Strategic orientation, organisational structure, and the associated effects on performance
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Larry P. Pleshko received his PhD from Florida State University. He specialises in marketing strategy research related to firm performance. He also investigates the area of consumer behaviour as it relates to marketing strategy. He has taught at universities in Australia, Saudi Arabia, the United Arab Emirates, the USA, Kuwait, and Jamaica. His previous work experience includes managerial and consulting positions, both in the USA and abroad.
Abstract The paper presents an investigation of the structural characteristics of firms’ strategic orientation (as conceptualised by Miles and Snow (1978)). The associated relationships to profitability and perceived market share are studied in financial services firms, specifically in credit unions. The author finds that most firms have a mixed structural form, with fewer firms being either highly structured or lowly structured. Defenders are more likely than expected to be of mixed structural form and less likely to be highly structured. Prospectors are more likely than expected to be highly structured. Analysers are more likely than expected to be highly structured. Reactors show little variation from the expected distribution. No interaction of structure and strategy is evident on either share or profits. The results do indicate that strategic orientation has an influence on perceived market share, but not profitability. Reactors are shown to have significantly smaller market shares than the Prospectors, Analysers, and Defenders. Also, Defenders are shown to have smaller shares than Prospectors. On the other hand, structural form is shown to have an influence on profitability. The less structured firms are shown to be more profitable than either the highly structured or mixed structure firms. It appears, at least in this sample, that organisational structure is more relevant to profitability, while organisational strategy is more relevant to market share. Journal of Financial Services Marketing (2007) 12, 53–64. doi:10.1057/palgrave.fsm.4760061 Keywords Credit unions, Miles and Snow, performance, financial services, organisational structure, organisational strategy
INTRODUCTION Business strategy has been discussed from many differing perspectives.1–3 A common and useful conceptualisation put forward by Miles and Snow4 focuses on a firm’s strategic environmental adaptation or aggressiveness towards the market. Much research over the years has investigated differences among the Correspondence: College of Business Administration, Kuwait University, P.O. Box 5486, Safat Code 13055, Kuwait Tel: + 965-4984017; e-mail: [email protected]
© 2007 Palgrave Macmillan Ltd 1363-0539 $30.00
Vol. 12, 1 53–64
four strategic types regarding a variety of internal factors, including innovation, management characteristics, organisational performance, and organisational design. The outlined Defender, Analyser, Reactor, and Prospector firms are suggested to be distinct in their actions, with each strategic group enacting consistent decisions and activities across a variety of organisational areas.5–9 Recen
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