chain, higher levels in the hierarchychange less
the environmentby building on and modifying frequently.Theyprovidedirection,integration,and
the firm'sinternalattributesand forces to respond consistencyfor lowerlevels, whichconstitutemore
to, and influence, environmentalconditions and detailedmeansand actionsfor reachingends. Yet,
developments.In short, strategyis co-aligningor despite this hierarchy,the relationshipbetween
adaptivecoordination.This definitionestablishes strategyand tactics is dialecticalratherthan lin-
three interrelatedpoints: strategyemphasizesthe ear: availablemeans constrainstrategy(Harkabi,
firm'sbehaviorover time andincludesmajorgoals 1997) and lower-level managerialinitiativescan
and actions;it includescoordinationin space and converge into and shape higher-level strategies
time, of which planned coordinationis just one (Bower, 1970; Burgelman,1983).8
special case; and it deals with adaptation,which
includes both respondingto and influencingthe Plannedand actual coordination
environment.Each of these points is elaborated
below. Coordinationis a term used to distinguishstrat-
egy from random behaviors and completely
autonomousactions(e.g., Quinn, 1980;MacCrim-
Goals and actions mon, 1993). Strategycoordinatesgoals andmeans,
Strategyincludes both goals and actions (Chan- internal resources and administrativeinfrastruc-
dler, 1962; Andrews, 1971; Porter, 1980). Goals ture, specific courses of actions, and internaland
'state what is to be achieved and when results external aspects of managing change. A firm's
are to be accomplished,but do not state how coordinatedaction (i.e., realized strategy) can
the results are to be achieved' (Quinn, 1980). be based on a mix of coordinatingmechanisms
Actions are a general label for bundles, sets, (Thompson,1967). It can be recognizedretrospec-
or sequencesof resourcedeployments,initiatives, tively as a patternin a streamof actions(Andrews,
responses,moves, deals, investments,and devel- 1971; Quinn, 1980; Mintzbergand Waters,1985).
opments.They include firm 'conduct'or external Coordinatedaction can be guided by a plan (i.e.,
actions as viewed in the intendedstrategy)in which long-termgoals, inten-
(i.e., interorganizational)
SCP and in the new industrialorganizationlit- tions, and means are specifiedpriorto actions. It
erature(e.g., Shapiro, 1989), political and legal can be centralizedand stem from core manage-
actions,and majorinternaladministrativeactions. rial values or from a guiding sense of purpose.
This part of the definitionemphasizes what the Alternatively,it can be based on improvisation,
firmdoes over time: its actionsand behaviors. mutualadjustmentto internaland externaldevel-
Goalsandactionscorrespondto threetraditional opments, or the (unexpected)interactionof agents
elementsof strategycontent(i.e., strategicchoice): (e.g., individuals) respondingto simple rules.9
goals (e.g., vision), postures (e.g., scope or com- Strategy also includes both the firm's loca-
petitiveposition),andmoves (e.g., joint ventures). tion and direction within the environment.Spa-
These elements constitutea means-ends hierar- tial coordination, or strategy states, and tempo-
ral coordination, or strategy paths, are therefore
chy (Simon, 1976), in which posturesare inter-
complementaryfacets. Strategystates (i.e., pos-
mediate goals coordinatedby higher-levelgoals
tures) representa view of the firm's coordinated
(e.g., profitability)and major policies that affect
the firm's overall directionand viability (Quinn,
1980). Postures,in turn, guide lower-level poli- us to view strategyalso in relationto otherpotentiallyrelated
strategies.
cies and actions, such as new productdevelop- 8 We see the idea that goals alwaysdictateeverythingelse as
ment and human resource management(Porter, misguided.Rather,in some circumstances,intentionscan be
1980). Specific moves are meansto achieve goals more malleablethanresourcestocks or environmentalcontin-
we view goalsnot only as constraintson
Consequently,
directly or indirectlythroughthe creation,suste- gencies.
subsequentdecisionsandstrategiesbutalso as variables.
nance,and changeof postures,or throughchanges 9 Wepreferto emphasizecoordinationandintegrationratherthan
in the firm's resourcemix.7 In this means-ends patternas a distinguishingcharacteristicof strategy.Patterns
in action can generally result from three sources: random
action,accumulation path-dependent,
of incremental, andlocally
7The hierarchicalandrecursivenatureof strategyimpliesthata adaptiveindividualsteps(suchas experiments),or granddesign.
strategycan be viewedas a partof anotherstrategy,as a stand- In our view, a patterncreatedby randomactions,even one that
aloneconcept,or as includingotherstrategies.Thismayrequire helpsthe firmadapt,does not constitutea strategy.
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572 M. Farjoun
resource deploymentsand its state of alignment content (goals and actions), mode of behavior
with the environmentfrozen at a point in time. (coordinated), and context (adaptation).Goals
Strategypaths andtrajectoriesrepresentthe devel- and actions define what is included in strategy.
opmentover time of coordinatedactionsequences Coordinationdistinguishes strategy from other
or moves. Both states (e.g., a firm's international
noncoordinatedbehaviors even those that are
diversityposture)and paths(e.g., a firm'sinterna-adaptive yet allows for multiple forms of
tionalizationpath) are a confluenceof the firm's coordinationto be included. Lastly, adaptation
designedand emergentstrategies. suggests that not all coordinatedbehaviors are
included (Meyer, 1991). It therefore provides
Continuousco-alignment external anchoring to otherwise closed-system
forms of coordination.
The firm'sinternallycoordinatedgoals andactions The definition also blends mechanistic and
are anchored in its continuous co-alignment organicideas. It includesmechanisticconceptions
with its environment(Thompson, 1967; Porter, of strategy as postures, states, and plans.
1991). Co-alignmentis viewed both as a process However, by integrating organic ideas, such
and as a relatively constant and superordinate as emergent strategy, it portrays strategy as
goal, coordinatingother intermediategoals and less rigid, linear, static, individualistic, and
lower-level actions, but not necessarily as an prospective.The definitionfurtherutilizesthethree
outcome obtained. Co-alignment is sustained definingcharacteristicsof the organicperspective.
through actions aimed at creating, (re)defining Particularly,it emphasizes incessant adaptation
and integratingthe firm's domains, throughthe and temporal and emergent coordination;it is
firm's navigationand (re)positioningwithin each interactive and emphasizesmutual and dialectic
domain, and through changes in the firm's influences;and it integrates externaland internal
resource mix, which supports,and is influenced actions,multiplecoordinationmodes and multiple
by, the firm's domain and navigationstrategies. strategylevels.l°
In contrast to steady-state alignment, the co-
alignment process is ongoing and dynamic and
consistsof a seriesof ever-changinggames(Porter, The OESP explanatory model
1991).
Key to the notion of co-alignmentis the idea The second pillar of the organicperspective,and
of mutual influence.The firm both adaptsto its parallelto the mechanisticperspective's maintheo-
context, and at times adapts the context to it reticalmodels,is the Organization-Environment-
(Pfeffer and Salancick, 1978; Bourgeois, 1984; Strategy-Performance(OESP) model, a meta-
Itami and Roehl, 1987; Porter, 1991). The firm theoreticalframework.The purposeof the model
needs to manage that is selectively identify, is to organizeandsynthesizeexistingmiddle-range
respond to, and influence, internaland external theoretical models and to stimulate the devel-
constraints historical,organizational,and envi- opment of new ones. In addition, the model,
ronmentalactors, attributes,forces, and develop- describedin Figure 1, aims to inform and rein-
ments which define and limit for a meaningful force analyticmodelsof strategicmanagementand
period of time what it can successfully achieve choice. We next describethe majorconstructsin
(Pettigrew, 1987; Ghemawat, 1991). It needs to the OESP model, their key relationships,and the
strikea dynamicbalance in allocatingits resources main implicationsof the model.
between responsive and defensive actions, and
more entrepreneurialones such as innovating,
influencingsources of uncertainty(e.g., govern- Major constructs in the OESPmodel
ment regulations),and changing the rules of the In additionto the already-defined conceptof strat-
game (Brandenburger and Nalebuff, 1996). egy, the othermajorconstructsin the OESP model
ow
5 . Firm Strategy .
. XI .
g The FIrm'scoordinated _ .
o
majorgoals and actions, in w :
3
FirmOrganization * time and space, that *' *
_.
t h) * continuouslyco-align the ^ t
r HIrm wlth ItSenvlronment er!
Resources(and technology): < 9 *9999999999999999999999FJ
Ct
o resources,relationships,worl
k-flow _ v .
J
technology. X. X w
r
L Administrativeand social St
Organizationalstructureand
processes (strategymaking, \ FirmPerformance* 4 g
organizing,strategicleaders
processing,etc.).
*- tor r_alinrormt bv k)
J
_______________ KeContributions
l | _________________ 4 _____ ________________________________________s___________ |
Process models
ch
-
I
D Figure 1. The Organization-Environment-Strategy-Performance(OESP) mode! Key contributionsof the mechanistic and or
- s
- /
574 M. Farjoun
actlvltles.
.
Copyright t 2002 John Wiley & Sons, Ltd. Strat. Mgmt. J., 23: 561-594 (2002)
576 M. Farjoun
Copyright (C)2002 John Wiley & Sons, Ltd. Slral. Mgml. J., 23: 561-594 (2002
578 M. Farjoun
of the SCP model (E, S, and P in our model). triggerresponsesfrom other actorsthat affect the
Takenalone, the SCP mainly focuses on a single firm's performanceand are themselves products
industryandthereforeon business-levelstrategies. of historical and contextual influences and tra-
By contrast,the inclusion of organizationin the jectories. Moreover, to a large extent the real-
model helps view firm-specificresources as not ized strategiesof Chandler'sfourfocal firmswere
only alternativesources of business unit perfor- uniquein their respectiveindustriesand potential
mance but also as potential means to affect the sources of unique competitivecapabilities.Nev-
choice of potential environments.Consequently, ertheless,therewere differenttrajectoriesthat led
by accommodatingmultipleproductor geographic to a similarstructuralsolution,and once in place
markets (i.e., environments)the model can also imitationpotentiallyerodedthe benefitsof distinc-
deal with corporate-level issues, such as location tiveness. The OESP model's synthesisand exten-
choices and global coordination. sion of individualorganicdevelopmentsportraysa
A fourthandrelatedfeatureof the OESPmodel more complex and rich pictureof strategyand its
is its accommodationof interactions.The model relationshipswith organization,environmentand
suggests that performancecan be influencedby performance,and enables the generationof new
interactionsbetween strategy, environment,and relationshipsand insights.
organizationthat are remote from performance
in time and in the causal chain (e.g., Henderson
and Mitchell, 1997). For example, the firm's The organic model of the strategic
current strategy may be a result of its past management process
performance,which in turn was determinedby
past statesandpathsof the firm'sorganizationand The thirdand final pillar of the organicperspec-
environment,which in turn co-determinedeach tive is an organicmodel of strategicmanagement.
otherin the past (e.g., Webband Pettigrew,1999). Based on our concept of strategyand the OESP
Alternatively, past strategy may have created model, the organic model revisits and extends
a favorable environment that enables current the traditionaldesign model.l5Strategicmanage-
strategies. ment is defined here as the superordinateand
To furtherillustratethe applicabilityanddistinc- continuousorganizationalprocessfor maintaining
tiveness of the OESP model, we chose Chand- and improvingthefirm's performanceby manag-
ler's ( 1962) 'Strategy and Structure'study and ing, that is, enabling,formulating,and realizing,
some of the subsequentstudies it inspired(e.g., its strategies.In this definition,strategicmanage-
Amburgeyand Dacin, 1994). The original study
ment is viewed as a process,a progression,which
is important,widely recognizedand containsrich
includesthe sequenceof events andactivitiesover
evidence. However,the main reasonfor its selec-
time (Pettigrew, 1992; Van de Ven and Poole,
tion is that the dominantview expressedthrough-
1995). We view strategicmanagementas consist-
out the study, as well the commonway in which
it has been subsequentlyinterpreted,are in the ing of a one-timemode dealing with a particu-
spirit of the mechanisticperspective.Highlight- lar strategyor a single strategicdecision and a
ing the less familiarorganicaspectsof the study, recurrentmode dealingwith a continuousstream
containedin the originalnarrativeand theoretical of strategiesand decisions. It is inherentlypre-
propositionsand in subsequentstudies, serves to scriptive:it deals with those aspects that can be
providedifferentand complementarylenses. Sup- shaped by managerialinitiatives. Figure2 pro-
plementingFigure 1, the Appendixlists the main vides a summaryform of the elements and flow
aspects of the mechanisticperspectivestressedin of the model. Figure3 de-aggregatesthe organic
the study and provides illustrationsfor each of modelof strategicmanagementandlists its distinct
the distinctive features of the OESPmodel. As emphases.
the Appendixshows, the OESPprovidesa more
dynamic,integrated,and interactiveview thanthe
one drawn from a mechanisticperspective.For '5Althoughwe describea generalmodel, we recognizethat
example, it drives home the point that firm coor- differentorganizational,national,and industrialcontextsmay
call for differentkindsof strategicmanagement processesand
dinated actions (e.g., structuraladjustment)are thereforemaychangetherelativeweightof someof theelements
not instantaneouslyand flawlessly achieved;they (e.g., plannedvs. emergentstrategy).
Copyright (C)2002 John Wiley & Sons, Ltd. Strat. Mgmt. J., 23:561-594(2002
Towardsan OrganicPerspectiveon Strategy 579
* Strategyincludes goals,
postures and moves
vlslon
. , . . ,
.
.
q
5
_F
Internal
influencesupon f22
o
and during
o
strategy
'_
formulation
oD5
Selectinga
V) strategythat
0:
upon realization
r provldesa
L
matchbetween
organization
and environment
Internal
considerations
and influences
(interactions)
upon and during
strategy
realization
(implementation _
and emergence)
Strategicmanagementas a
capabilityand as facilitating
and improvingtheformulation,
emergenceand
implementabilityof strategies
Feedback,
cT
revl.slon,
learning,control
Linkagesemphasizedin the design model Addedempha.sesin the organic model 8 Strategyincludesgoals, posturesand m
Primary: * * tD
-
Copyright t 2002 John Wiley & Sons, Ltd. Strat. Mgmt. J.. 23: 561-594 (2002)
Towardsan Organic Perspective on Strategy 585
beginningshave been made by options thinking, benefit from using multiple time frames, com-
new analytic models that can help strategic parative(historical)research,simultaneousexplo-
managers better deal with uncertainty, rapid rationof differentlevels of analysis,and multiple
change, and turning points are badly needed. theoreticallenses. Clearly,such a researchagenda
Traditionalanalytic tools can also be improved. is more demandingand thereforeit may be better
For example, models of internalanalysis should approachedin researchprograms,in large, book-
move beyond the analysis of resources and length studies, and in periodical reviews rather
activities to include other organizationalaspects, than in the usual single-studyformat.However,it
and to highlight the role of organization as is likely to betterplacetheoreticalideas andempir-
a context, process, and product of strategy. ical observationsin a broaderand more temporal
Similarly,models that integratesociological and context.
economicaspectsof the environment,or thatmove
beyond traditionallife-cycle conceptions of its Historyandprocess research
evolution,are lacking.Moreover,althoughSWOT
The organic perspectivehighlights the historical
analysisis still useful, it can no longer serve as a
primarymodel to guide strategicchoice (Hill and dimension of strategy-relatedphenomena. As
Westbrook,1997). illustratedin Chandler's(1962) research,the nature
What general directions for a new research of historicalperspectivemakesit morelikely to be
agenda for the field of strategy can be derived eclectic, integrative,and sensitiveto time, interac-
from the organic perspective?We divide these tion, context,and multiplelevels of analysis.Case
into conductand substanceimplicationswhile rec- historiesof firms and industriesthat were instru-
ognizing that some implicationscontain a little mentalto the field's early developmentare some-
of both. times labeled 'prescientific'(e.g., Rumelt etal.,
1994). However, a renewed interestin historical
and clinical researchis not a sign of regression
Conduct implications but of the field's maturity.The benefitsof such an
approachare too great to be ignoredby strategy
Variableresolution researchers.New historicalresearchis likely to be
differentfrom earlierwork since it can now build
A betterunderstanding of strategy-relatedphenom- on the cumulativeprogressmadein the field. First,
ena is unlikely to be gained by attendingto a it can use both qualitativeand dynamicstatistical
single theoreticalperspective, level of analysis, modeling. Second, it can use a better-developed
context, or time frame. Thus for example, the theoreticalbase to frame the analyses. Third, it
factors associated with the success of a single can be moresensitiveto readinghistoryforwardas
strategicdecision, the tenure of a specific exec- opposedto retrospectively,thus providinga better
utive team, or firm survival across several gen- appreciationof how firmsandmanagerscope with
erationsof technologicalbreakthroughscan vary uncertainty,multiple trajectories,lags, and dead
widely (see Zaheer, Albert, and Zaheer, 1999, ends. Fourth,it can examine the developmentof
on the issue of time scale). Furthermore,what firms,industries,andstrategiesbeforetheybecome
may be optimal at a collective level may not full-blownentities and thus add more knowledge
be optimal at the unit level. Progress is more on their early emergence,variation,and selection
likely to be made by using researchwith different (see, for example, Aldrich, 1999). A revival of
degrees of resolution. By employing both fine- 'neo-historical'researchin strategymay thus ben-
grainedandcoarse-grainedapproachesalternately, efit from the path-dependent intellectualevolution
a more holistic appreciationof strategyissues can of the field itself.
emerge. The content and spirit of the organic perspec-
Much progress has been made in the study tive requirethe use of longitudinalresearchandof
of highly specific phenomena such as acquisi- less acceptedmethodssuch as sequencemodeling,
tions and multipointcompetition.Attentionat the ethnography,and case histories. Cross-sectional
level of individualsand to micro phenomenacan studies can be useful but they cannot remain
also make new and importantadvances. At the the predominantmode of analysis (Bowen and
other end of the spectrum,strategyresearchcan Wiersema,1999). Processmodels look at different
Copyright i) 2002 John Wiley & Sons, Ltd. Strat. Mgmt. J., 23: 561-594 (2002)
586 M. Farjoun
issues than variancemodels and thereforepoten- the search for common ground that combines
tially produce different observations. Although strengthsand minimizes weaknesses, and in the
therearedifferentopinionswith regardto the need case of dialectics the use of differencesand ten-
to integratevarianceand processapproaches(e.g., sions betweencompetingperspectivesto produce
Langley, 1999), we certainlysee the use of pro- new understandings(Morgan, 1983: 377-382).
cess models as appealingin severalrespects.First, One illustrationthat invites cross-fertilizationis
by disaggregatingtime, they introduceuniquepos- the theme of integratedmanagementof change.
sibilities for path and sequence to affect final Insights gained from behavioral models about
outcomes. Second, process models may be bet- how to initiate and institutionalizechange can
ter sultes to galn lnslgzts lnto ( uratlon varl- be synthesizedwith those coming from economic
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.
< MechanisticThemes
O The study connects the main constructsof interestto strategyresearchin the following (primarilylinear) wa
= the environment(E) and the resourcesof the organization(O), influencethe strategy(S) chosen and this in t
c. structure(O). Subsequently,the evolutionof the environmentand resourcesbringsabouta new strategyand a n
Chandler'sbook (p. 314), strategy-structure (S-O) mismatchresultsin inefficiency(P). This proposition,as well
link, were subsequentlyexaminedby others (e.g., Rumelt(1974)). Furthermore,firms in some industrieswe
others(E-S) or adoptcertainstructures(E-O)(Williamson,1975:141).Chandleralso tends to view strategyas a
strategicmanagementprocessas a formaland analyticalprocessdirectedby a dominantleader.These aspect
the case of Du Pont's diversificationand structuredecisions(p. 80) and in the organizationstudyat GM.
Organic Themes and Distinctive Features of the OESP model
OESP: Views of strategy and * In StandardOil, structuraladjustmentand strategic expansion came in a more
Organic strategy making: way. Change did not follow an explicitly defined plan (p. 172). Emergent stra
Themes Strategy as interactive, experiences with prior anti-competitionstrategies showed their limitations and
dynamic, learned, (p. 33). Evolutionarystructuralchange. Endogenous growth creates unexpecte
integrative, inventive, and * Sears' revo]utionarystrategy in direct retailing (p. 233).
emergent. * Goals-Strategy-Structurecoordination;strategy adaptationto changes in econo
Strategy as adaptive * Individuals (e.g., consultants) and strategic leaders play a central role in strate
coorolnatlon.
. * .
(p. 283).
Strategy making as social, * Benchmarkingand learning from other firms (p. 95).
intuitive, interpretive,and * Executives' sense making of recent performanceproblems (p. 98).
continuous. * Conflict in decision making at Sears (p. 247).
* Multi-divisional structurefacilitates strategy formation.
New linkages in SCP, * Strategy grows out of structureand in turn leads to its modification (Hall and
SSP, RBV * Strategy affected by those in power and their perceptions (Fligstein, 1991).
Organic developments * Process of structuralchange-internal conflicts and politics, study committees,
(s.d.m, s. Ieadership, (p. 303).
managementof change, * Competitive imitation and responses to structuralchange (p. 380).
strategic interaction). * The essential reshaping of administrativestructurenearly always had to wait f
(p. 381). Family held firms were slower to change both structureand strategy.
c
.
(Continued)
5