Responding to Uncertain Conditions: New Research on Strategic Adaptation

Under currently uncertain and fast-changing environments, it is important for firms to supplement their main strategy with alternative ones so that they can quickly change courses of actions. Strategic flexibility is thus an important factor for the viability and success of firms. Although previous research has emphasized the need for strategic flexibility, some firms are reluctant to do so since it requires high investments. Existing studies on strategic flexibility have emerged from various disciplines and drawn on diverse theoretical perspectives. Due to the increasing importance of strategic flexibility, this chapter reviews and summarizes existing studies on strategic flexibility based on the applications of strategic flexibility in various business disciplines, including management and strategy, business entrepreneurship, and marketing. The authors also summarize different theoretical perspectives, including upper echelons theory, resource-based view theory, and dynamic capabilities theory, as well as their limitations.

In view of a disruptive environment, the authors consider theories that explain left-skewed performance outcomes and inverse risk–return relationships where some rationales imply causal dependencies with slightly differing outcomes while others refer to spurious artifacts. These literatures are briefly outlined and dynamic response capabilities introduced as an alternative perspective expressed as strategic responsiveness where commonly observed performance outcomes derive from heterogeneous response capabilities among firms that compete in dynamic environments. Financial performance outcomes are analyzed empirically based on a comprehensive corporate dataset where computational simulations of adaptive strategy making among firms generate comparable outcomes from a simple strategic responsiveness model. The findings demonstrate how diverse adaptive strategy-making processes can generate a substantial part, if not all, of the commonly observed artifacts of firm financial performance. The implications of these results are discussed pointing to propitious approaches of analyzing the impact of dynamic adaptive strategies.

The abundance of technological innovations has dramatically increased the prominence of digital transformation processes in many organizations and sectors. At the present time, digital transformation is first and foremost depicted in the literature as a strategy carefully elaborated and deployed by diligent executives. This stands in sharp contrast with contemporary organizational theory, and most especially the strategy-as-practice research stream, which has increasingly underlined the capability of middle managers to weigh upon strategizing processes. An empirical inquiry conducted in a major aeronautics company reveals that digital transformation can be largely driven by middle managers in charge of specific technological projects, who operate in the absence of a well-defined, overarching strategy. Drawing on the sociology of translation, the chapter identifies four tactics used by middle managers to ensure that their projects make it to the strategic agenda of the firm. Ultimately, the findings suggest that digital transformation processes cannot be solely understood as strategic endeavors, and can result from the addition of disjointed technological projects driven by middle managers instead.

Strategic adaptation in complex environments with frequent changes must balance the search for innovative opportunistic ventures and conscious pursuit to achieve established goals and outcomes. This creates a tension between attempted efficiency gains from tight strategic controls that avoid diversion of corporate resources and the facilitation of dispersed initiatives in search for business opportunities. To assess this conundrum, the authors present an interactive strategic control model that combines planning and participative strategy-making with interactive control processes. This combination of management practices arguably creates an adaptive system that drives the upside performance outcomes from a guided adaptation of opportunistic insights. Various hypotheses are developed and tested based on survey data from among the 500 largest firms in Denmark. The results suggest a direct relationship between interactive controls, strategic planning, and participative leadership on upside performance outcomes. Moreover, the positive effect from interactive controls on the upside potential is enhanced by participative decisions.

An organization’s ability to navigate uncertain conditions hinges on its members generating timely and productive responses to ongoing changes in their local task environments. Since less healthy employees are less productive, organizations stand to gain from fostering their physical and mental health. Little knowledge, however, exists as to whether and how an organizations’ internal control systems affect employee health. In the following the authors, therefore, shed light at this relation drawing on an empirical study with 179 employees. Results suggest that the design of control systems has an impact on employee health. This has important implications for ongoing theory-building efforts on the effects of organizations’ internal control systems and for business practice.

By adopting relational practice theory on a case study of a Finnish software company, a solution provider for the public healthcare sector, this study examines how the nexus of practices, and their socio-historical premises, enable and constrain intentional strategizing in an organization about to survive the ten-year Death Valley phase. The strategy literature adopting a practice lens has been focused on the rationality of human actions or implicated that all practices are shaped by the historical socio-cultural background of the organization. As a consequence, the practice-based strategy literature tends to overemphasize the rationality of human action or reduces human agency to an extent where the autonomy of actors becomes problematized. These practice-based strategy views circumscribe relational agency as inherent in practice theory treating human agents as acting within a nexus of practices but also consider them as being free to make choices. Findings suggest that even during intentional strategizing, managers are not fully autonomous in their choices as practices constrain possibilities and set boundaries for strategic activities. Prior commitments determine the possible strategic themes to pursue. Within the boundaries of these strategic themes, strategic activities emerge where the strategic activities are shaped by a nexus of practices within and around the organizational boundaries. Depending on the complexity of mutually dependent entertwined strategic activities, they can be perceived as being beyond management control, or considered strategically irrelevant, which influences the strategic direction in the face of uncertainty.

This study investigates what causes businesses to increase their environmental stewardship beyond the governmental standards. This “beyond compliance behavior” is examined by analyzing the influence of organizational slack and institutional pressures in the European paper and paperboard industry. Beyond compliance behavior is measured as the adoption of a sustainable forestry certificate issued by the Forest Stewardship Council (FSC). The longitudinal (10-year period) dataset consists of adoption events per company, their business characteristics and historic socio-economic data per region in the respective European countries. Examination was done by means of an event history analysis using the program “R.” The results show differences between antecedents of compliance and beyond compliance behavior. The authors discuss the results in the light of institutional and stakeholder theories. Due to institutional shifts in environmental demands, adoption of an FSC certificate has become an off-the-shelf compliance answer to legitimacy issues disguised as a progressive environmental stewardship program.

The case of Alpha, a group of small subsidiaries, confronted with a strong crisis following the implementation of an enterprise resource planning (ERP) in a context of financial crisis (Spanish subsidiaries) allows the authors to illustrate the dynamics of collective bricolage, from individual bricolage to intra-subsidiary bricolage and then inter-subsidiary bricolage, network and more globally a strategy of bricolage within the group. Would multi-level bricolage be a new way for companies facing more and more crises, scarcity of resources and uncertain environments?

The action research (AR) conducted by the ERP project manager – researcher – during two years (2012–2014) shows a dynamic that increases tenfold the potential of discovering at low-cost tinkered solutions that work, adapted to the specificities of the group. Bricolage includes the constitution of the repertoire of resources (material and immaterial resources and intimate knowledge of resources) and the art of bringing the different elements of the repertoire into dialogue (tests, permutations and substitutions) in order to find an arrangement that works despite limited resources (Lévi-Strauss, 1966). In order to combine the advantages of an ERP designed according to an engineer approach and the advantages of small subsidiaries (flexibility, reactivity and local adaptations) accustomed to “bricolage,” to make do with the means at hand, the group is gradually developing a “strategic bricolage” approach. This approach contributes to enriching the repertoires of resources and developing the capacity for dialogue between the elements of the different repertoires (individuals, subsidiaries, countries, activities, external network and group), which encourages the discovery of bricolage solutions that are difficult to imitate. The evaluation of the tinkered solutions at both the local and global levels allows the group to improve, enhance and disseminate them to all subsidiaries.

The relationship between stakeholders and organizations has been gaining more focus in strategic organizational management. The scenario of increased accountability required by society and by the competitive business environment itself demands ethical, fair, and sustainable practices from companies. In this sense, effective and fair stakeholder management becomes relevant. Thus, stakeholder theory proves to be a valid theoretical perspective for this challenge. In its conceptualization, stakeholder theory has pointed out different issues for strategic management practices, and how to treat the stakeholder fairly has been one of the concerns of the proponents of the theory (Bosse, Phillips, & Harrison, 2009). In this regard, principles of organizational justice have been incorporated into stakeholder management models. The authors argue that organizational justice, including its basic dimensions of distributive justice, procedural justice, and interactional justice, can positively impact the bottom line of organizations through synergy in value creation and by encouraging reciprocal behavior between the firm and stakeholders.

Socio-economic, health and environmental turbulences experienced during the past decades have caused major value chain disruptions, triggering multinational enterprises (MNEs) to rethink the footprints of their global operations and redesign for resilience. These developments have fueled a rapidly expanding scholarly literature on resilience. Yet, its conceptual understanding and practical utility remain highly fragmented, cross-disciplinarily disconnected and ambiguous. This study explores the intellectual structure of resilience research in business and management, relying on a systematic literature review approach based on bibliometric techniques and content analysis. A unique database consisting of 545 peer-reviewed articles published in 65 leading Academic Journal Guide (AJG) journals are analyzed. Based on the findings, three leading research communities dominate the resilience discussion in business and management. Moreover, the intellectual structure of the field through the most productive authors and top cited journal articles is discussed. Based on the results, five potential research avenues are suggested.