A Formal Evaluation of the Performance of Different Corporate Styles in Stable and Turbulent Environments

University of Navarra Working Paper No. 621

27 Pages Posted: 3 May 2006

See all articles by J. E. Ricart

J. E. Ricart

University of Navarra - IESE Business School

Date Written: March 2006

Abstract

The notion of parenting styles, introduced by Goold, Campbell and Alexander, has been widely acknowledged by the Corporate Strategy literature as a good broad description of the different ways in which corporate managers choose to manage and organize multibusiness firms. The purpose of this paper is to present a formal test of the relationship between parenting style and performance. For this test, we developed a set of agent-based simulations using the Performance Landscapes framework, which captures and describes the evolution of firms led by different parenting styles in business environments with different levels of complexity and dynamism. We found that the relative performance of each style is contingent upon the characteristics of the environment in which the firm operates. In less complex business environments, the Strategic Planning style outperforms the Strategic Control and Financial Control styles. In highly complex and highly dynamic environments, by contrast, the Strategic Control style performs best. Our results also demonstrate the importance of planning and flexibility at the corporate level and so contribute to the wider debate on Strategic Planning vs. Emergent Strategies.

Keywords: corporate strategy, parenting styles, agent-based models

Suggested Citation

Enric Ricart, Joan, A Formal Evaluation of the Performance of Different Corporate Styles in Stable and Turbulent Environments (March 2006). University of Navarra Working Paper No. 621, Available at SSRN: https://ssrn.com/abstract=899268 or http://dx.doi.org/10.2139/ssrn.899268

Joan Enric Ricart (Contact Author)

University of Navarra - IESE Business School ( email )

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Barcelona, 08034
Spain
34 3 204 40 00 (Phone)
34 3 280 11 77 (Fax)

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