Blowing in the Wind: A Study for Granger-Causality between Managerial Strategy and Organizational Performance

Abstract

Mixed findings on the impact of strategy on performance suggest that it is necessary to investigate the causal relationship between strategy and performance. We theorize that past negative performance may motivate public managers to be defenders, which will enable them to focus on core tasks. Using Texas school district data, we explore the reverse-causality between strategy and performance through Granger-Causality test. Our findings suggest that poorly performing public organizations are more likely to be defenders, though past strategy does not significantly influence performance. The findings contribute to the literature by demonstrating that the strategy-performance link may run in reverse direction.

Keywords: Managerial Strategy, Organizational Performance, Granger-Causality