John Bryson and Lauren Hamilton Edwards
Strategic planning has become a fairly routine and common practice at all levels of government in the United States and elsewhere. It can be part of the broader practice of strategic management that links planning with implementation. Strategic planning can be applied to organizations, collaborations, functions (e.g., transportation or health), and to places ranging from local to national to transnational. Research results are somewhat mixed, but they generally show a positive relationship between strategic planning and improved organizational performance. Much has been learned about public-sector strategic planning over the past several decades but there is much that is not known.
There are a variety of approaches to strategic planning. Some are comprehensive process-oriented approaches (i.e., public-sector variants of the Harvard Policy Model, logical incrementalism, stakeholder management, and strategic management systems). Others are more narrowly focused process approaches that are in effect strategies (i.e., strategic negotiations, strategic issues management, and strategic planning as a framework for innovation). Finally, there are content-oriented approaches (i.e., portfolio analyses and competitive forces analysis).
The research on public-sector strategic planning has pursued a number of themes. The first concerns what strategic planning “is” theoretically and practically. The approaches mentioned above may be thought of as generic—their ostensive aspect—but they must be applied contingently and sensitively in practice—their performative aspect. Scholars vary in whether they conceptualize strategic planning in a generic or performative way. A second theme concerns attempts to understand whether and how strategic planning “works.” Not surprisingly, how strategic planning is conceptualized and operationalized affects the answers. A third theme focuses on outcomes of strategic planning. The outcomes studied typically have been performance-related, such as efficiency and effectiveness, but some studies focus on intermediate outcomes, such as participation and learning, and a small number focus on a broader range of public values, such as transparency or equity. A final theme looks at what contributes to strategic planning success. Factors related to success include effective leadership, organizational capacity and resources, and participation, among others.
A substantial research agenda remains. Public-sector strategic planning is not a single thing, but many things, and can be conceptualized in a variety of ways. Useful findings have come from each of these different conceptualizations through use of a variety of methodologies. This more open approach to research should continue. Given the increasing ubiquity of strategic planning across the globe, the additional insights this research approach can yield into exactly what works best, in which situations, and why, is likely to be helpful for advancing public purposes.
Kathryn Rudie Harrigan
Concerns regarding strategic flexibility arose from companies’ need to survive excess capacity and flagging sales in the face of previously unforeseen competitive conditions. Strategic flexibility became an organizational mandate for coping with changing competitive conditions and managers learned to plan for inevitable restructurings. They learned to reposition assets and capabilities to suit their firms’ new strategic aspirations by overcoming barriers to change. Core rigidities flared up in the form of legacy costs, regulatory constraints, political animosity, and social resistance to adjusting firms’ strategic postures; managers learned that their firms’ past strategic choices could later become barriers to adapting corporate strategy.
Managerial insights concerning how to modify firms’ resources changed the way in which they were subsequently regarded. Enterprises saw assets lose their relative productivity and value as mastery of specific knowledge become less germane to success. Managers recognized that their firms’ capabilities were mismatched to market or value-chain relationships. They struggled to adapt by overcoming barriers to change.
Flexibility problems were inevitable. Even if competitive conditions were not impacted by exogenous change forces, sustaining advantage in a steady-state competitive arena became difficult; sustaining advantage in dynamic arenas became nearly impossible. Confronted with the difficulties of changing strategic postures, market orientations, and overall cost competitiveness, managers embraced the need to combat organizational rigidity in all aspects of their firms’ operations. Strategic flexibility affected enterprise assets, capabilities, and potential relationships with other parties within firms’ value-creating ecosystems; the need for strategic flexibility influenced investment choices made to escape organizational rigidity, capability traps and other forms of previously unrecognized resource inflexibility.
Where entry barriers once protected a firm’s strategic posture, flexibility issues arose when the need for endogenous changes occurred. The temporary protection afforded by imitation barriers slowed an organization’s responsiveness to changing its strategy imperatives—making the firm rigid when adaptiveness was needed instead. A firm’s own inertia to change sometimes created mobility barriers that had to be overcome when hypercompetitive conditions arose in their traditional market arenas and forced firms to change how they competed.
Where exogenous changes drove competitive conditions to become more volatile, attainment of strategic flexibility mandated the need to downsize the scope of a firm’s activities, shut down facilities, prune product lines, reduce headcount, and eliminate redundancies—as typically occurred during an organizational turnaround—while simultaneously increasing the scope of external activities performed by an enterprise’s value-adding network of suppliers, distributors, value-added resellers, complementors, and alliance partners, among others. Such structural value-chain changes typically exacerbated pressures on the firm’s internal organization to search more broadly for value-adding innovations to renew products and processes to keep up with the accelerated pace of industry change. Exploratory processes of self-renewal forced confrontations with mobility or exit barriers that were long tolerated by firms in order to avoid coping with the painful process of their ultimate elimination. The sometimes surprising efforts by firms to avoid inflexibility included changes in the nature of firms’ asset investments, value-chain relationships, and human-resource practices. Strategic flexibility concerns often trumped the traditional strengths accorded to resource-based strategies.
Donald D. Bergh
Growth strategies have long been a priority for executive leadership. However, growth can also create problems. Leaders may need to use restructuring and divestiture actions to regain control, improve transparency, and re-establish efficiency. Given that leaders benefit from having insights into the antecedents, processes, outcomes, and decisions associated with unwinding growth most effectively, it is essential to consider the body of knowledge that exists in strategic management on restructuring and divestiture. This review seeks to describe what is currently known and not known about restructuring and divestiture and will give future researchers some suggested directions for further developing knowledge about these expensive and risky actions. The assessment is organized round five key questions that have shaped the field’s literature base: Why do firms divest? How do firms divest? Do divestitures create value? What happens to the divested units? And what are some promising directions for future knowledge development? Afterwards, three challenges for knowledge development are presented: What is value creation and for whom does it matter? What to do about incomplete information? And, is there a need for integrating different levels of strategy? Overall, it is important to identify, develop, and analyze the conceptual models of restructuring and divestiture with the purpose of guiding future research to provide knowledge that decision-makers will find useful as they engage in restructuring and divestitures.
The New Public Management (NPM) is a major and sustained development in the management of public services that is evident in some major countries. Its rise is often linked to broader changes in the underlying political economy, apparent since the 1980s, associated with the rise of the New Right as both a political and an intellectual movement. The NPM reform narrative includes the growth of markets and quasi-markets within public services, empowerment of management, and active performance measurement and management. NPM draws its intellectual inspiration from public choice theory and agency theory.
NPM’s impact varies internationally, and not all countries have converged on the NPM model. The United Kingdom is often taken as an extreme case, but New Zealand and Sweden have also been highlighted as “high-impact” NPM states, while the United States has been assessed as a “medium impact” state. There has been a lively debate over whether NPM reforms have had beneficial effects or not. NPM’s claimed advantages include greater value for money and restoring governability to an overextended public sector. Its claimed disadvantages include an excessive concern for efficiency (rather than democratic accountability) and an entrenchment of agency-specific “silo thinking.”
Much academic writing on the NPM has been political science based. However, different traditions of management scholarship have also usefully contributed in four distinct areas: (a) assessing and explaining performance levels in public agencies, (b) exploring their strategic management, (c) managing public services professionals, and (d) developing a more critical perspective on the resistance by staff to NPM reforms.
While NPM scholarship is now a mature field, further work is needed in three areas to assess: (a) whether public agencies have moved to a post-NPM paradigm or whether NPM principles are still embedded even if dysfunctionally so, (b) the pattern of the international diffusion of NPM reforms and the characterization of the management knowledge system involved, and (c) NPM’s effects on professional staff working in public agencies and whether such staff incorporate, adapt, or resist NPM reforms.
Jacqueline A. Gilbert
Organizational diversity is regarded positively, but haphazardly embraced. The absence of a cultural mandate at work (one which includes an emphasis on managing differences) can result in minority assimilation, and in either unintended bullying or in intentional abuse. Declining stock price, loss of goodwill, inability to recruit qualified candidates, and internal havoc marked by perpetuation of firm dysfunction may occur. These outcomes are especially alarming in the face of transformative population growth, in which minorities are predicted to become the demographic majority within the United States.
Inattention to employee misconduct prevents firms from experiencing enhanced productivity. Encouraging civil behavior is thus essential to engendering camaraderie in a diverse workforce, in which incivilities, or micro-inequities, are disproportionately targeted at minority groups. Management modeling of appropriate behavior (and swift action toward perpetrators for non-compliance) are necessary to achieve human capital integration.
Steven A. Stewart and Allen C. Amason
Since the earliest days of strategic management research, scholars have sought to measure and model the effects of top managers on organizational performance. A watershed moment in this effort came with the 1984 introduction of Hambrick and Mason’s upper echelon view and their contention that firms are a reflection of their top management teams (TMT). An explosion of research followed and hundreds, if not thousands, of manuscripts have since been published on the subject. While a number of excellent reviews of this extensive literature exist, a relative few have asked questions about the overall state and future of the field. We undertook this assessment in an effort to answer some key questions. Are we still making progress on the big questions that gave rise to the upper echelon view, or have we reached a point of diminishing returns with this stream of research? If we are at an inflection point, what are the issues that should drive future inquiry about top management teams?
Torben Juul Andersen and Carina Antonia Hallin
Contemporary organizations operate under turbulent business conditions and must adapt their strategies to ongoing changes. Sustainable performance can be achieved when the organization engages in interactive processes that link emerging opportunities to forward-looking analytics. But few organizations are able to practice this consistently. Fast processes performed by managers at the frontline respond to ongoing environmental stimuli and slow processes initiated by managers at the center interpret events and reasons about updated strategic actions. Current experiential insights from the fast processes can be aggregated systematically to inform the slow processes of reasoning. When the fast and slow processes interact they can form a dynamic system that adapts organizational activities to changing conditions.
Mikko Ketokivi and Joseph T. Mahoney
This is an advance summary of a forthcoming article in the Oxford Research Encyclopedia of Business and Management. Please check back later for the full article.
Which components should a manufacturing firm make in-house, which should it co-produce, and which components should it outsource? Who should sit on the firm’s board of directors? What is the right balance between debt and equity financing?
These three questions may appear different on the surface, but they are all variations on the same theme: How should a complex contractual relationship be governed to minimize cost and create transaction value? Transaction Cost Economics (TCE) is one of the most established theories of management to address this fundamental question.
In 1937, Coase was the first author to highlight the importance of understanding the costs of transacting, but TCE as a formal theory started in earnest in the late 1960’s and early 1970’s, as an attempt to understand and make empirical predictions about vertical integration (“the make-or-buy decision”). In its history, spanning now over five decades, TCE has expanded to become one of the most influential management theories, addressing not only the scale and the scope of the firm but also many aspects of its internal workings, most notably corporate governance and organization design. TCE is therefore not only a theory of the firm but, indeed, also a theory of management.
At its foundation, TCE is a theory of organizational efficiency: How should a complex transaction be structured and governed so as to minimize waste? The efficiency objective calls for identifying the comparatively better organizational arrangement among feasible alternatives to match the key features of the transaction. For example, a highly complex, risky, and recurring transaction may be prohibitively expensive to try to manage through a buyer-supplier contract. Instead, internalizing the transaction through vertical integration offers an economically more efficient approach.
TCE starts by seeking to describe and understand two kinds of heterogeneity. The first kind is the diversity of transactions: What are the relevant dimensions with respect to which transactions differ from one another? The second kind is the diversity of organizations: What are the relevant dimensions in which organizational responses to transaction governance differ from one another? The ultimate objective in TCE is to understand discriminating alignment: Which organizational response offers the least-cost solution to govern a given transaction? Understanding discriminating alignment is also the main source of prescription derived from TCE.
The key points when examining the logic and applicability of TCE are:
1. TCE is not only a theory of the make-or-buy decision but also has broader applicability to the examination of complex transactions and contracts more generally; the buyer-supplier contract is the paradigmatic canonical case.
2. TCE could be described as a constructive stakeholder theory, where the primary objective is to ensure efficient transactions and avoidance of waste. TCE shares many features with contemporary stakeholder management principles.
3. TCE offers a useful contrast and counterpoint to other theories of organizations, such as competence- and power-based theories of the firm. These other theories, of course, symmetrically inform TCE. TCE reminds us that in a world where resources are limited, the economics of organizing are always relevant.
This is an advance summary of a forthcoming article in the Oxford Research Encyclopedia of Business and Management. Please check back later for the full article.
Academic integrity is an interdisciplinary concept that provides the foundation for every aspect and all levels of education. It is a term that evokes strong emotions in teachers, researchers, and students, not least because it is usually associated with negative behaviors. When considering academic integrity, the discussion tends to revolve around cheating, plagiarism, dishonesty, fraud, and other academic malpractices and how best to prevent these behaviors. A more productive approach entails a focus on promoting the positive values of honesty, trust, fairness, respect, responsibility, and courage as the intrinsically motivated drivers for ethical academic practice. Academic integrity is much more than “a student issue” and requires commitment from all stakeholders in the academic community, including undergraduate and postgraduate students, teachers, established researchers, senior managers, policy-makers, support staff, and administrators.