The effect of uncertainty on the formulation of strategies: a study of selected Indian organizations
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The effect of uncertainty on the formulation of strategies: a study of selected Indian organizations Amit Kundu1 · Dev Narayan Sarkar2 · Arabinda Bhattacharya3 Received: 5 May 2020 / Accepted: 2 October 2020 © Springer Nature Switzerland AG 2020
Abstract An organization’s performance is often claimed to be associated with the business environment, as well as with the organization’s strategic response to such an environment. If the environment of an organization is adverse, it may face challenges in getting its required inputs, and in adding value to the society. The objective of the present study is to propose a measure of uncertainty based on a survey of executives from randomly selected companies and present several implications for practice and theory. The present research follows a multi-stage sampling process. In the first stage, a complete list of sectors was taken from CMIE, and four sectors were randomly selected (simple random sampling) from the list. The selected sectors are as follows: chemical, petro-chemical industry, agricultural-related industry, and food processing industry. The second stage was also a simple random sampling process. The third stage was a sort of convenience sampling since the top management of the selected organizations proposed the names of the executives to be surveyed. A firm’s performance seems to be associated to the business environment, as well as, the organization’s strategic response to such an environment. There exists a dynamic relationship between a firm and its business environment. Several limitations and future courses of studies are also presented. Keywords Uncertainty measure · Internal uncertainty · External uncertainty · Strategy · Chemical sector · India * Amit Kundu [email protected] Dev Narayan Sarkar [email protected] Arabinda Bhattacharya [email protected] 1
School of Management, Techno India Group, DN 25, Sector V, Salt Lake, Kolkata, West Bengal 700 091, India
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PepsiCo India, 4A, Akash Tower, 781 Anandapur, Kolkata, West Bengal 700 107, India
3
Department of Business Management, University of Calcutta, 1, Reformatory Street, Kolkata, West Bengal 700 027, India
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Introduction Environmental uncertainty has often been claimed to have a negative impact on firm financial performance (Singh 2020). A firm’s performance seems to be associated to the business environment, as well as, the organization’s strategic response to such an environment (Ibrahim and Primiana 2015). Such an operating environment is often said to be the business ecosystem (Bhagavatula et al. 2017). Eker and Eker (2019) suggested that higher differentiation strategy, management control system, the three-way interaction between environmental uncertainty, differentiation strategy and management control system often lead to higher firm performance. The networking behavior of executives also needs to be tailored to the environmental uncertainty to achieve higher performance (Srivastava et al. 2018). Arie
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