Saturday, May 15, 2010

What is strategic management all about?

By Murli (E. Muralidharan).

I am a second year Ph.D. student majoring in strategy and international business, presently taking courses in strategic management. After having spent quite a while as a practicing manager in the area of strategy and international business, relating to a scholars view point in understanding business phenomena was initially difficult. However academic work in the specific area of strategic management appeared to be more user friendly from a practitioners point of view. Having spent close to two years now as an academic I have been able to look at a business phenomenon as a practitioner and now increasingly as an academic.

In the above context we recently debated the question: what is strategic management all about? Scholarly research has been attempting to derive a definition of the field of strategic management. Nag et al, 2007 (1) arrived at an implicit definition of the field as ‘Strategic management deals with the major intended and emergent initiatives taken by general managers on behalf of their owners involving utilization of resources to enhance the performance of firms in their external environment’.

My question here while evaluating this definition is whether strategy is an output of or an input to organizations performance. Bluntly asking, ‘does strategy drive performance or does performance drive strategy?’ - a typical chicken and egg situation.

As a practitioner I would have never thought about the possibility of performance driving strategy as a primary issue, although I would look at past performance to arrive at and evaluate various strategic options. The reason being that the main responsibility of managers is organizational performance. From an academic perspective, the primary question in strategy is ‘why do some organizations perform better than others’ and therefore ‘organizational performance’ again from a scholars point of view is a key dependent variable. So the general mindsets of both practitioners and scholars are about how to achieve organizational performance and what leads to organizational performance respectively.

The question that I would put forward to both academics and practitioners alike is ‘does strategy drive performance or does performance drive strategy?’. I feel that achieving clarity in understanding this question and articulating its answer may perhaps help address many of the methodological concerns that currently exist related to strategic management research. I am sure many who participate in "Strategy and You" would have similar thoughts relating to my question and I look forward to discussing further on this topic.

(1) Nag, R., Hambrick, D.C., & Chen, M.J. 2007. What is strategic management, really? Inductive derivation of a consensus definition of the field. Strategic Management Journal, 28:935-955.
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*Murli (E. Muralidharan) is a Ph.D. student at the Asper School of Business, University of Manitoba, Canada. Prior to joining academia, he worked in industry for over 15 years with reputed multinationals.

1 comment:

Weatherwax66 said...

Hiya, Murli,

I think that it can go both ways. For instance, if past performance has been suboptimal, an organization may not have the resources to pursue the same strategy as a different organization might select. It can only pursue a strategy it can afford.

On the other hand, selecting a poor strategy in the first place contributed to that suboptimal past performance.

Yes?

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