TOWARDS AN ORGANIC PERSPECTIVE ON STRATEGY_FARJOUN (2002)

Strategic Management JournalStrat. Mgmt. J., 23: 561–594 (2002)

Published online 28 March 2002 in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/smj.239

TOWARDS AN ORGANIC PERSPECTIVE ONSTRATEGY

MOSHE FARJOUN*Leon Recanati Graduate School of Business Administration, Tel Aviv University,Ramat Aviv, Tel Aviv, Israel

The strategy field’s core issues—the concept of strategy, causal models relating strategyto other constructs, and models of strategic management and choice—have been previouslyaddressed by two key progressions. The mechanistic perspective based on disciplinary-basedtheories, the design model, and a view of strategy as a planned posture, has provided a unifiedview, but a narrow and increasingly less pertinent one. The advent of organic developmentsthat included strategy process research, evolutionary and process models, and interactive andintegrative views, has provided richness and pertinence, but not a unified perspective. Thesetwo progressions marked an epistemological shift from mechanistic to organic assumptions:from discrete to incessant time, from directional to interactive flow, and from differentiatedto integrated constructs and models. Building on this shift, this paper proposes an organicperspective that combines the insights and coherence of the mechanistic perspective with the morerelevant organic ideas. It makes use of the organic assumptions to advance a view of strategyas an adaptive coordination, introduce the Organization–Environment–Strategy–Performance(OESP) integrative theoretical model, and present an organic model of strategic management.The organic perspective provides a basis for an upgraded, more unified, and better-attuned viewon strategy’s core issues. Copyright 2002 John Wiley & Sons, Ltd.

INTRODUCTION

What is strategy? What is strategy related to,and how? How is strategy selected and man-aged? How should it be? These core questionshave been addressed by two broad progressions,distinguished more by epistemological differencesthan by chronological order. The first develop-ment consisted of several disciplinary-based andstand-alone middle-range theories, mainly the SCP(Structure–Conduct–Performance), SSP (Strat-egy–Structure–Performance) and RBV (Resource-Based View). These theories were used to explainvariations in strategy and performance (e.g.,

Key words: concept of strategy; strategic management;strategy research; synthesis; process*Correspondence to: Moshe Farjoun, Leon Recanati GraduateSchool of Business Administration, Tel Aviv University, RamatAviv, Tel Aviv 69978, Israel.

Rumelt, 1991). Strategy itself has been mainlyviewed as a posture and a plan. The design modeland the SWOT (strengths, weaknesses, opportuni-ties, and threats) (Andrews, 1971; Barney, 1997)model have been used as the main models of strate-gic management and strategic choice, respectively.We call this first development the mechanisticperspective, for it provides a set of conceptual,explanatory, and prescriptive models that are uni-fied by the Newtonian mechanistic logic as theirshared epistemological basis.

The mechanistic perspective remains vital tothe development of strategy research, teaching,and practice. It has established the centrality ofkey constructs, questions, and theoretical rela-tionships, and its prescriptive orientation reflectsthe field’s commitment to help firms improvetheir functioning and performance, and to addressmanagerial concerns. Most significantly, aided by

Copyright 2002 John Wiley & Sons, Ltd. Received 14 September 1999Final revision received 25 October 2001

562 M. Farjoun

shared assumptions, its concepts, theories, andmodels have mutually reinforced one another, andfacilitated better communication, generation, andexchange of ideas. Yet, despite its many contribu-tions and achievements, the tenets of the mechanis-tic perspective have been increasingly questioned.Its simple assumptions, better suited to a relativelystable and predictable world and to the early stagesof the field’s development, seem to be at oddswith the more complex and constantly changingobserved behavior of individuals, firms, and mar-kets. Furthermore, critics have described it as static(e.g., Pettigrew, 1992), linear (e.g., Henderson andMitchell, 1997), and fragmented (e.g., Schendel,1994).

Prompted by the limitations of the mechanis-tic perspective, and inspired by the advent ofnew ideas in the social and natural sciences, thefield’s second broad progression saw the emer-gence and spread of organic developments. Keydevelopments included research on strategy for-mation and implementation (e.g., Quinn, 1980;Mintzberg and Waters, 1985), evolutionary ideasand process models (e.g., Nelson and Winter,1982; Van de Ven, 1992; Barnett and Burgelman,1996), the recognition of reciprocal and interac-tive relationships between strategy and other con-structs (e.g., Tirole, 1989; Henderson and Mitchell,1997), and integrative research (e.g., Baden-Fullerand Stopford, 1994). These research streams haveintroduced more dynamic and eclectic views ofkey constructs, offered new views of strategy for-mation, highlighted the importance of strategyprocesses especially against rational unitary actormodels, and portrayed a more complex view ofcausality. Moreover, they have shifted the focusfrom strategic choice to strategic change, and givenmuch more recognition to ‘soft’ variables and tothe messy side of reality.

Collectively, the organic developments repre-sented an important shift in the underlying episte-mological assumptions of the mechanistic perspec-tive concerning time, flow, and coupling withinand across models. First, the view of time in themechanistic perspective is discrete or synchronic:it focuses on a single occurrence of a set of givensat a particular time. As a result, it is essentiallytimeless: it pays little attention to past and future,process, lags and duration, and the creation of newentities. By contrast, organic ideas adopt an inces-sant and diachronic concept of time: concepts andrelationships are part of continuous processes and

iterated sequences, and entities are created ratherthan given.1 Second, the mechanistic perspectivecontrasts with organic ideas in its directional viewof flow. It often presents a linear and sequentialview of events and causality, and highlights deter-ministic causes of behavior (Bourgeois, 1984). Byimplication, it pays less attention to interaction,feedback and to multiple, reciprocal, and endoge-nous influences. Lastly, although early conceptsof strategy emphasized its integrative nature (e.g.,Andrews, 1971), the mechanistic perspective ischaracterized by internal differentiation: the con-structs in both explanatory and prescriptive modelsare more developed and better specified than therelationships that hold them together. By contrast,organic ideas emphasize integrated (i.e., problem-centered, multilevel and relational) views of strat-egy phenomena and concepts.

The move to organic epistemological assump-tions offers several advantages to the field ofstrategy. First, it reflects a growing appreciationof the complexity and interdisciplinary nature ofstrategy. Second, it maintains continuity since itbuilds on, rather than rejects, lower-level mech-anistic conceptions (Boulding, 1956). Finally, aschanges, conflict, and interdependence are thechief concerns of modern firms and strategy itself,organic assumptions seem to hold a natural appeal.Nonetheless, organic developments have been onlypartially assimilated into the mainstream of thestrategy field. Furthermore, the field has experi-enced a growing separation between prevalent ana-lytic and prescriptive models and the new conceptsand descriptive ideas.

Against this backdrop, and to capitalize on therelative strengths of the two progressions, thispaper outlines an organic perspective on strat-egy core issues.2 Being organic, the new perspec-tive derives its internal consistency from organicepistemological assumptions on time, flow, andconstruct coupling. Paralleling the mechanistic

1 A continuous view of time accommodates both continuous anddiscontinuous notions of change.2 Burns and Stalker (1961) originally used the terms mecha-nistic and organic to distinguish between different organizationstructures and management styles required to cope with differ-ent environments. We borrow the terms to suggest that differentcontexts call for different clusters of conceptual, explanatory,prescriptive, and methodological models. We too view the termsas describing points on a continuum rather than a dichotomyof pure types. We find the term organic particularly suitable toour purposes since it combines notions of process, unity, andvitality.

Copyright 2002 John Wiley & Sons, Ltd. Strat. Mgmt. J., 23: 561–594 (2002)

Towards an Organic Perspective on Strategy 563

perspective, it provides a unified set of conceptual,explanatory, and prescriptive elements. Particu-larly, it introduces a concept of strategy as an adap-tive coordination of goals and actions. It presentsthe Organization–Environment–Strategy–Perfor-mance (OESP) model, an integrative theoreticalstructure that links different middle-range theo-ries and synthesizes mechanistic and organic ideas.Lastly, it includes an organic model of the strate-gic management process in which the iterative andintegrative qualities of the process are stressed.These three parts of the organic perspective areinternally compatible, represent the field’s con-tinuity and progress, and are better suited to amore complex, interconnected, uncertain and ever-changing world.3

The development of an organic perspective cancontribute to the field in several respects.4 First,without sacrificing key insights and contributionsof the mechanistic perspective and its attention toprescription, an organic perspective can help renewmechanistic concepts and models by aligning themwith organic themes. Second, an organic perspec-tive can integrate various research streams thatshare its epistemological orientation, and fostercross-fertilization of conceptual, theoretical, andanalytic models. Lastly, beyond renewal and inte-gration the organic perspective can stimulate new

3 We see global strategic management as a distinctive but integralpart of strategy and strategic management. Therefore, the organicperspective also pertains to globalization and related issues.4 Our work follows the trail of prior works that stressed theimportance of dynamics, process, integration, and mutual deter-mination (e.g., Bourgeois, 1984; Haspeslagh and Jemison, 1991;Porter, 1991), or that infused prescriptive frameworks withdescriptive ideas (e.g., Quinn, 1980; Bowman and Hurrey, 1993;MacIntosh and MacLean, 1999). In addition, it is both comple-mentary and orthogonal to panoramic views of the field of strat-egy (Rumelt, Schendel, and Teece, 1994; Mintzberg, Ahlstrand,and Lampel, 1998; Ghemawat, 1999). We differ from these priorcontributions in that we do not simply provide a review, explaina particular phenomenon (e.g., acquisitions), develop a singularmodel, or advocate a particular theoretical viewpoint (e.g., com-plexity theory). Rather, we make sense of the field’s evolutionby using epistemological as opposed to chronological, theoreti-cal or conceptual lenses, focus on development and not merelyadvocacy, provide a perspective on broad issues, and highlightboth time and integration. Moreover, though we provide a broadreview of the field, it is not meant to be exhaustive and fullyrepresentative, but rather to present certain developments we seeas central, and serve as a logical step for developing the newperspective. We do not intend to propose a fully developed newtheory of strategy or strategy phenomena either. Rather, we aimto illustrate one way in which the consistent use of a small set ofepistemological assumptions can aid in developing more compat-ible and relevant concepts and models for strategy research andpractice. To this end we sketch a preliminary, yet self-contained,structure upon which future extensions can be made.

ideas and applications. Once the organic set ofassumptions on time, flow, and coupling have beenisolated from their original contributions they canbe applied and recombined in ways other than theone described here.5

We begin by describing the mechanistic per-spective on strategy. We then introduce organicthinking by discussing the development of perti-nent research streams. The bulk of the paper isdevoted to building on these two developments topropose a three-pillared foundation for an organicperspective on strategy. In conclusion, we sum-marize the contributions and potential implicationsof the new perspective, and propose avenues forfuture work.

THE MECHANISTIC PERSPECTIVE

The mechanistic perspective consists of a con-cept of strategy, related explanatory models, andmanagerial frameworks. These three elements havecommon epistemological assumptions.

A concept of strategy

In the mechanistic perspective, strategy is mainlyviewed as a posture —a relatively stable config-uration—a fit or alignment—between mutuallysupporting organizational elements, such as activi-ties and organizational structure, and environmen-tal elements, such as a customer group. Two maintypes of strategy postures are position (e.g., differ-entiation strategy) and scope (e.g., vertical integra-tion) (Chandler, 1962; Rumelt, 1974, 1984; Porter1980, 1991; Wernerfelt, 1984). Strategy postureshave been the traditional focus of research onstrategic groups (e.g., Cool and Schendel, 1988),diversification (e.g., Montgomery, 1982), and strat-egy–structure (e.g., White, 1986). In addition,early treatments of strategy, rooted in strategicplanning models, have viewed it primarily as arational plan. In this view, which still guides muchof the thought in the strategy field, action is pur-posive and prospective, and strategies are realizedas planned (Mintzberg, Ahlstrand, and Lampel,1998).

5 Van de Ven and Poole (1995) present another approach tomodel building that bears some similarities to ours. They extractfour process models from existing studies and show how theycan be used to generate new applications.


564 M. Farjoun

Explanatory models of strategy

Two concerns of mainstream strategy researchare to explain what determines firm performance,and to identify what affects firm strategy. Threeresearch programs have been particularly influ-ential in addressing these questions. The Struc-ture–Conduct–Performance (SCP) paradigm (e.g.,Bain, 1956) and its derivative, the industry struc-ture model (Porter, 1980), view the external envi-ronment as a key determinant of strategy and per-formance. In the SCP model, the main causalityflows from industry structural variables to firmconduct (i.e., strategy) and then to firm and indus-try performance. Porter’s model retained the basicflow of the SCP but, rather than focusing on theindustry, used the model to discuss the strategiesopen to the firm (e.g., positioning strategies) toimprove its performance.

The Strategy–Structure–Performance (SSP)paradigm highlights the significance of factorscomplementary to strategy, such as organizationalstructure, to firm performance. Originating inChandler’s (1962) classic study of the growthof large American firms, the model proposesthat different growth strategies are driven bythe accumulation and deployment of internalresources, and are matched by different internalstructural arrangements such as the functionaland multidivisional organizational structures.Chandler’s theoretical model particularly impliedthat the match between strategy and structureresults in better performance. This propositionhas guided subsequent studies (e.g., Stopfordand Wells, 1972; Rumelt, 1974; Franko, 1976;Miles and Snow, 1978), has been integratedinto contingency research in organizational theory(e.g., Galbraith and Nathanson, 1978), and hasbeen extended by configuration theorists to otherorganizational processes (e.g., Miller and Friesen,1978). This literature provides a causal modelthat relates strategy, organizational structure (andprocesses), and performance.

A related and more recently embraced modelis the Resource-Based View (RBV). AnticipatingChandler’s work, early work in RBV delineateda process theory of the role of resources in firmgrowth (Penrose, 1959). Several more recent vari-ants of the model have been proposed (e.g., Wer-nerfelt, 1984; Teece, Pisano, and Shuen, 1997), allof which complement the external view of the SCPby their mirror emphasis on internal firm-specific

attributes that affect strategy and performance. TheRBV sees certain resource attributes, such as inim-itability, uniqueness, and flexibility, as enablingcertain strategies (e.g., cost leadership), and con-tributing to sustained competitive advantage (Pen-rose, 1959; Wernerfelt, 1984; Barney, 1991; Teeceet al., 1997).6

Collectively, these different models of the mech-anistic perspective see firm performance as affectedby the environment and by firm strategy and otherinternal attributes, such as resources and organi-zational structure. Strategy itself is influenced byinternal firm attributes and by attributes of theenvironment. This basic causal model describes themain relationships between central constructs instrategy research: organizational resources, envi-ronment, strategy, organizational structure, andperformance. It also informs corresponding modelsof strategic management and choice.

The design approach to strategic managementand choice

What implicitly provided the glue for integratingdifferent causal models of strategy was thedesign model, a prescriptive framework widelyused as a guide for practice and teaching(Andrews, 1971; Porter, 1980; Barney, 1997). Theframework describes the strategic managementprocess —the actual steps and subprocesses of afirm’s strategy that need to be managed to maintainor improve the firm’s performance. In the standarddesign model, the strategic management processgenerally consists of two main subprocesses:strategy formulation and strategy implementation.The strategy formulation subprocess is concernedwith analyses of the external and internalenvironment and the choice of strategy at thecorporate, business, and functional levels. Strategyimplementation comprises a series of primarilyadministrative activities and includes the design oforganizational structure and processes (Chandler,1962), and the absorption of policy into theorganization’s social structure (Selznick, 1957:91–107).

6 Another important stream of research is Transaction CostEconomics (TCE) (e.g., Williamson, 1975). Although the theoryis not considered as one of the founding models of strategy inlooking at a firm’s resources, boundaries, and structure, it hassignificantly contributed to each of the three streams discussedhere. More recent work has attempted to apply the theory tomore central concerns of the field (e.g., Williamson, 1999).



Each of the main research programs reviewedhas contributed to the design model. Derivedfrom the SCP are the five forces model andits dynamic counterpart—the industry life cyclemodel—which became the dominant models foranalyzing the external environment (Porter, 1980).The SSP has provided a theoretical basis forthe formulation–implementation link in the designmodel. In addition, by focusing on internal firmattributes, the RBV model, together with the valuechain model of firm workflow activities (Porter,1985, 1996), has become a standard tool for ana-lyzing the internal (i.e., organizational) side in thedesign model (Barney, 1997).

The SWOT model is often used to prescribe thestrategic choice (i.e., strategy formulation) part ofthe design model. In this model, strategy needsto match the firm’s internal resources and dis-tinctive competencies with environmental oppor-tunities and threats, so as to better meet overallgoals and objectives (Andrews, 1971). The deci-sion rule used is to choose a strategy that capital-izes on the firm’s strengths, fixes its weaknesses,exploits its opportunities, and defends or neu-tralizes threats (Barney, 1997). Strategy needs toexhibit external consistency —firm resources needto be matched with environmental opportunities,and internal consistency —a fit between strategyand organizational elements. In addition, strategyneeds to be in line with managerial values andwith societal expectations (Andrews, 1971; Porter,1980). The different research programs reviewedhave also provided support for these differentforms of fit (e.g., Chandler, 1962).

Common epistemological underpinnings

Despite differences in content and emphasis,the field’s main issues—the nature of strategy,its relations, and the ways it is managed andselected—are addressed in the mechanistic per-spective in a consistent and mutually reinforcingmanner. A view of strategy as a position or postureimplies that strategic choice is mostly a selectionamong static configurations. Furthermore, the viewof strategy as mainly determined by the indus-try environment, implicit in the SCP, is paral-leled in the design model by the relative neglectof strategies that change the environment (e.g.,Child, 1972). Finally, the SWOT model of strate-gic choice is now characteristically accompaniedby explanatory models of the external environment

(e.g., Porter, 1980) and of internal resources (e.g.,Barney, 1991). A prime reason for this coher-ence is the shared but largely implicit views ontime, flow, and coupling. These were influencedto a large extent by Newtonian mechanics and itsapplication to microeconomics, and by the ideasprevailing in the behavioral and economic disci-plines when the formal study of business strategybegan.

Concept of time: discrete

In the mechanistic perspective firm strategy, theenvironment, and the firm’s stock of resources,structure, and work flow technology are oftentreated as given discrete categories or states thatcoalesce to create static efficiency (e.g., economiesof scale), fit, and configuration (e.g., Galunic andEisenhardt, 1994). Strategic management is viewedas a one-time sequence of formulating and imple-menting a single choice rather than a continuousprocess. Strategy-making mechanisms are assumedto be in place, and learning, history, and processesare downplayed. Strategy formulation and imple-mentation activities are condensed in time and theirduration is inconsequential. The choice part of themodel often involves once-and-for-all choices forwhich past and subsequent choices are not con-sidered, and where there is no distinction betweeninitiation of a new alternative and the continuationof an existing one (March and Simon, 1958).

The discrete view of time is also evident inthe research models being used. Most mechanis-tic studies use variance models, cross-sectionalin design. Variance models are concerned mainlywith what the relative explanatory power of differ-ent determinants of abstract entities (i.e., strategyand performance) are rather than how these entitiesare formed (Mohr, 1982). Although process expla-nations featuring the role of history and learningwere central in the founding of the main theo-ries (e.g., Selznick, 1957; Penrose, 1959; Chandler,1962), they have been largely neglected by subse-quent research.

Underlying this particular view of time and thefocus on variance models is the idea of efficienthistorical process —an evolutionary process thatmoves rapidly to a unique steady-state equilibriumsolution, conditional on current environment con-ditions, and thus independent of the historical path.A static alignment at a given time is the product ofa rapid optimizing process. The process is assumed


566 M. Farjoun

to lead to improvement of fit and ultimately to theone most suitable (March, 1994).

Concept of flow: directional

In early versions of the main underlying researchprograms causality ran from environment to strat-egy and performance (in the SCP model), fromstrategy to structure (and performance) in the SSPmodel, and from resources to strategy and per-formance in the RBV model. Moreover, as pos-tures, strategies are mainly responses to given con-straints rather than means to influence them orcreate new environments (Porter, 1980). Addition-ally, at its core, positioning analysis often assumesno responses from competitors and other play-ers (Ghemawat, 1991), and value chain analysislargely represents sequential interdependence (Sta-bell and Fjeldstad, 1998). The sequential flow ofthe design model and the view of strategic choicealso illustrate directionality. Feedback loops areeither implicit, as from implementation to for-mulation, or absent, as in the case of perfor-mance influences on other elements. Choice con-stitutes a constrained optimization problem wherethe choice set is exogenous and given (Porter,1991).

Coupling within and across models: differentiated

Because of their disciplinary and historical roots,the main models have been developed from theground up as fragmented middle-range theoriesrather than as lower-level theories stemming froman integrated overview of strategy. Moreover, eachof the research programs has focused on a dif-ferent element of the strategy picture: environ-ment, resources, and organizational structure. Thisdivision of labor between programs of researchhas facilitated scientific progress—but at a price(Schendel, 1994). The SCP and the industry struc-ture model have been criticized for lacking a the-ory of the firm’s organization (Teece, 1984) andas generally ignoring the inner context of strat-egy (Pettigrew, 1987). The SSP has been criti-cized for not paying attention to competition (Gal-braith and Nathanson, 1978), and research in RBVhas only recently begun to explore the mutualdependence of internal resources and competition(Levinthal and Myatt, 1994; Priem and Butler,2001). By and large, theoretical differentiation hasconsiderably hampered the recognition of multiple

and reciprocal causality between these distinctelements (Henderson and Mitchell, 1997).

This fragmentation has close parallels in thedesign model. Despite the recognition that strategyformulation and implementation are interrelated(Andrews, 1971), the design model describesthem as separate activities (Mintzberg et al.,1998). Strategy implementation has been viewedas administrative rather than analytic activityinvolving choice, and external aspects of managingchange (e.g., Chen, 1996) have been treatedseparately from internal ones (e.g., Quinn, 1980).

Panel A of Table 1 summarizes the underlyinginfluences and context of the mechanistic perspec-tive. It then focuses on the mechanistic epistemo-logical assumptions and their imprints on the waythe perspective approaches each of the field’s mainconcerns.

TOWARDS AN ORGANICPERSPECTIVE: PRIOR ORGANICDEVELOPMENTS

Alongside the progress made in the field in particu-lar content areas grew several streams of ideas thatquestioned, complemented, and partially adaptedthe prevailing approaches at a more fundamen-tal level. Particularly challenging and extending intheir impact on the core assumptions of the mecha-nistic perspective on time, flow, and coupling, andits predominately rational and prescriptive tone,were research on strategy processes, evolutionaryand process models, models highlighting interac-tion, and integrative research.

Strategy processes

Complementing the focus of mechanistic modelson strategy as a fully blown and perfectly realized‘product’, grew streams of research that focused onthe processes of strategy formation and implemen-tation. These topics were by and large studied bybehavioral and organizational theory researchersand had a more descriptive and dynamic tone(Hirsch, Friedman, and Koza, 1990; Schendel,1994; Mintzberg et al., 1998). Complementing theSSP model, studies of strategy implementation andstrategic change have focused on the administra-tive actions and processes involved in initiating,developing, and institutionalizing strategy-relatedchanges. Joining earlier organizational develop-ment approaches to management of change (e.g.,


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568 M. Farjoun

Lewin, 1951), works such as Quinn (1980), Pet-tigrew (1985), and Baden-Fuller and Stopford(1994) have dealt with the political, cultural, andpsychological aspects of strategic transformation.These and related studies have highlighted thedifficulties of realizing intentions, the interactivenature of internal change, and the importance ofrealistic and people-sensitive strategic initiatives(Ansoff, 1984).

A more direct challenge to mechanistic ideascame from studies of strategic choice and strategyformation. Most research underlying the mecha-nistic view is guided by the concept of a decision-making process based on a planned and rationalunitary actor model (Rumelt, Schendel, and Teece,1994). In this model, decision-making processesare viewed as black boxes that have no conse-quences for the decision itself (Simon, 1986). Thechoice is guided by the comparison of discretealternatives (Pettigrew, 1992; March, 1994; Dosiet al., 1997). By contrast, strategic decision mak-ing and cognitive research (e.g., Mintzberg, Rais-inghani, and Theoret, 1976; Reger and Huff, 1993)have suggested that the decision-making processmatters to the plans and decisions reached (Simon,1986). Sociopolitical influences such as negotia-tion and procedural justice, learning, and otherinformation processing activities can affect thekinds of strategies and plans selected, and con-sequently also affect performance outcomes (e.g.,Hart and Banbury, 1994). Choices are viewedas nested (e.g., March, 1994) and multistaged(Brehmer, 1992) rather than discrete, and choicesets can be modified endogenously (Kleindorfer,Kunreuther, and Schoemaker, 1993).

Other studies have highlighted the role of visionand cognition, and of other cultural, social, andpolitical influences in strategy formation (e.g.,Chakravarthy and Doz, 1992; Pettigrew, 1985).They emphasized the incremental nature of deci-sion making, initially as a disjointed process (Lind-blom, 1959), and subsequently as a more inte-grated one (Quinn, 1980). Quinn’s (1980) modelparticularly blended descriptive ideas of an incre-mental and nonlinear process with the logicaland prescriptive marks of more rational mod-els. Bower (1970) and Burgelman (1983) addeda view of strategy formation as dialectic involv-ing rationalization and structuring by top manage-ment and strategic initiatives of lower levels in theorganization (Noda and Bower, 1996).

A related branch of strategy inquiry has high-lighted the significant role of strategic leadershipin the strategic management process (e.g., Ham-brick and Mason, 1984). This stream of researchhas highlighted the role of the CEO, board, andtop management in formulating and implement-ing strategies (e.g., McNulty and Pettigrew, 1999).It served as a counterpart to the mechanistic andrational views of strategy making by highlight-ing human engagement and multiparty (e.g., board,consultants) interaction in these processes, and thecritical role of strategic leaders in mediating thefirm’s internal and external contexts.

A final and most significant development alongthese lines suggests that realized strategies canbe a result of prior plans but can also be anemergent stream of actions recognized as a pat-tern after the fact (Mintzberg and Waters, 1985).Rather then being distinct processes as depicted inthe design approach, formulation and action (i.e.,implementation) are better viewed as constantlycoevolving: following and affecting each otherthrough a process of strategic learning and con-trol. Good strategies can be formed and discoveredby experimenting and observing the organization’sactions rather than by conducting formal analysesof strengths and opportunities (Mintzberg et al.,1998). In contexts where plans proved inadequateat times, such as in an increasingly turbulent envi-ronment, the concept of emergent strategy offereda viable alternative.

Ultimately, these various contributions uncov-ered a persistent tension in the field: strategy isan attempt to construct a rational and predictableworld in the face of a reality that quite oftenresists it.

Process approaches and models

A second organic development stems not so muchfrom dealing with topics largely ignored by themechanistic approaches, but rather from a differ-ent orientation to process and time. It particularlyincludes the rise of new evolutionary models ofthe strategy process, and the growing interest inviewing strategy in dynamic and process terms(Porter, 1991; Melin, 1992; Academy of Manage-ment, 1997). Inherent to models of evolutionaryprocesses is the idea that ‘history matters’ (Nel-son and Winter, 1982; North, 1991; March, 1994;Arthur, 1995). Some of these models suggest thatparticular paths may influence outcomes examined



at a particular time, and that history does notnecessarily work efficiently to produce the opti-mal configurations and alignments suggested bythe mechanistic views. In contrast to the traditionalmodel of the environment (e.g., industry structure),more attention is given to market processes (Nel-son and Winter, 1982; Dosi et al., 1997). Staticconceptions of resources have been augmented bymodels that highlight process and learning (e.g.,McGrath, MacMillan, and Venkataraman, 1995;Teece et al., 1997). Similarly, studies of organiza-tional structure have shifted the focus to its evolu-tionary nature (e.g., Galunic and Eisenhardt, 1995),and to organizing—the processual quality of orga-nizational systems and participants (e.g., Weick,1969; Pettigrew and Fenton, 2001).

A related development is the advent of action-based notions of strategy. In the new evolution-ary and process models, strategy involves morethan a static position in the marketplace (Inkpenand Choudhury, 1995), and includes paths, moves,and actions (Pettigrew, 1992). Models of strate-gic interaction (Chen, 1996), real options (e.g.,Bowman and Hurrey, 1993), commitment (Ghe-mawat, 1991), and dynamic capabilities (Teeceet al., 1997) still see strategy as being subject toplanning, but highlight its continuous and path-dependent nature. By highlighting the idea thatfirms need to conduct experiments and not onlyanalysis and planning, recent approaches have fur-ther promoted a more active view of strategy(e.g., Miller and Chen, 1996; Brown and Eisen-hardt, 1998).

Process models and designs have moved thefocus from what determines strategy and perfor-mance to how they are determined (Mohr, 1982).The new models do not necessarily reject the ideaof steady states and strategic positions but ratherseek to explain firm success and failure by look-ing at historical developments, and observing thepace and path of change (Hodgson, 1993; Bar-nett and Burgelman, 1996). They examine howinitial conditions, timing, managerial choices, deci-sive moments, learning, and path-dependent pro-cesses enable and constrain current states and inturn provide platforms for future developments(Doz, 1996; Mitchell, 1989; Lieberman and Mont-gomery, 1998).

Interaction

With the growing appreciation of interaction andreciprocal causation of key constructs, feedback

loops have been added in each of the main researchprograms of the mechanistic perspective. Theyaccounted for firm conduct and firm structureeffects on industry structure (Caves et al., 1980;Caves, 1980; Porter, 1991), highlighted the effectsof organization structure on strategy (Hall andSaias, 1980), and recognized the effects of strat-egy and environment on resources (Porter, 1991;Rumelt et al., 1994). These latter new linkagesin particular have pointed to new connectionsacross the original models. The focus on strate-gic (external) interaction is also the main fea-ture of the game theoretical models in the newIndustrial-Organization (I-O) economics (Tirole,1989; Brandenburger and Nalebuff, 1996). Mod-els admitting interaction view capabilities, com-petition, and performance as both affecting andbeing affected by strategy, and are less concernedwith the differential contributions of resourcesand environment to performance (e.g., Hender-son and Mitchell, 1997). Differences betweenfirms are traceable not only to their contempo-rary conditions, but also to the history of interac-tions between them and with other actors (March,1994).

Reciprocal causality has also penetrated thedesign model of the strategic management pro-cess. It is implicit in the notion of dynamic fit(Itami and Roehl, 1987). It is also evident in thedialectic view of formulation and implementation(Burgelman, 1983; Mintzberg and Waters, 1985).Finally, it is represented in the renewed interest ininternal firm attributes, such as organization struc-ture, culture, and decision processes, as importantinfluences on, rather than derivatives of, strategyformulation (Barney and Zajac, 1994).

Integrative works

A final set of organic developments has helped tocounteract the growing proliferation of alternativeviews and approaches to strategy, and to emulateearlier works that provided a more holistic pic-ture of strategy (e.g., Chandler, 1962). In additionto the integration gained by the increased recogni-tion of reciprocal causation, integrative works haveoffered more eclectic views of concepts and phe-nomena, linked previously disconnected constructsand levels of analysis, and attempted to further thebridging of fragmented models.

Examples of such integrative work are thedevelopment of comprehensive models of business


570 M. Farjoun

phenomena such as acquisitions (Haspeslagh andJemison, 1991) or turnaround (Baden-Fuller andStopford, 1994). Also included is the work of con-figuration theorists (e.g., Miller and Friesen, 1978),which extended earlier notions of alignment toshow how environment, strategy, structure, andother organizational attributes coalesce into dis-tinct and episodically changing archetypes. Finally,several works have explored new ways to mergebehavioral and economic approaches (Barney andOuchi, 1986), to bridge across multiple levelsof analysis (Pettigrew, 1985), and to integrateprescriptive and descriptive models (e.g., Bow-man and Hurrey, 1993; MacIntosh and MacLean,1999).

Common epistemological underpinnings

Although some of these organic developmentscame from within the field, others were influ-enced by advances in the natural sciences, particu-larly in modern physics (McKelvey, 1997; Mac-Intosh and MacLean, 1999), and in the socialsciences (e.g., Adam, 1990; Sztompka, 1993) asexemplified by evolutionary ideas in economics(Hodgson, 1993), and by the move in organiza-tional theory from rational to natural views onorganizations (Scott, 1995) and towards processmodels (Van de Ven and Poole, 1995). Com-mon to these diverse developments in the organicwave is a shift in the underlying epistemologi-cal assumptions related to time, flow, and cou-pling found in the mechanistic perspective. Thenew ideas have emphasized time as incessant anddiachronic: concepts and relationships are part ofcontinuous processes and dynamic phenomena,and entities are not fixed but are rather createdand changed. History matters in the sense thatprior events and developments condition currentchoices, and action, human agency, and socialprocesses are central. In the organic view inter-action and multiple and mutual influences arehighlighted; there is more room for actors’ dis-cretion and for endogenous developments. Finally,the new ideas emphasize interdisciplinary and inte-grated views of strategy phenomena and con-cepts, particularly depicting and explaining phe-nomena, while being sensitive to their interdepen-dent social, economic, and informational aspects,and highlighting linkages within and across levelsof analysis.

TOWARDS AN ORGANICPERSPECTIVE: THREE PILLARS

If the mechanistic perspective provided a sharedepistemological base, the advent of the organicdevelopments has brought the field much more rel-evant and enriched approaches to its core issues.Despite the growing recognition in the field ofthe relevance and utility of the organic ideas, theyhave not managed to change the mechanistic per-spective’s more secure yet increasingly fractured‘deep structure’. Consequently, the field’s transi-tion away from fragmentation, stasis, and linearityhas remained incomplete and uneven.

For example, Porter’s (1996, 1997) reflectionon the concept of strategy, which includes severaldynamic extensions, still retains a view of strat-egy as a planned and stable position, and suggestsa linear causal flow running from environmentto position (i.e., strategy) to internal organization.Similarly, SWOT analysis, rooted in mechanisticideas, still remains a primary consulting tool (Hilland Westbrook, 1997) and serves as an organiz-ing framework for research and teaching (Barney,1997). Organic ideas have made more mark onthe mechanistic perspective’s concept of strategyand theoretical models than on its analytic models.Moreover, the independent and disciplinary rootsof the main mechanistic models have left linkagesacross models less specified. Against this back-drop, an organic perspective can further exploitthe generative power of the organic assumptionsto facilitate the transition to more dynamic andintegrated approaches to the field’s core issues.We proceed by developing three related build-ing blocks that parallel the main elements of themechanistic perspective: a concept of strategy, anintegrative theoretical model, and a model of thestrategic management process.

A concept of strategy

A natural starting point and a linchpin to theother two pillars of the organic perspective is theconcept of strategy. Extending earlier definitions(Chandler, 1962; Andrews, 1971; Porter, 1980;Quinn, 1980; Mintzberg and Waters, 1985; Itamiand Roehl, 1987; Bowman and Hurrey, 1993;Brown and Eisenhardt, 1998), we define a firm’sstrategy as the planned or actual coordination ofthe firm’s major goals and actions, in time andspace, that continuously co-align the firm with its



environment. The firm’s strategy co-aligns it withthe environment by building on and modifyingthe firm’s internal attributes and forces to respondto, and influence, environmental conditions anddevelopments. In short, strategy is co-aligning oradaptive coordination. This definition establishesthree interrelated points: strategy emphasizes thefirm’s behavior over time and includes major goalsand actions; it includes coordination in space andtime, of which planned coordination is just onespecial case; and it deals with adaptation, whichincludes both responding to and influencing theenvironment. Each of these points is elaboratedbelow.

Goals and actions

Strategy includes both goals and actions (Chan-dler, 1962; Andrews, 1971; Porter, 1980). Goals‘state what is to be achieved and when resultsare to be accomplished, but do not state howthe results are to be achieved’ (Quinn, 1980).Actions are a general label for bundles, sets,or sequences of resource deployments, initiatives,responses, moves, deals, investments, and devel-opments. They include firm ‘conduct’ or external(i.e., interorganizational) actions as viewed in theSCP and in the new industrial organization lit-erature (e.g., Shapiro, 1989), political and legalactions, and major internal administrative actions.This part of the definition emphasizes what thefirm does over time: its actions and behaviors.

Goals and actions correspond to three traditionalelements of strategy content (i.e., strategic choice):goals (e.g., vision), postures (e.g., scope or com-petitive position), and moves (e.g., joint ventures).These elements constitute a means–ends hierar-chy (Simon, 1976), in which postures are inter-mediate goals coordinated by higher-level goals(e.g., profitability) and major policies that affectthe firm’s overall direction and viability (Quinn,1980). Postures, in turn, guide lower-level poli-cies and actions, such as new product develop-ment and human resource management (Porter,1980). Specific moves are means to achieve goalsdirectly or indirectly through the creation, suste-nance, and change of postures, or through changesin the firm’s resource mix.7 In this means–ends

7 The hierarchical and recursive nature of strategy implies that astrategy can be viewed as a part of another strategy, as a stand-alone concept, or as including other strategies. This may require

chain, higher levels in the hierarchy change lessfrequently. They provide direction, integration, andconsistency for lower levels, which constitute moredetailed means and actions for reaching ends. Yet,despite this hierarchy, the relationship betweenstrategy and tactics is dialectical rather than lin-ear: available means constrain strategy (Harkabi,1997) and lower-level managerial initiatives canconverge into and shape higher-level strategies(Bower, 1970; Burgelman, 1983).8

Planned and actual coordination

Coordination is a term used to distinguish strat-egy from random behaviors and completelyautonomous actions (e.g., Quinn, 1980; MacCrim-mon, 1993). Strategy coordinates goals and means,internal resources and administrative infrastruc-ture, specific courses of actions, and internal andexternal aspects of managing change. A firm’scoordinated action (i.e., realized strategy) canbe based on a mix of coordinating mechanisms(Thompson, 1967). It can be recognized retrospec-tively as a pattern in a stream of actions (Andrews,1971; Quinn, 1980; Mintzberg and Waters, 1985).Coordinated action can be guided by a plan (i.e.,intended strategy) in which long-term goals, inten-tions, and means are specified prior to actions. Itcan be centralized and stem from core manage-rial values or from a guiding sense of purpose.Alternatively, it can be based on improvisation,mutual adjustment to internal and external devel-opments, or the (unexpected) interaction of agents(e.g., individuals) responding to simple rules.9

Strategy also includes both the firm’s loca-tion and direction within the environment. Spa-tial coordination, or strategy states, and tempo-ral coordination, or strategy paths, are thereforecomplementary facets. Strategy states (i.e., pos-tures) represent a view of the firm’s coordinated

us to view strategy also in relation to other potentially relatedstrategies.8 We see the idea that goals always dictate everything else asmisguided. Rather, in some circumstances, intentions can bemore malleable than resource stocks or environmental contin-gencies. Consequently, we view goals not only as constraints onsubsequent decisions and strategies but also as variables.9 We prefer to emphasize coordination and integration rather thanpattern as a distinguishing characteristic of strategy. Patternsin action can generally result from three sources: randomaction, accumulation of incremental, path-dependent, and locallyadaptive individual steps (such as experiments), or grand design.In our view, a pattern created by random actions, even one thathelps the firm adapt, does not constitute a strategy.


572 M. Farjoun

resource deployments and its state of alignmentwith the environment frozen at a point in time.Strategy paths and trajectories represent the devel-opment over time of coordinated action sequencesor moves. Both states (e.g., a firm’s internationaldiversity posture) and paths (e.g., a firm’s interna-tionalization path) are a confluence of the firm’sdesigned and emergent strategies.

Continuous co-alignment

The firm’s internally coordinated goals and actionsare anchored in its continuous co-alignmentwith its environment (Thompson, 1967; Porter,1991). Co-alignment is viewed both as a processand as a relatively constant and superordinategoal, coordinating other intermediate goals andlower-level actions, but not necessarily as anoutcome obtained. Co-alignment is sustainedthrough actions aimed at creating, (re)definingand integrating the firm’s domains, through thefirm’s navigation and (re)positioning within eachdomain, and through changes in the firm’sresource mix, which supports, and is influencedby, the firm’s domain and navigation strategies.In contrast to steady-state alignment, the co-alignment process is ongoing and dynamic andconsists of a series of ever-changing games (Porter,1991).

Key to the notion of co-alignment is the ideaof mutual influence. The firm both adapts to itscontext, and at times adapts the context to it(Pfeffer and Salancick, 1978; Bourgeois, 1984;Itami and Roehl, 1987; Porter, 1991). The firmneeds to manage—that is selectively identify,respond to, and influence, internal and externalconstraints —historical, organizational, and envi-ronmental actors, attributes, forces, and develop-ments—which define and limit for a meaningfulperiod of time what it can successfully achieve(Pettigrew, 1987; Ghemawat, 1991). It needs tostrike a dynamic balance in allocating its resourcesbetween responsive and defensive actions, andmore entrepreneurial ones such as innovating,influencing sources of uncertainty (e.g., govern-ment regulations), and changing the rules of thegame (Brandenburger and Nalebuff, 1996).

Summary and contribution of the definition

The three elements of the definition clearlyestablish strategy at the intersection of a specific

content (goals and actions), mode of behavior(coordinated), and context (adaptation). Goalsand actions define what is included in strategy.Coordination distinguishes strategy from othernoncoordinated behaviors—even those that areadaptive—yet allows for multiple forms ofcoordination to be included. Lastly, adaptationsuggests that not all coordinated behaviors areincluded (Meyer, 1991). It therefore providesexternal anchoring to otherwise closed-systemforms of coordination.

The definition also blends mechanistic andorganic ideas. It includes mechanistic conceptionsof strategy as postures, states, and plans.However, by integrating organic ideas, suchas emergent strategy, it portrays strategy asless rigid, linear, static, individualistic, andprospective. The definition further utilizes the threedefining characteristics of the organic perspective.Particularly, it emphasizes incessant adaptationand temporal and emergent coordination; it isinteractive and emphasizes mutual and dialecticinfluences; and it integrates external and internalactions, multiple coordination modes and multiplestrategy levels.10

The OESP explanatory model

The second pillar of the organic perspective, andparallel to the mechanistic perspective’s main theo-retical models, is the Organization–Environment–Strategy–Performance (OESP ) model, a meta-theoretical framework. The purpose of the modelis to organize and synthesize existing middle-rangetheoretical models and to stimulate the devel-opment of new ones. In addition, the model,described in Figure 1, aims to inform and rein-force analytic models of strategic management andchoice. We next describe the major constructs inthe OESP model, their key relationships, and themain implications of the model.

Major constructs in the OESP model

In addition to the already-defined concept of strat-egy, the other major constructs in the OESP model

10 Our concept is generally consistent with other frequentlyused definitions of strategy such as Mintzberg’s position, ploy(included as a move in our terminology), perspective, plan, andpattern (5 P’s), and adds path as a sixth P strategy.



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574 M. Farjoun

are firm organization, firm environment, and firmperformance.11

Firm organization. Firm organization includesthe actual and potential internal means, mecha-nisms, institutions, developments, and forces thatinduce, enable, modify, and carry out the firm’sstrategy. These elements are not simply viewedas tools but also as part of an open system thathas organic qualities such as emergence, infor-mal relationships, and indeterminacy. Firm orga-nization particularly includes the states and paths(i.e., history) of (a) resources (and technology),and (b) administrative and social structure. Thesetwo categories are viewed as mutually supportingand as distinct from strategy, whose main role isto mediate and guide firm–environment interac-tions. Each of the categories is viewed as an opensubsystem that interacts with related elements inthe environment through resource exchange, com-munication, and other relationships and boundaryactivities.

Resources (and technology)—we include underthis general heading internal means and devel-opments that can be drawn upon to accomplishthe firm’s goals, and especially those unique fea-tures called the firm’s distinctive competencies(Selznick, 1957). We break down the generalheading into the following: resources —the finan-cial, physical, informational, and organizationalresources, and the human resources such as expe-rience, skills, motivation, and behaviors associ-ated with individuals in the organization (Penrose,1959; Barney, 1991); relationships —the formaland informal relationships, such as contracts, trust,loyalty, legal rights, and social capital that bindthe firm with various actors and stakeholders; andwork flow technology —the various activities andoperations in which resources are employed, andthe way work is done (Porter, 1985).

Administrative and social structure representsthe ways in which means are administered andrelationships are regulated among the firm’s par-ticipants. These include the organization’s struc-ture and processes —the formal (e.g., governance

11 Firm strategy as defined before includes both planned andactual coordinated goals and actions (realized strategy). Con-sistent with most explanatory models and empirical research inthe field, strategy is defined in the OESP model as a firm’srealized strategy. In our subsequent discussion of the strategicmanagement process, planned and realized strategies are treatedseparately.

structure) and informal (e.g., culture, politics, con-trol) mechanisms and organizing activities forallocating, coordinating, and mobilizing decisionauthority, resources, and rewards (Penrose, 1959;Chandler, 1962; Galbraith and Nathanson, 1978;Miles and Snow, 1978). In particular, we stressthe processes, such as formulation, and emer-gence, by which strategies are created, realized,and managed, and the processes by which infor-mation is created, acquired, developed, maintained,organized, disseminated, transmitted, and commu-nicated (e.g., Huber, 1991). Also included arethe nature, attributes, connections, core values,beliefs, ideology, and behavior of strategic lead-ers and key decision-makers in the organization(Selznick, 1957; Porter, 1980; Collins and Porras,1994).

These two categories of firm organization areconsistent with and extend the view of the firm asa pool of resources embedded in an administrativeframework (Penrose, 1959; Chandler, 1962). Theyreflect the respective emphases of behavioral andeconomic models, and include their commonaspects, such as technology and information, aswell as their distinctive—technological/economicvs. social—contributions. The categories chosenmay have some conceptual overlap, yet theybroadly represent the richness and complexity oforganizations with their formal and informal (i.e.,sociopolitical), human, technological, economic,informational, and relational aspects.

Firm environment(s). Although at times thephysical environment can be an important con-sideration for the firm, it is useful to view theenvironment as consisting primarily of other actualand potential actors and their actions (Bain, 1956;Pfeffer and Salancik, 1978; Porter, 1980; Branden-burger and Nalebuff, 1996). Actors can representdifferent levels of analysis. They can include indi-viduals, groups, organizations, or a set of indi-viduals and organizations (i.e., ecology) such asa strategic group (Caves and Porter, 1977), anindustry (Porter, 1980), a field (Scott, 1992), adistribution channel (Stern and El-Ansary, 1988),a network (Thorelli, 1986), an ecosystem (Moore,1993), or a value net (Brandenburger and Nalebuff,1996). The environment includes political, eco-nomic, social, institutional, informational, techno-logical, and demographic aspects, conditions, anddevelopments. The firm’s environment particularlyincludes actors’ resources, technologies, strategies,



relationships and interactions, and performances,and external developments, forces, events, anddiscontinuities that may affect them and the focalfirm. Finally, environment includes past and cur-rent environments, and future environments inwhich the firm may potentially operate either asa result of its own initiatives or the result of theinitiatives of other actors.

As with the other constructs, the environment isviewed both as a state and a path. This reflects,for example, the complementary notions of indus-try structure and industry evolution, the currentcomposition of actors and their exit and entry pat-terns, the current postures of different actors, andthe ways these postures have been formed. Addi-tionally, the environment is viewed as influencingits own path. This view of environment includesdynamic features, integrates various behavioraland economic conceptions of its composition andcharacter, and attends to multiple levels of analysis.

Firm performance. Firm performance indicatesthe quality of the firm’s continuous co-alignmentwith the environment (Chakravarthy, 1986). Thisparameter can be represented by growth, prof-itability, survival, and other standard indicators,and by nonfinancial indicators. Depending on thecontext, firm performance may include indica-tors in multiple levels of analysis (e.g., businessunit). Although it is often described in referenceto a particular point in time (Dosi et al., 1997),it also needs to capture development and changeover time and reflect different time scales. Partic-ularly, static efficiency can lead to maladjustmentin the long run (Ghemawat and Ricart i Costa,1993; Miller, 1990), and short-term misfit may beneeded to attain long-term dynamic fit (Itami andRoehl, 1987). Therefore, firm performance mayparticularly need to attend to conflicting short-term and long-term alignments. It needs to reflectboth the quality of the firm’s exploitation of cur-rent resources and its capacity to generate newones (Levitt and March, 1988; Sanchez and Heene,1997).

Flow and relationships in the OESP model

In the OESP model, which is described in theupper part of Figure 1, firm organization, firmenvironment, firm strategy, and firm performanceare causally related one to another. In the transitionfrom prior work to the current model, constructs

such as goals and strategy have been consolidatedinto four broader, higher-level, logical counterparts(e.g., strategy), and their dynamic and unfoldingnature has been highlighted. In addition, relation-ships between key constructs were consolidatedinto more coarse-grained linkages, and defined soas to emphasize temporal linkages and processthemes and questions. Each of the constructs isalso described by its state (e.g., initial conditions)and evolutionary path. It also influences itself overtime: being influenced by its previous history, andinfluencing its future path and state (Monge, 1990).Furthermore, to provide compatibility of its partsand be consistent with underlying research pro-grams, the model deliberately remains at a generallevel of abstraction. Yet, reciprocal influences alsooperate within each of the main constructs.12

Each construct in the model can affect each ofthe others in space and time, both directly and indi-rectly, through or jointly with other constructs, andcan serve as a starting point for causal sequences.Constructs are not required to evolve at the samerate, and their reciprocal relationships do not implyequal magnitude or simultaneity of influence. Thisquality enables the understanding of parts of themodel without necessarily studying all constructsat the same time. Particularly, the model can beused to examine specific dyadic relationships aswell as more complex causal relationships suchas positive and negative feedback loops (Arthur,1995).

To simplify, Figure 1 describes the model asfully endogenous. Although the model is inter-nally determined, history and environment canbe defined in such a way as to make parts ofthem exogenous. Moreover, some interactions areassumed to be the result of random processes andchance events. Furthermore, the strength of therelationships between constructs, such as the rela-tive influence of environment on performance, mayvary in different settings.

12 The model is not a theory in the usual sense but rather a frameto link lower-level models and theories. To keep it general, wedeliberately avoided the use of more specific constructs such assustained competitive advantage, industry, and capability (e.g.,Teece et al., 1997), or overly strong and restrictive assumptionsand views (such as a fine-grained theory of the firm). Nor dowe formally state specific propositions. The focus on higher-level constructs and relationships sacrifices some specificitybut is necessary to accommodate diverse models, levels ofstrategy, and disciplinary orientations, and to fit more fine-grained constructs and relationships into one whole.


576 M. Farjoun

The model assigns particular importance tohistory in the way it defines constructs andrelationships. History influences—but does notdetermine—current and future states of each ofthe variables. Systems are distinguished not onlyfrom events outside them but also from eventsoccurring prior to them and subsequent to them(Fuller, 1982). Therefore, context is defined bothin space and in time. The model also assumes thatagents intend to choose and act rationally and thattheir actions are for the most part prospective andpurposive. Yet it recognizes deviations from ratio-nal behavior such as those stemming from agents’cognitive limits, the means–ends uncertainty inthe information environment (March and Simon,1958), and other constraints on efficient adjustment(e.g., inertia). More generally the model extendsthe idea of rational planned action by openingthe ‘black box’ to admit other cognitive, affective,social, and political influences.13

In the OESP model the interaction between theconstructs can be designed, evolving, or random,but it is best captured by the notion of continuousco-alignment. As suggested by the definition ofstrategy as adaptive coordination, two facets of thisprocess are particularly important. In its externalinteractions the firm, guided by its strategy, bothresponds to and shapes the state and path of itsenvironment. Internal interactions arise as strategyis derived and enabled by organizational elementsand in turn shapes their composition and develop-ment. Both external and internal interactions affectthe firm’s performance and in turn are influencedby it. Firm strategy both mediates between internaland external forces and in itself serves as a forcethat influences these other forces. It responds tochanges and creates changes.

This co-alignment process can also be appre-ciated from the viewpoint of other actors. Thefirm co-aligns itself with the ecology of otherco-adapting individuals and organizations (March,1994). Other actors exchange resources with thefocal firm, and interact with its strategy, organi-zation, and performance. Because the focal firmplaces constraints upon other actors, they too mayrespond to and influence these constraints. Actual

13 Although we use such abstractions as firm, environment,strategy, coordination, action, and adaptation to describe macrostructures and processes, we fully recognize that ultimatelythey include and are carried out by human beings and microprocesses.

firm performance is thus influenced by the qualityof other actors’ co-alignment efforts.

Implications and contributions of the OESP model

The lower part of Figure 1 summarizes the keycontributions of the mechanistic and organic mod-els on which the model is built and which itextends. At its most rudimentary level the OESPmodel includes and unifies the main constructs,relationships, and models of the mechanistic per-spective. It still maintains some of the main mech-anistic ideas that are central to traditional thinkingin strategy, such as notions of steady states andstrategy positions. For example, even if one rejectsequilibrium as an empirical phenomenon thesenotions remain useful for theoretical and empiricalresearch, and for simplified planning and com-munication (Ghemawat, 1991; Porter, 1991). Thefigure particularly shows the mechanistic perspec-tive’s broad agreement on key constructs, high-lights its predominantly linear flow (from orga-nization and environment to strategy and perfor-mance), the centrality of the strategy–performancelink (appearing in all main mechanistic models),and the fragmented nature of its main models.

Organic ideas in turn extend familiar con-structs and relationships through their emphasison dynamic notions of constructs and relation-ships, reciprocal causation and interaction, andintegration across and within constructs. Particu-larly emphasized are the processes and historicalpaths linking different constructs, self-loops, andcausal relationships between several constructs andacross time. Additionally, each of the differentlinkages in the model can be used to address vari-ance and process questions. Therefore, the centralquestions of the field are viewed in the modelas dealing with both how firm strategy and firmperformance are determined and with what thedeterminants are.

The OESP model goes beyond merely renewingexisting key mechanistic and integrating organicmodels and emphases. By isolating and applyingkey organic assumptions on time, flow and cou-pling, the OESP model offers several distinct con-tributions. First, it highlights several dyadic rela-tionships that have been rather overlooked or onlypartially researched. For example, rather than thetraditional focus on firm performance as the field’sultimate dependent variable, in the OESP modelit is viewed as a means (independent variable)



for achieving a constantly changing dependentvariable— long-term performance. Furthermore,the model suggests that performance can affecteach of the other constructs. It can affect firmorganization, for example, by changing internalpolitical processes or cause–effect beliefs. It canaffect environment, as by changing resource dis-tributions, signaling growth and profit potential,allowing comparison, and otherwise affecting ac-tors’ behavior (e.g., March and Sutton, 1997).Finally, it can affect strategy on a continuous basis,or through unique historical events such as a firm’snear-death experience.

Another acknowledged but mostly overlookedrelationship highlighted in the model is the effectof strategy on environment (and indirectly on per-formance). Hardly treated by any of the origi-nal mechanistic models, but highly complemen-tary to them, this set of relationships has to someextent been examined by the new industrial orga-nization research (e.g., Tirole, 1989). Althoughthe environment is generally expected to exert astronger influence on firms than in reverse, firmsstill have considerable and often overlooked lati-tude. In line with the organic concept of strategy,this latitude includes strategies that create newindustries, establish technological standards, andotherwise generate ‘creative destruction’ (Schum-peter, 1942).

Additionally, the OESP model specifies theexistence of direct casual flows between firmorganization and environment (and their sub-constructs). These linkages represent the basic ideathat firms and their attributes are parts of theenvironment, and are linked to it by exchangesof resources and information and by variousrelationships and institutions. For example, firmresources affect and are affected by competitors,customers, and local environment (Levinthal andMyatt, 1994; Porter, 1991), organization structurecan affect competitors’ behavior and industrystructure (e.g., Caves, 1980), and perceptionsof key individuals within the firm affect theenvironment viewed by the firm directly, orindirectly through organizational structure (Marchand Simon, 1958). These linkages are particularlyrelevant given the advent of relational views ofcompetitive advantage and the greater recognitionthat key firm resources may reside in a firm’sexternal network (e.g., Dyer and Singh, 1998).

A second distinctive feature of the OESPmodel is that it stresses the too often ignored

self-influences in each construct’s developmentpath. It specifically considers firm performanceeffects on its own development (Barnett andHansen, 1996), such as when current customershelp generate new customers (Arthur, 1995) andcurrent successes lead to future failures (Miller,1990). Additionally, it includes the effects ofstrategy upon itself such as when early choicesconstrain or enable future ones (e.g., Nelsonand Winter, 1982; Bowman and Hurrey, 1993;Ghemawat, 1991).

A third distinct feature of the OESP model isin extending dyadic relationships to describe a net-work of potential relationships and multiple causalinfluences. One example of this feature of themodel is the existence of multiple causal influ-ences on firm performance. The notion of strat-egy is invoked to explain systematic differencesin performance that are based on the firm coordi-nated (i.e., systemic) adaptive action. The effectsof strategy on performance can be direct or indirectthrough changes in organization, such as changesin resource mix, and changes in environment, suchas the reaction of competitors. At the same timefirm performance can be affected by factors notnecessarily mediated by strategy, such as supe-rior resources, unfavorable environment, history,and unintended or uncoordinated actions outsideof strategy (such as luck). Consequently, the modelclearly separates between firm resources and firmstrategy as two related but different forms of firm-specific effects on performance. Firm resourcesand structure may affect performance directly andnot only through the specific positions and pathsor as a result of managerial design.14

Another example of the network of relationsexposed by the OESP model is the integrationof organization (i.e., resources and administrativeand social structure)—the traditional focus of theresource-based view—with the main constructs

14 Prior to the emergence of the strategy field, theories in indus-trial organization economics, such as the SCP, ascribed firmperformance mainly to attributes of the environment. A commondistinction made in this literature is between structural variablesthat can have independent effects on performance, and strate-gic variables. For example, in entry barriers, structural variablesare resources such as scale of production, reputation, and know-how, and strategic variables are actions taken by incumbentssuch as entry-deterring strategies. Similarly, organization theorymodels, such as early contingency research, have viewed per-formance as being affected directly by organizational attributessuch as organizational structure. These direct linkages betweenorganization, or environment, and performance are relevant bothto the strategy field and to the disciplines.


578 M. Farjoun

of the SCP model (E, S, and P in our model).Taken alone, the SCP mainly focuses on a singleindustry and therefore on business-level strategies.By contrast, the inclusion of organization in themodel helps view firm-specific resources as notonly alternative sources of business unit perfor-mance but also as potential means to affect thechoice of potential environments. Consequently,by accommodating multiple product or geographicmarkets (i.e., environments) the model can alsodeal with corporate-level issues, such as locationchoices and global coordination.

A fourth and related feature of the OESP modelis its accommodation of interactions. The modelsuggests that performance can be influenced byinteractions between strategy, environment, andorganization that are remote from performancein time and in the causal chain (e.g., Hendersonand Mitchell, 1997). For example, the firm’scurrent strategy may be a result of its pastperformance, which in turn was determined bypast states and paths of the firm’s organization andenvironment, which in turn co-determined eachother in the past (e.g., Webb and Pettigrew, 1999).Alternatively, past strategy may have createda favorable environment that enables currentstrategies.

To further illustrate the applicability and distinc-tiveness of the OESP model, we chose Chand-ler’s (1962) ‘Strategy and Structure’ study andsome of the subsequent studies it inspired (e.g.,Amburgey and Dacin, 1994). The original studyis important, widely recognized and contains richevidence. However, the main reason for its selec-tion is that the dominant view expressed through-out the study, as well the common way in whichit has been subsequently interpreted, are in thespirit of the mechanistic perspective. Highlight-ing the less familiar organic aspects of the study,contained in the original narrative and theoreticalpropositions and in subsequent studies, serves toprovide different and complementary lenses. Sup-plementing Figure 1, the Appendix lists the mainaspects of the mechanistic perspective stressed inthe study and provides illustrations for each ofthe distinctive features of the OESP model. Asthe Appendix shows, the OESP provides a moredynamic, integrated, and interactive view than theone drawn from a mechanistic perspective. Forexample, it drives home the point that firm coor-dinated actions (e.g., structural adjustment) arenot instantaneously and flawlessly achieved; they

trigger responses from other actors that affect thefirm’s performance and are themselves productsof historical and contextual influences and tra-jectories. Moreover, to a large extent the real-ized strategies of Chandler’s four focal firms wereunique in their respective industries and potentialsources of unique competitive capabilities. Nev-ertheless, there were different trajectories that ledto a similar structural solution, and once in placeimitation potentially eroded the benefits of distinc-tiveness. The OESP model’s synthesis and exten-sion of individual organic developments portrays amore complex and rich picture of strategy and itsrelationships with organization, environment andperformance, and enables the generation of newrelationships and insights.

The organic model of the strategicmanagement process

The third and final pillar of the organic perspec-tive is an organic model of strategic management.Based on our concept of strategy and the OESPmodel, the organic model revisits and extendsthe traditional design model.15 Strategic manage-ment is defined here as the superordinate andcontinuous organizational process for maintainingand improving the firm’s performance by manag-ing, that is, enabling, formulating, and realizing,its strategies. In this definition, strategic manage-ment is viewed as a process, a progression, whichincludes the sequence of events and activities overtime (Pettigrew, 1992; Van de Ven and Poole,1995). We view strategic management as consist-ing of a one-time mode —dealing with a particu-lar strategy or a single strategic decision—and arecurrent mode —dealing with a continuous streamof strategies and decisions. It is inherently pre-scriptive: it deals with those aspects that can beshaped by managerial initiatives. Figure 2 pro-vides a summary form of the elements and flowof the model. Figure 3 de-aggregates the organicmodel of strategic management and lists its distinctemphases.

15 Although we describe a general model, we recognize thatdifferent organizational, national, and industrial contexts maycall for different kinds of strategic management processes andtherefore may change the relative weight of some of the elements(e.g., planned vs. emergent strategy).



FirmEnvironment(s)

Actors, theirattributesandbehaviors,strategies,relationships,andperformances;developments,forces anddiscontinuities.

FirmOrganizationStates, forcesand developments in the firm’s resources,relationships,work-flowtechnology, socialstructure, andorganizationalstructure andprocesses(strategy making,organizing,strategicleadership, infoprocessing, etc.).

Quality of short- and long-termco-alignment.

Strategy * FormulationScanning, problemfinding, interpretation,analysis & evaluation,choice & implementationplanning, negotiation,persuasion, invention.

Strategy Realization/ImplementationManaging real-timechange; complementing,refining, securing &sequencing strategy.

Primarydirection

Secondarydirection

Emergentstrategy

* Strategy includes goals,postures and moves

Firm Performance

Figure 2. An organic model of the strategic management process: a summary form

Elements of the strategic management process

Strategy formulation. This subprocess is mostclosely associated with the traditional notion ofstrategy content and formulation (Andrews, 1971),and with coordination by plan (Thompson, 1967).It therefore includes the familiar elements of scan-ning, problem finding, analysis and evaluation,interpretation, and choice. Our model extendsthe traditional view in several ways. It specifi-cally emphasizes the planning of alternative strate-gic trajectories, such as in new market entry(e.g., Bogner, Thomas, and McGee, 1996); it

suggests the need to evaluate the adequacy ofcurrent strategy as well as new alternatives; andit highlights the need to conduct implementationplanning when such planning is deemed possi-ble. Moreover, because of the ‘wicked’ nature ofstrategic issues (e.g., Mason and Mitroff, 1981),formulation includes not just analysis and synthesisbut also invention, intuition, persuasion, and nego-tiation and does not necessarily follow a predeter-mined sequence of steps.

With the appropriate adjustments these mainactivities of strategy formulation need to beconsidered regardless of strategy level (a goal, a


580 M. Farjoun

discrete posture such as a generic strategy, a singlemove or a sequence of moves), and regardless oforganizational level (e.g., corporate). Specifically,choice and implementation planning are viewedas natural complementary parts of the same inte-grated whole—the strategic plan or logic. Thismeans, for example, that the selection of a ‘related’diversification strategy (Rumelt, 1974) is incom-plete if structural coordinating mechanisms, link-ages between activities, sequencing of internaland external changes, and other steps needed toimplement the selection, are not considered too.Similarly, multipoint competition has a potentialperformance effect only if it is complementedby the requisite cross-unit communication andintegration.

Strategy realization/implementation. This sub-process deals with the realization of selected goals,postures and moves, and complementary choices(such as organizational structure). When it isguided by a plan (and hence viewed as imple-mentation), it includes the execution of strategy,its refinement to lower-level steps, and the execu-tion of organizational choices that extend the cho-sen strategy. The notion of realization particularlysuggests that strategy may not be a result of delib-erate planning but can also emerge (Mintzberg andWaters, 1985). Strategy realization/implementationalso includes more traditional aspects of man-aging internal change such as communicationand support building. However, it also includesthe action–interaction sequences of managing theexternal context of strategic change, especiallythe realization of strategic trajectories and theabsorption of strategy into the firm’s external con-text.

One-time and recurrent modes of the strategicmanagement process

The strategic management process consists of anongoing cycle of activities, which are reciprocaland in reality may temporally overlap and not beclearly demarcated.

As described in Figure 3 the one-time modeof the process, dealing with a specific strat-egy or decision, is adequately captured in theflow of the traditional design model. Added inthe organic view are several emphases. First,the chosen strategy guides strategy execution,which affects performance directly, and indirectly,

through its effects on organizational (e.g., orga-nizational structure) and environmental elements(e.g., industry structure). Second, an alternativeand complementary path to strategy realization isan emergent strategy that can be interwoven withthe formulation process or bypass it altogether.Emergent strategy can be based on other coordinat-ing mechanisms such as core values, simple ‘rules’and the like, and on the interaction between topmanagement’s perspective and lower-level man-agement’s feasibility assessment. Realized strategytakes its final form—a particular mix of coordinat-ing measures—through real-time mutual adjust-ment to organizational and environmental forcesand performance signals. Third, the flow cyclesback in that performance influences organizationaland environmental elements and realized strat-egy, and joins them as new informational inputsto strategy formulation. In the one-time mode ofstrategy, both performance and realized strategyshape future choices through learning and the pro-vision of inputs stemming from emerging strat-egy or strategy experiments. In the cycle, thoughtand action continuously and reciprocally feed eachother.16

The recurrent mode of strategic managementreflects the idea that strategic management is nota given process but one that needs to be ini-tiated, cultivated and occasionally modified, andis ongoing : its uses are not confined to a sin-gle cycle or a particular strategy. Three tasks ofstrategic management are particularly pertinent toits continuous nature. First, facilitating the formu-lation of strategies, for example, by establishingmarket and competitive intelligence devices or bymanaging the formulation process itself: staffing,hiring external consultants, dividing responsibili-ties between management and board, and estab-lishing the desired degree of decision conflict.Second, facilitating the emergence of strategies,for example, by encouraging bottom-up contri-butions, cultivating supportive organizational cul-ture, rewarding rich communication flows, andthe like. Third, enhancing the implementability

16 Strategic leaders play an important but not unlimited role inthe strategic management process. In contrast to their depictionin the mechanistic view as rational analyzers, we view theirrole as combining social and analytical facets and particularlyas subject to constraints on rationality and adjustment. Moreover,leaders’ actions and behaviors, such as using external consultantsto test the political feasibility of potential directions, or creating asense of confidence through symbolic actions, often accompanyor precede analysis.



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582 M. Farjoun

of strategies, through delegating responsibilities,encouraging participation, and strengthening thefirm’s capacity for change, for example. Thesethree tasks influence the first-order, more fre-quently repeated activities of formulation and real-ization. They can also be revisited under specialcircumstances. For example, the firm may need totake action through double-loop learning (Argyrisand Schon, 1978) upon learning of consistent prob-lems in a major aspect of its strategic manage-ment: the firm’s response may be too slow dueto a lengthy implementation process or it may nothave the right mechanisms to encourage creativestrategies.

Implications of the organic model of strategicmanagement

Rooted in organic notions of time, interaction andintegration, and as shown in Figure 3, the organicmodel of strategic management emphasizes severalthemes. We focus on four in particular.

First, a key feature of the model is that firmorganization and firm environment interact witheach of the subprocesses of strategic manage-ment. The roles of different elements of the firm’senvironment and firm organization are not con-fined to being inputs to strategy, but extend tobeing a context for facilitating strategy, interact-ing with the actual process of realization, andpartly being products of strategy itself. Specif-ically, external action–interaction sequences areimportant in strategy realization at the same timethat internal social, cognitive, cultural, and politi-cal processes play a role in strategy formulation.Furthermore, administrative issues and implemen-tation may require formulation and planning too,and content issues need to include the choice ofstrategic moves and paths (see also Inkpen andChoudhury, 1995). Each of the strategic manage-ment subprocesses combines both social and ana-lytic considerations. A more holistic view of strat-egy replaces the conventional distinction betweencontent and process.

The integration of organization and environ-ment into each of the subprocesses suggests aview of strategic management as a process ofmanaging change (or persistence). It thus high-lights human engagement, the particular role ofstrategic leaders, and the particular considerationsassociated with change such as lags, timing, dura-tion, momentum, inertia, and abortive efforts. It

suggests that strategy formulation broadly dealswith the sensing, evaluating, and planning ofexternal and internal change rather than more nar-rowly with making choices. Strategy realizationthen deals with the realization of change, plannedor emergent. Finally, the role of recurrent strate-gic management is to facilitate the emergence,planning, and realization of change, as well as toevaluate and integrate these facets of managingchange.

Second, the idea that strategy affects its owninputs (i.e., organization and environment) maysuggest that the process and effects of strategyrealization need to be recognized at formula-tion: strategy needs to be planned with its effectsin mind. Particularly, during strategy execution,additional changes may take place, and strategyitself may affect these changes in part. Since thefirm’s actions change the nature of the problemit faces, the firm needs to select a realizablestrategy —one that will provide a good dynamicmatch between organizational and environmen-tal attributes if and when it is implemented andsustained.

An example from a familiar context may illus-trate this point. When the traditional choice modelis applied, a firm considering entry into a newindustry needs to evaluate the structure of thatindustry vis-a-vis the firm’s available resources.We propose to consider how industry structure andfirm resources might look if and when entry occursand is completed : what changes will occur beforeand during formulation or execution (e.g., thesimultaneous entry of other firms), what changeswill be produced by the entry (e.g., migration ofcustomers), what resources will be consumed dur-ing the process (e.g., managerial attention), whatimplementation capability the firm has (e.g., howefficient the entry process is likely to be), and howinternal and external stakeholders might support orinterfere with execution (e.g., reaction of incum-bents, and employee support).

Moreover, the potentially path-dependent natureof strategy suggests that the evaluation of alter-native strategies needs to consider their impacton subsequent strategies, for example, the easeof transition from one alternative to a fall-backalternative. Beyond the question of how currentstrengths, weaknesses, opportunities, and threats(SWOT) affect the choice of a current strategy,an equally important consideration might be theextent to which an executed strategy improves the



future SWOT of the firm. The view of strategy ascreating and affecting its own inputs also suggeststhe need for backward and interactive reasoning,which is not an integral part of the SWOT model(Hill and Westbrook, 1997).17

A third implication of the organic model sug-gests that strategy formulation, the main focus ofstrategy research and teaching, may have a lesssignificant role in the overall strategic manage-ment process and in affecting performance out-comes than traditionally conceived. This can beappreciated through the use of backward reason-ing. As Figure 2 indicates, what may eventuallyaffect a firm’s performance is its realized strategy.Therefore, a main managerial question becomeshow to generate the most effective realized strate-gies. This comes down to either implementinga previously formulated strategy, or realizing anemergent strategy. Furthermore, both planned (andsubsequently implemented) and emergent strate-gies are supported by more basic and recurrentstrategic management activities. Consequently, thefirm may need to either plan well or create theorganization necessary to implement effectively,or respond effectively, through emergent strate-gies. Thus, given the potential effects of imple-mentation, emergent strategies, and strategic man-agement’s basic functions, the traditional atten-tion given to choice and formulation may bedisproportionate.

A final key implication is that strategic manage-ment when continuously practiced may develop tobe a core firm capability. A firm may particularlyexcel at the strategic management of alliances,or become adept at more recurrent tasks: man-aging formulation and implementation in parallel,switching and resolving conflicts between differentmodes of strategy formation, and learning acrosscycles. Generalizing related suggestions (e.g., Hartand Banbury, 1994; Teece et al., 1997), strategicmanagement rather than one-time strategies mayhave more enduring effects on the firm’s long-termperformance.

17 Familiar planning tools such as the industry life-cycle andscenario planning often imply the design of strategies aroundexternal givens. They do not usually consider changes in theenvironment produced by strategy itself. The need to choose thebest strategy given the strategies of other players is implicit inthe game-theoretic notion of the Nash equilibrium. This notion isextended here to include actions and responses of internal actors.

Summary of the organic perspective’sepistemological underpinning and theirmanifestations

Like the mechanistic perspective it seeks to extend,the organic perspective offers a coherent view ofcore strategy issues. For example, the view of strat-egy as affecting the firm’s environment is alsoreflected in the reciprocal causality between themain constructs in the OESP model, and in therole of strategy formulation and realization. Theidea of continuity and path dependence is evidentin the attention given to future strategies in theorganic model of strategic management. Also, theunified view of constructs and relationships in theOESP model helps better link the different sub-processes of strategic management. This internalconsistency is enabled by the shared epistemolog-ical assumptions on time, flow, and the couplingof constructs. It puts conceptual, theoretical, andprescriptive models of strategy on an equal epis-temological footing and encourages their cross-fertilization. Panel B of Table 1 summarizes thecontent, influences, and context of the organic per-spective on strategy. Taken together, the table’stwo panels demonstrate how each set of episte-mological assumptions provides coherence withineach of the perspectives, and how the differencesin the sets often yield distinct views on the samecore issues.

DISCUSSION

Summary and contributions

The key drive behind writing this paper was thegrowing awareness that mechanistic models andideas are losing their potency, while organic ideashave not gone far enough to renew them or toprovide an alternative and more current perspec-tive. One potential remedy is the development ofa different overriding perspective that will helprenew and integrate existing ideas and stimulatenew ones. To that end we focused first on uncov-ering epistemological assumptions that have beenused throughout the field’s evolution, and sec-ond on selectively using organic assumptions todevelop an internally consistent set of concepts,explanatory and prescriptive models. This focusreflects our belief that it is through the reexamina-tion of epistemological foundations that long-termprogress in the field can be made: a fruitful way to


584 M. Farjoun

change entrenched views is to recognize the waywe think.

Each pillar of the organic perspective, devel-oped in this paper, offers a distinctive view onthe field’s main issues as well as new directionsthat can be explored. First, the organic concept ofstrategy stresses action, coordination, and adapta-tion. It suggests that prior notions of strategy suchas position and a pattern may have much more incommon than previously suggested. It particularlyhighlights the need to better understand the varietyof coordinating mechanisms, the ways they com-bine or conflict in practice, and the contextsin which they are most effective. Second, theOESP model shows how different lower-levelmodels stem from a more integrated and dynamicoverview of the field’s main constructs and rela-tionships. The model can be extended by examin-ing less researched linkages, using process models(e.g., dialectics) to explain such issues as advan-tage creation, attending to history, multiple causesand change, and dealing with specific concernsof strategy like positioning or scope decisions.Finally, the organic model of strategic managementhighlights the recurrent and integrated aspects ofthe process and suggests a more holistic view ofstrategy itself. It urges us to better understand howstrategy emerges and is enabled, and how the exter-nal and internal aspects of managing change areactually integrated.

We see the paper’s chief contribution in propos-ing an extension and alternative to the mechanisticperspective and one that potentially offers a moredynamic, integrative, and appropriate frameworkfor the phenomena and questions of interest tothe field. The focus on organic ideas as desirablefor the field’s development is meant to reduce theperceived asymmetry between their potential andactual use, and to suggest that relying solely onmechanistic ideas may lead into a blind alley. Theorganic perspective provides a coherent yet dis-tinct view on the field’s core concerns and a meansto generate and exchange ideas, facilitate inter-disciplinary work, and increase the compatibilitybetween what we study, teach, and practice.

The organic perspective is consistent with prioradvocates of integration (e.g., Barney and Zajac,1994) and dynamics (Porter, 1991). Yet it alsoextends these works. It gives a more concretemeaning to the notion of dynamics by com-bining issues related to time, such as processand history, with those related to flow, such

as interaction and feedback. It further providessubstance to the notion of integration by offer-ing broadly defined constructs, establishing theirinterrelationships, and showing how diverse mod-els can be unified. Moreover, it joins prior pro-posals to combine both dynamics and integration(e.g., Bourgeois, 1984; Bowman and Hurrey, 1993;MacIntosh, and MacLean, 1999). It particularlyputs to use, updates, and elaborates the work ofBourgeois (1984), among the first to highlight theneed for the field to move from mechanistic toorganic views.18

Though they provide different perspectives onthe same issues, there are many ways in whichorganic and mechanistic ideas complement eachother. Particularly, the questions of how a par-ticular firm succeeded or failed, and what werethe contributing historical conditions and devel-opments, go hand in hand with the question ofwhether its fortunes came about because of a bril-liant strategy, superior resources, favorable envi-ronment, or pure luck. Moreover, rational anal-ysis is incomplete if it fails to account for thesocial nature of reality. In turn, the use of anal-ysis and logical baselines can inform attempts toinfluence or develop actual behavior of individualsand social systems.

The organic perspective also offers severalimplications for the development of practice.When employed as a way of thinking, itencourages managers to think and act in waysthat are more allocentric, holistic, process-oriented,entrepreneurial, and creative. It sensitizes themto issues of timing, critical intervention points,interaction, and the recognition of temporalpatterns and sequences. However, unless organicideas are supplemented by the applicable analyticmodels, strategic analysis and management riskbecoming exclusively an art. Although good

18 A similar progression to a more organic view can be foundin models of human behavior. A major debate in the fieldsof psychology and organization behavior has focused on therelative primacy of personality and situational determinantsin explaining individual behavior. Although neither positioncompletely negates the other, internal views see people as beingmotivated by inner drives (Freud, 1964) or traits (Allport, 1961),while external models (e.g., Skinner, 1953) view human behavioras primarily caused by external stimuli. A third and more recentperspective explains human functioning in a more dynamic andintegrated manner. In social cognition theory (e.g., Bandura,1986), human behavior is explained in terms of a model of triadicreciprocity in which behavior, cognitive and other personalcapabilities, and environmental events interactively influenceeach other.



beginnings have been made by options thinking,new analytic models that can help strategicmanagers better deal with uncertainty, rapidchange, and turning points are badly needed.Traditional analytic tools can also be improved.For example, models of internal analysis shouldmove beyond the analysis of resources andactivities to include other organizational aspects,and to highlight the role of organization asa context, process, and product of strategy.Similarly, models that integrate sociological andeconomic aspects of the environment, or that movebeyond traditional life-cycle conceptions of itsevolution, are lacking. Moreover, although SWOTanalysis is still useful, it can no longer serve as aprimary model to guide strategic choice (Hill andWestbrook, 1997).

What general directions for a new researchagenda for the field of strategy can be derivedfrom the organic perspective? We divide theseinto conduct and substance implications while rec-ognizing that some implications contain a littleof both.

Conduct implications

Variable resolution

A better understanding of strategy-related phenom-ena is unlikely to be gained by attending to asingle theoretical perspective, level of analysis,context, or time frame. Thus for example, thefactors associated with the success of a singlestrategic decision, the tenure of a specific exec-utive team, or firm survival across several gen-erations of technological breakthroughs can varywidely (see Zaheer, Albert, and Zaheer, 1999,on the issue of time scale). Furthermore, whatmay be optimal at a collective level may notbe optimal at the unit level. Progress is morelikely to be made by using research with differentdegrees of resolution. By employing both fine-grained and coarse-grained approaches alternately,a more holistic appreciation of strategy issues canemerge.

Much progress has been made in the studyof highly specific phenomena such as acquisi-tions and multipoint competition. Attention at thelevel of individuals and to micro phenomena canalso make new and important advances. At theother end of the spectrum, strategy research can

benefit from using multiple time frames, com-parative (historical) research, simultaneous explo-ration of different levels of analysis, and multipletheoretical lenses. Clearly, such a research agendais more demanding and therefore it may be betterapproached in research programs, in large, book-length studies, and in periodical reviews ratherthan in the usual single-study format. However, itis likely to better place theoretical ideas and empir-ical observations in a broader and more temporalcontext.

History and process research

The organic perspective highlights the historicaldimension of strategy-related phenomena. Asillustrated in Chandler’s (1962) research, the natureof historical perspective makes it more likely to beeclectic, integrative, and sensitive to time, interac-tion, context, and multiple levels of analysis. Casehistories of firms and industries that were instru-mental to the field’s early development are some-times labeled ‘prescientific’ (e.g., Rumelt et al.,1994). However, a renewed interest in historicaland clinical research is not a sign of regressionbut of the field’s maturity. The benefits of such anapproach are too great to be ignored by strategyresearchers. New historical research is likely to bedifferent from earlier work since it can now buildon the cumulative progress made in the field. First,it can use both qualitative and dynamic statisticalmodeling. Second, it can use a better-developedtheoretical base to frame the analyses. Third, itcan be more sensitive to reading history forward asopposed to retrospectively, thus providing a betterappreciation of how firms and managers cope withuncertainty, multiple trajectories, lags, and deadends. Fourth, it can examine the development offirms, industries, and strategies before they becomefull-blown entities and thus add more knowledgeon their early emergence, variation, and selection(see, for example, Aldrich, 1999). A revival of‘neo-historical’ research in strategy may thus ben-efit from the path-dependent intellectual evolutionof the field itself.

The content and spirit of the organic perspec-tive require the use of longitudinal research and ofless accepted methods such as sequence modeling,ethnography, and case histories. Cross-sectionalstudies can be useful but they cannot remainthe predominant mode of analysis (Bowen andWiersema, 1999). Process models look at different


586 M. Farjoun

issues than variance models and therefore poten-tially produce different observations. Althoughthere are different opinions with regard to the needto integrate variance and process approaches (e.g.,Langley, 1999), we certainly see the use of pro-cess models as appealing in several respects. First,by disaggregating time, they introduce unique pos-sibilities for path and sequence to affect finaloutcomes. Second, process models may be bet-ter suited to gain insights into duration vari-ables in general and into sustained performancein particular. Third, by their greater sensitivity tomultiple trajectories, process models and studiesare more likely to reveal sources of both successand failure.19

Interaction and managerial discretion

The interactive view of flow in the organic per-spective has several implications. First, as sug-gested by others (e.g., Rindova and Fombrun,1999) there is a need to go beyond stating theexistence of mutual influences to specifying theexact mechanisms by which interaction occurs.Second, if we take seriously the idea that firmsand environments influence each other, then it fol-lows that some of the firm’s resources and unique-ness is due to its embeddedness in a particularindustry network, geography, and historical con-text. In turn, the firm’s resources and actions mayaffect industry attributes, such as entry barriers.Moreover, both firms and industries are subjectto emergent and selection processes that are lesslikely to be influenced by managers, if at all. Theissue then becomes not so much whether the indus-try or the firm is a more important determinant offirm performance, but rather what discretion man-agers and other employees have in affecting thefirm’s internal or external context, and under whatconditions.

Integration

We see synthesis and dialectic as particularlyuseful strategies to integrate different theoreticalperspectives and research traditions (e.g., in theUnited States and Europe), or different facets of aphenomenon. In the case of synthesis this involves

19 For an excellent introduction to the conduct of process researchand to pertinent foundational work on time in the social sciencessee Pettigrew (1997).

the search for common ground that combinesstrengths and minimizes weaknesses, and in thecase of dialectics the use of differences and ten-sions between competing perspectives to producenew understandings (Morgan, 1983: 377–382).One illustration that invites cross-fertilization isthe theme of integrated management of change.Insights gained from behavioral models abouthow to initiate and institutionalize change canbe synthesized with those coming from economicmodels, such as strategic interaction and optionstheory. Although they originate in different dis-ciplines, these models deal with similar issues:managing uncertainty, overcoming resistance andinertia, coalition formation, and communication.As another illustration, models of learning andexperimentation traditionally dealt with by behav-ioral analysts can examine, for instance, what themost effective experimentation strategies in dif-ferent contexts may be (e.g., Mosakowski, 1997),and more generally become the focus of analyticapproaches.

Language and communication

As pointed out by others (e.g., Weick, 1969), atten-tion to process and interaction requires the useof dynamic vocabulary. Foundational work in themechanistic perspective coming from both eco-nomics and organization theory has focused fortoo long on structural features of markets andorganizations. The trend towards more dynamicanalyses that came with the organic develop-ment may require a greater attention to the rep-resentation and communication of dynamic ideas.One approach is to use verbs, such as organiz-ing and strategizing, to highlight micro actionsand human processes and practices. Modeling par-ticular aspects of time such as pace and dura-tion may be another strategy (e.g., Monge, 1990).Finally, the use of visual vocabulary to conveyprocess and interaction may also be beneficial.These different forms of presenting and commu-nicating ideas can complement the use of organicepistemological assumptions on time, flow, andcoupling.

Substance implications

Using the analogy of language, the organic per-spective generally does not include specific sen-tences and a rigid syntax, but rather proposes a



shared base of key assumptions, concepts, relation-ships, and themes upon which a variety of storiescan be told. What are some of the researchablequestions consistent with the organic perspectivethat can be pursued with the stylistic and methodthemes discussed above?

Dynamic decision tasks

Strategic decisions are dynamic decision tasks.Taking time into account can be either in terms ofconsidering the duration needed to make the deci-sion, the optimal time to make a decision, or thechanges in the decision structure over time (Arieliand Zakai, 2001). These aspects are relativelyneglected in strategy research and in models ofstrategic choice and management. Particularly, therational unitary actor model used in the mech-anistic perspective is largely insensitive to thenotion of time. The best-known model of orga-nizational decision making that does take timeand timing seriously into account, the ‘garbagecan’ model (Cohen, March, and Olsen, 1972), ismainly a descriptive model of organizational anar-chy. Is it possible to come up with other strategicdecision-making models, descriptive or prescrip-tive, that will take into account continuous changesin resources, interests, competitive responses, andother factors, including those happening within thedecision making period?

Dual classes of units of analysis and theirinteraction

An important distinction in process and evolution-ary analysis is between bounded entities (individ-uals, work units, firms, groups) that strategicallyinteract, and the units (such as routines, strategies,rules, institutions, transactions, competencies) car-ried by these entities (e.g., Baum and Singh, 1994;Aldrich, 1999). An advantage of making this dis-tinction is that one can learn about the developmentprocesses of a unit from one class by examininghow units from the other class develop. For exam-ple, as shown in the work of Nelson and Winter(1982), the evolution of routines can shed light onfirm and industry evolution as well as be informedby this evolution. Other domains of inquiry, par-ticularly relevant to the strategy field, may includethe diffusion of strategies, the evolution of net-works, and the relationships between institutions(e.g., norms, conventions) and rivalry (for other

examples see Moldoveanu, 2001). Although notsimple to design, studies that look simultaneouslyat the two classes of units of analysis can shedlight on how micro and macro processes inter-act and enhance cross-fertilization of disciplinary-based ideas.

Imperfect adaptation and inefficiency

Much of the empirical research on strategy is oftencriticized for being outcome based and confiningitself to instances of success (e.g., Carroll, 1993).The focus of the organic perspective on processand path enables a better appreciation of imperfectadaptive processes and instances of inefficiency,mistakes, and failures. One remedy for the poten-tial existence of a bias may involve sample selec-tion. However, several more substantive questionsremain to be addressed. For example, in what waysare the prerequisites and contributing processesfor firm survival different from those contribut-ing to sustained exceptional performance? Whatare the implications of the difference in the timeframes involved in firms sustaining superior per-formance as opposed to experiencing decline andbankruptcy? In what ways, if at all, are the sourcesand development of strengths different from thoseof weaknesses?

The economics of firm’s transitions

Another area of research that is consistent with ouremphasis on process is the efficiency by whichfirms change their strategy, structure, products,technology, and the like. The mechanistic empha-sis on static efficiency, evident in frameworks suchas the value chain, have precluded a better under-standing of how efficient firms are in their tran-sitions. Issues such as how efficiently firms movefrom one position to another, and from one mar-ket to another, or how adept they are in imple-menting acquisitions, alliances or organizationalchanges, are not adequately captured by the notionof switching costs either. Among other concernsof the field, the analysis and measurement of theeconomics of transitions can improve the under-standing of sources of firm success and failure,extend traditional static frameworks of compara-tive analysis of competitors and other interactingactors, improve the analysis of various decisionalternatives, and strengthen the links between con-cerns of strategy formulation and realization.


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Multiple and inconsistent goals

Most mechanistic models conveniently adopt theclassic economic model of profit-maximizingfirms. However, in reality and even whena long-term unitary strategy exists, managersoften pursue several and at times inconsistentgoals and objectives. In particular, tensions arisebetween profitability and growth and betweenshort-term and long-term performance. What arethe implications of using multiple and partlyinconsistent performance criteria in both empiricalresearch and strategic management models? Howdo we treat a firm’s actions that may be appropriatefor the short run and not the long run orconversely? These issues, and particularly thetemporal tension between static and dynamicefficiency, are central to the practice of strategicmanagement and should get a more central stagein strategy research and in strategic thinking.

These research directions are but a few ofthose that can build on the organic perspective.A sustained effort in each of them is likely toenhance progress on the field’s core questions.Many aspects of the organic perspective are con-tained in earlier studies such as Chandler’s (1962).Several recent studies too, such as Garud and Vande Ven’s (1992) on internal corporate venturing,Levinthal and Myatt’s (1994) on competencies andcompetition, Rindova and Fombrun’s (1999) inter-active model of competitive advantage, and Hol-brook et al.’s (2000) on the evolution of firms’differences, nicely illustrate the perspective’s con-tent and spirit. If successful, these individual con-tributions and other new research can become anintegral part of a more unified and better-attunedorganic perspective on strategy research, teaching,and practice.

A FINAL WORD

Almost from its inception, the strategy field has toa great extent relied on a mechanistic perspectiveon strategy. This perspective, unified by an epis-temologically coherent base, has gradually movedout of alignment with its context. The advent oforganic developments, in turn, has brought betterexternal alignment but not a unified approach. Theproposed organic perspective relies on the threeI’s (incessant, interactive, and integrated) insteadof the three D’s (discrete, directional, and dif-ferentiated) and addresses the field’s core issues

in unison. It therefore builds on the strengths ofthe two prior developments: it better harmonizesstrategic models and constructs with one another,and with the new realities.

ACKNOWLEDGEMENTS

I thank the anonymous reviewers of the paper fortheir constructive and thoughtful comments. Anearlier version of the paper was presented at theFourth Conference on Competence-Based Com-petition (Oslo, Norway). I thank the conferenceparticipants as well as Ron Sanchez, Eli Segev,and Gerda Kessler for their contributions to thedevelopment of the paper.

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Towards an Organic Perspective on Strategy 593A

PP

EN

DIX

:C

HA

ND

LE

R’S

STR

AT

EG

YA

ND

STR

UC

TU

RE

STU

DY

RE

VIS

ITE

D

(Bas

edon

Cha

ndle

r(1

962)

,R

umel

t(1

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,W

illia

mso

n(1

975)

,A

rmou

ran

dTe

ece

(197

9),

Hal

lan

dSa

ias

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0),

Am

burg

eyan

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acin

(199

4)an

dFl

igst

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1))

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stic

The

mes

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stud

yco

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em

ain

cons

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rest

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rate

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sear

chin

the

follo

win

g(p

rim

arily

linea

r)w

ay.

Inea

chpe

riod

the

natu

reof

the

envi

ronm

ent

(E)

and

the

reso

urce

sof

the

orga

niza

tion

(O),

influ

ence

the

stra

tegy

(S)

chos

enan

dth

isin

turn

dete

rmin

esth

eor

gani

zatio

nst

ruct

ure

(O).

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eque

ntly

,th

eev

olut

ion

ofth

een

viro

nmen

tan

dre

sour

ces

brin

gsab

out

ane

wst

rate

gyan

da

new

stru

ctur

e(p

.15

).A

sst

ated

inC

hand

ler’

sbo

ok(p

.31

4),s

trat

egy-

stru

ctur

e(S

-O)

mis

mat

chre

sults

inin

effic

ienc

y(P

).T

his

prop

ositi

on,

asw

ell

asa

dire

ctst

rate

gy-p

erfo

rman

celin

k,w

ere

subs

eque

ntly

exam

ined

byot

hers

(e.g

.,R

umel

t(1

974)

).Fu

rthe

rmor

e,fir

ms

inso

me

indu

stri

esw

ere

mor

elik

ely

todi

vers

ify

than

othe

rs(E

-S)

orad

opt

cert

ain

stru

ctur

es(E

-O)(

Will

iam

son,

1975

:141

).C

hand

ler

also

tend

sto

view

stra

tegy

asa

plan

and

apo

stur

e/st

ate

and

the

stra

tegi

cm

anag

emen

tpr

oces

sas

afo

rmal

and

anal

ytic

alpr

oces

sdi

rect

edby

ado

min

ant

lead

er.

The

seas

pect

sof

the

proc

ess

are

illus

trat

edin

the

case

ofD

uPo

nt’s

dive

rsifi

catio

nan

dst

ruct

ure

deci

sion

s(p

.80

)an

din

the

orga

niza

tion

stud

yat

GM

.

Org

anic

The

mes

and

Dis

tinct

ive

Fea

ture

sof

the

OE

SPm

odel

Illu

stra

tion

inC

hand

ler’

sW

ork

and

Sele

cted

Subs

eque

ntSt

udie

s

OE

SP:

Org

anic

The

mes

Vie

ws

ofst

rate

gyan

dst

rate

gym

akin

g:St

rate

gyas

inte

ract

ive,

dyna

mic

,le

arne

d,in

tegr

ativ

e,in

vent

ive,

and

emer

gent

.St

rate

gyas

adap

tive

coor

dina

tion.

Stra

tegy

mak

ing

asso

cial

,in

tuiti

ve,

inte

rpre

tive,

and

cont

inuo

us.

•In

Stan

dard

Oil,

stru

ctur

alad

just

men

tan

dst

rate

gic

expa

nsio

nca

me

ina

mor

ein

tuiti

ve,

unsy

stem

atic

and

adho

cw

ay.

Cha

nge

did

not

follo

wan

expl

icitl

yde

fined

plan

(p.

172)

.E

mer

gent

stra

tegy

inSw

ift

(p.

25).

Du

Pont

’sex

peri

ence

sw

ithpr

ior

anti-

com

petit

ion

stra

tegi

essh

owed

thei

rlim

itatio

nsan

dle

dto

adi

ffer

ent

stra

tegi

cfo

cus

(p.

33).

Evo

lutio

nary

stru

ctur

alch

ange

.E

ndog

enou

sgr

owth

crea

tes

unex

pect

edco

nseq

uenc

es.

•Se

ars’

revo

lutio

nary

stra

tegy

indi

rect

reta

iling

(p.

233)

.•

Goa

ls-S

trat

egy-

Stru

ctur

eco

ordi

natio

n;st

rate

gyad

apta

tion

toch

ange

sin

econ

omic

and

inst

itutio

nal

envi

ronm

ent.

•In

divi

dual

s(e

.g.,

cons

ulta

nts)

and

stra

tegi

cle

ader

spl

aya

cent

ral

role

inst

rate

gyfo

rmul

atio

nan

dre

aliz

atio

n(p

.28

3).

•B

ench

mar

king

and

lear

ning

from

othe

rfir

ms

(p.

95).

•E

xecu

tives

’se

nse

mak

ing

ofre

cent

perf

orm

ance

prob

lem

s(p

.98

).•

Con

flict

inde

cisi

onm

akin

gat

Sear

s(p

.24

7).

•M

ulti-

divi

sion

alst

ruct

ure

faci

litat

esst

rate

gyfo

rmat

ion.

New

linka

ges

inSC

P,SS

P,R

BV

•St

rate

gygr

ows

out

ofst

ruct

ure

and

intu

rnle

ads

toits

mod

ifica

tion

(Hal

lan

dSa

ias,

1980

).•

Stra

tegy

affe

cted

byth

ose

inpo

wer

and

thei

rpe

rcep

tions

(Flig

stei

n,19

91).

Org

anic

deve

lopm

ents

(s.d

.m,

s.le

ader

ship

,m

anag

emen

tof

chan

ge,

stra

tegi

cin

tera

ctio

n).

•Pr

oces

sof

stru

ctur

alch

ange

–in

tern

alco

nflic

tsan

dpo

liti

cs,

stud

yco

mm

ittee

s,ex

peri

men

tatio

nan

dre

visi

ons

(p.

303)

.•

Com

petit

ive

imita

tion

and

resp

onse

sto

stru

ctur

alch

ange

(p.

380)

.•

The

esse

ntia

lre

shap

ing

ofad

min

istr

ativ

est

ruct

ure

near

lyal

way

sha

dto

wai

tfo

ra

chan

gein

top

com

man

d(p

.38

1).

Fam

ilyhe

ldfir

ms

wer

esl

ower

toch

ange

both

stru

ctur

ean

dst

rate

gy.

(con

tinu

edov

erle

af)


594 M. Farjoun(C

onti

nued

)

Illu

stra

tion

inC

hand

ler’

sW

ork

and

Sele

cted

Subs

eque

ntSt

udie

s

OE

SP:

Dis

tinc

tive

Fea

ture

s

Inte

grat

edC

onst

ruct

s•

Stra

tegy

incl

udes

both

goal

san

dac

tion

s(p

.13)

,Env

iron

men

tin

clud

esec

onom

ic(i

.e.,

indu

stry

)in

fluen

ces

asw

ell

asso

cial

inst

itut

iona

lon

es(e

.g.,

Fli

gste

in,1

991)

,Str

uctu

rein

clud

escu

ltur

e,po

wer

and

beli

efs

(Hal

lan

dSa

ias,

1980

).P

erfo

rman

cein

clud

essh

ort-

run

and

long

-run

cons

ider

atio

ns.

Self

-infl

uenc

es•

Mom

entu

min

stru

ctur

alor

stra

tegy

chan

ges

(Am

burg

eyan

dD

acin

,199

4);

Per

form

ance

asa

self

-gen

erat

ing

forc

efo

rgr

owth

(p.3

83).

Pat

hde

pend

ence

and

hist

ory

•H

isto

rica

lco

ntex

t(e

.g.,

1920

)pr

ovid

edop

port

unit

ies

for

dive

rsifi

cati

on(F

ligs

tein

,199

1).

•H

isto

ryaf

fect

sst

rate

gyth

roug

hst

ruct

ure.

•W

arex

peri

ence

inex

plos

ives

affe

cts

dive

rsifi

cati

onpa

that

Du

Pon

t.•

The

way

inw

hich

its

foun

ders

orth

eir

fam

ilie

sm

ake

thei

rte

rms

wit

hth

ead

min

istr

ativ

eim

pera

tive

sof

ala

rge-

scal

een

terp

rise

iscr

ucia

lto

the

late

rhi

stor

yof

afir

m(p

.381

).Im

perf

ect

adap

tati

on•

Org

aniz

atio

nal

anar

chy

and

impe

rfec

tco

ordi

nati

on:

each

func

tion

alde

part

men

tus

esit

sow

nst

atis

tics

(p.1

01).

•F

unct

iona

lst

ruct

ure

impe

des

man

ager

s’st

rate

gic

view

and

chan

nels

thei

rat

tent

ion

(p.2

47).

•B

iase

sin

iden

tify

ing

capa

bili

ties

atD

uP

ont

(p.1

12).

•Se

ars’

Woo

dst

rate

gy:

gene

ral

dire

ctio

nis

corr

ect

but

man

ym

ista

kes

happ

enon

the

way

(p.2

35).

•D

elay

sbe

twee

nin

trod

ucti

onof

stra

tegy

and

adop

tion

ofst

ruct

ure

(p.1

35).

•In

dica

tion

ofin

erti

ain

stru

ctur

alad

opti

onat

Du

Pon

t(p

.101

).P

roce

ssm

odel

s(h

owqu

esti

ons)

•P

roce

ssof

grow

this

endo

geno

usan

dem

erge

nt—

expl

oiti

ngre

sour

ces

asa

dyna

mic

forc

eth

atch

ange

dbo

thst

rate

gyan

dst

ruct

ure

(p.3

84).

•St

ruct

ure’

sin

fluen

ceon

stra

tegy

ism

edia

ted

byit

sin

fluen

ceon

the

stra

tegi

cde

cisi

onm

akin

gpr

oces

s,an

dth

ero

les,

skil

lsan

dpe

rcep

tion

sof

top

man

agem

ent

(Am

burg

eyan

dD

acin

,199

4).

•St

ruct

ural

diff

usio

nas

apr

oces

s(c

h.7)

.A

netw

ork

ofre

lati

ons,

inte

ract

ions

,equ

ifina

lity

and

mul

ti-c

ausa

lity

•C

urre

ntle

vel

ofdi

vers

ifica

tion

(S)

and

grow

th(P

)af

fect

sst

rate

gy(S

)an

dst

ruct

ure

(O)

chan

ges

(Am

burg

eyan

dD

acin

,199

4).

•F

amil

yhe

ldfir

ms

slow

toch

ange

stra

tegi

esbu

tal

sola

ckof

stra

tegi

cde

cisi

ons

let

fam

ilie

sgo

vern

long

er(p

.381

).•

Equ

ifina

lity

:di

ffer

ent

rout

esto

the

inno

vati

onof

mul

ti-d

ivis

iona

lfo

rm.

•St

ruct

ure

atJe

rsey

are

sult

ofhi

stor

ical

evol

utio

n,pe

rson

alpr

efer

ence

s,le

gal

requ

irem

ents

,and

just

happ

enst

ance

(p.1

65).

•St

ruct

ure

and

stra

tegy

are

affe

cted

byle

giti

miz

ing

norm

s,im

itat

ion

and

fash

ion

(Rum

elt,

1974

;F

ligs

tein

,199

1;A

mbu

rgey

and

Dac

in,1

994)

•A

sm

ore

firm

sad

opte

dth

est

ruct

ure,

the

link

betw

een

stru

ctur

ead

opti

onan

dpe

rfor

man

cedi

sapp

eare

d(A

rmou

ran

dTe

ece,

1979

)•

Mut

ual

lear

ning

betw

een

the

foca

lfo

urfir

ms

and

othe

rfir

ms

(p.1

7).

Stra

tegy

effe

cts

onen

viro

nmen

t•

Sear

s’en

try

todi

rect

reta

ilin

gre

volu

tion

izes

the

indu

stry

(p.2

33).

Per

form

ance

asin

depe

n-de

ntva

riab

le•

Dec

lini

ngpr

ofita

bili

tyat

base

indu

stry

push

esfo

rdi

vers

ifica

tion

(Am

burg

eyan

dD

acin

,199

4).

•P

erfo

rman

cere

cord

ofun

rela

ted

dive

rsifi

cati

onha

sin

fluen

ced

subs

eque

ntch

oice

sof

stra

tegy

(Fli

gste

in,1

991)

.•

Dep

ress

ion

asan

exte

rnal

shoc

kin

fluen

cing

choi

ces

ofst

rate

gy(F

ligs

tein

,199

1).

•B

asic

reor

gani

zati

ons

inD

uP

ont

and

GM

cam

eaf

ter

maj

orfin

anci

alcr

isis

.


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TOWARDS AN ORGANIC PERSPECTIVE ON STRATEGY_FARJOUN (2002)

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