How Does Strategy Process Influence Strategy Content? Antecedents of Consistency between Resource Allocation Decisions and Corporate Strategy

Abstract:     
We investigate the relative importance of organizational and decision-specific factors that shape decision-making processes as antecedents of consistency between corporate strategy concept and individual resource allocation decisions. Our empirical study examines the Swiss pharmaceutical companies Ciba and Sandoz from 1989 to 1996. We use a model from which we derive hypotheses on the influence of organizational and decision-specific factors on consistency. We test these hypotheses using data on 493 resource allocation decisions, and applying maximum likelihood ordered logit estimation. Our results indicate that factors specific to individual resource allocation decisions are far more important for their consistency with the prevailing corporate strategy concept than are organizational factors. In particular, we find that the longer the time lag between the announcement of a corporate strategy concept and individual resource allocation decisions, the lower the likelihood of high consistency levels. As to the role of organizational factors, lower decision-making levels tend to be associated with higher consistency levels.

Number of Pages in PDF File: 20

Keywords: Consistency, Corporate Strategy Concept, Resource Allocation Decisions

JEL Classification: M10, M19

Accepted Paper Series