Environment-Strategy Relationship and its Performance Implications: An Empirical Study of Chinese Electronics Industry

Abstract

This study examined the strategy-environment-performance paradigm in a centrally planned economy (People's Republic of China) in transition to a more market-driven economy. Based on a survey of top Chinese managers in the electronics industry, it was found that during this course of transformation, firms exhibited distinctive strategies despite a long tradition of central planning, and these strategies were significantly related to perceived environmental uncertainty. Specifically, managers' perceptions of increased environmental uncertainty were found to be negatively related to proactive strategies and positively related to defensive strategies. Defensive strategies were also linked to higher performance.