Leadership and Strategy

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    ______________________________________________________________________________Copyright 2004. La Chaire de management stratgique international Walter-J.Somers, HEC Montral. Tous droitsrservs pour tous pays. Toute traduction et toute reproduction sous quelque forme que ce soit est interdite. Les textespublis dans la srie Les Cahiers de la Chaire de management stratgique international W-J.- Somers nengagent que laresponsabilit de leurs auteurs. Distribu par la Chaire management stratgique international Walter-J.-Somers, HECMontral, 3000 chemin de la Cte-Sainte-Catherine, Montral, Qubec, H3T 2A7.

    Environment, Strategy, andLeadership Patterns as Determinantof Firm Performance: A Study ofCameroonian FirmsBy : Taeb Hafsi and Bernard Gauthier,

    Professeurs titulaires HEC MontralSeptember 2003Cahier de recherche : N 25-01

    ISSN: 1711-6309

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    Environment, strategy and leadership patterns as determinants of performance: A study of Cameroonian firms

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    ABSTRACT

    In this article, we use a unique set of microeconomic data on a relatively large sample ofCameroonian firms, gathered during the 1992-1995 period, to describe the nature of these firmsinstitutional and competitive environment, their strategic responses, and the characteristics of theirtop managers. Then we study the relationships that exist between performance of these firms, andthree sets of variables describing environment, strategy and leadership characteristics. We showthat there are clear firm behaviors that can be described by configurations of these variables, andsuch configurations generally explain performance. Important implications for both research andpractice are suggested.

    RSUM

    Dans cet article, nous utilisons un ensemble de donnes unique sur un grand chantillon defirmes camerounaises, assembl pendant la priode 1992-1995, pour dcrire la nature desenvironnements concurrentiel et institutionnel de ces firmes, leurs rponses stratgiques et lescaractristiques de leurs dirigeants. Nous tudions ensuite la relation qui existe entre laperformance des firmes et trois ensemble de variables dcrivant leurs environnements, leursstratgies et les caractristiques de leurs dirigeants. Nous montrons quil est possible de rvler descomportements reconnaissables partir de configurations des variables utilises. Et cescomportements expliquent la performance des firmes. Des consquences importantes en matire derecherche et de pratique de la gestion sont suggres.

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    Environment, strategy and leadership patterns as determinants of performance: A study of Cameroonian firms

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    Table of Contents

    ABSTRACT..................................................................................................................................................................... 1RSUM ........................................................................................................................................................................ 1

    INTRODUCTION............................................................................................................................................................. 2

    II. A THEORETICAL FRAMEWORK....................................................................................................................... 3

    ENVIRONMENT.............................................................................................................................................................. 4STRATEGY..................................................................................................................................................................... 5LEADERSHIP.................................................................................................................................................................. 7

    III. DATA AND METHODS ................................................................................................................................... 9

    1. THESAMPLE ......................................................................................................................................................... 9

    2. THEVARIABLES ................................................................................................................................................ 10ii. Strategy variables.............................................................................................................................................. 11iii. Entrepreneurial characteristics variables............... ........... .......... ........... .......... ........... .......... ........... .......... ..... 11Performance variables........................................................................................................................................... 11

    3. EMPIRICAL ANALYSES ........................................................................................................................................ 12

    IV. FACTOR ANALYSES: RESULTS AND CONCEPTUALIZATION................................................................... 14

    1. ENVIRONMENT FACTORS ................................................................................................................................... 142. STRATEGY FACTORS .......................................................................................................................................... 153. ENTREPRENEURIAL CHARACTERISTICS FACTORS ............................................................................................... 15

    V. REGRESSION ANALYSES: RESULTS AND CONCEPTUALIZATION..... ........... .......... ........... .......... .......... 17

    VI. DISCUSSION AND IMPLICATIONS FOR RESEARCH AND PRACTICE................................................ 20

    BIBLIOGRAPHY........................................................................................................................................................... 23

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    INTRODUCTION

    The three dimensions of environment, strategy and leadership are the basis of the dominantstrategic management framework (Schendel and Hofer, 1978). Based on Andrews (1987)sformalization of the concept of corporate strategy, the idea of strategic management emphasizesthe process by which the interaction and fit between environment, the organizations resourcesand choices, and the nature of leadership, in particular top managements values, lead to higherperformance. These dimensions may be seen as antecedents of performance. In the case ofdeveloping countries, can we expect the same relation ? In their study of management theoryand practice in developing countries, Kiggundu, Jorgensen and Hafsi (1983) suggested thatthose theories in which the organisation can behave as a closed system should apply to

    developing countries. Where the organisation cannot behave as a closed system, they found thatthere were significant differences with what happens in developed countries. As each ofstrategy, leadership and environment cannot be considered strictly internal to the firm, weshould expect differences.

    In developed countries, much research has been devoted to the bilateral relationshipsbetween performance and each of these strategy, leadership and environmental factors. Despitethorny methodological issues, related to our ability to build appropriate constructs and measurethem properly (Prescott & Vankatraman, 1990), the contingency theory, in particular, which positscongruence between environment and structure as a determinant of performance has been tested ina variety of situations and circumstances. The congruence of strategy, structure and environment

    has also received wide support in numerous circonstances (Rumelt, 1991; Prescott & Vankatraman,1990; Vankatraman and Grant, 1986; among many). Finally Porters early work (1980) haspopularized a number of strategies, which are supposed to lead to performance, while Miller (1996)and Hrebeniak and Joyce (1985) have suggested the conditions of environmental determinism andof strategic choice in which these strategies provide the best performance. Linking leadership toperformance has been more difficult to operationalize. Hambrick and Masons work (1984) hasprovided an important lead with the idea of relating demographic characteristics to performance,and has been joined by numerous followers (Geletkanycz & Hambrick, 1997; Finkelstein, Sydneyand Hambrick, D. C, 1995; Westphal & Zajac, 1995; Daily and Dalton, 1992; Reuber and Fisher,1992). Other significant work has found a fit between strategic choices and leadership profiles(Golden and Zajac, 2001; Michel and Hambrick, 1992; Zajac and Shortell, 1989; Fredrickson,

    J.W., D.C. Hambrick, S. Baumrin, 1988).

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    Although the importance of each of these factors on firm performance is widely recognized,rarely have all of environment, strategy and leadership characteristics been related, in a largesample test, to performance, though it has been discussed in case research (Andrews, 1987;Schendel and Hofer, 1978). Even more rarely has such a research been performed in a developingcountry setting (Hafsi and Farashahi, 2002; Hos