The Effect of 'Simplicity' on the Strategy-Performance Relationship: A Note
22 Pages Posted: 6 Nov 2006
The concept of simplicity (Miller, 1993) in strategy making suggests a preoccupation with a single goal, strategic activity, or function. Prior research indicates that simplicity may, under certain conditions, benefit firm performance, but it may also limit an organization's perspective and blind it to the breadth and variety it needs to sustain its success. This field study investigates the role of simplicity as a moderator of strategy-performance relationships. Using moderated hierarchical regression analysis, simplicity was found to enhance performance among firms using cost leadership and focus strategies among a sample of 32 firms. The findings suggest that the strategy making styles and practices of strategic managers influence the character of the whole organization and often have an important impact on organizational outcomes.
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