Lost in transaction? The transfer effect of strategic consistency

Abstract

Prior empirical studies provide evidence that the learning-curve perspective from manufacturing settings is not directly applicable to strategic management settings. In the latter case learning relates to the quality rather than to the quantity of experience. Regarding the antecedents of organizational learning especially, there are still unanswered questions remaining; for example, the questions what kind of experience has a positive effect on performance and what kind of experience is more of a hindrance than a help. This becomes obvious when looking at acquisitions as examples of strategic management decisions. Results of prior empirical studies analyzing the relationship of acquisition experience and acquisition performance have been mixed. By introducing the concept of strategic consistency, we intend to facilitate a better understanding of the kind of experience necessary for organizational learning. Therefore, we measure the concordance and frequency of change in strategic actions. Employing a sample of 379 acquisition series, we find evidence for a positive transfer effect of strategic consistency within series and, therefore, a positive relationship between strategic consistency and acquisition performance.

Strategic patterns and firm performance: comparing consistent, flexible and reactor strategies

“…Strategic consistency and strategic flexibility performed almost equally well and outperformed reactors in majority cases. The performance of strategic consistency is consistent with previous research (Anikeeff and Sriram, 1995;Fehre et al, 2016;Lamberg et al, 2009;Pleshko et al, 2014) while others (Herhausen and Morgan, 2014;Ouakouak and Ammar, 2015;Parnell, 2005) support the better performance by adapting flexible strategy. The performance for consistent and flexible strategies, however, varies due to variation in strategic orientation, firm size, and industry.…”

“…Strategic consistency, a constituent element of strategy (Fehre et al, 2016), is the management's intentional continuity with past strategies (Moss et al, 2014). It is the firm's actions that conjoin both with changes in the business environment (necessitating adaptation) and with the firm's own history (necessitating continuity).…”

“…The strategists choose a strategic course of action for an extended period of time and enjoy the benefits of specialization, expertise, organizational learning, and a clear customer image. Prior research has shown evidence for a positive impact of strategic consistency on firm performance (Fehre et al, 2016;Lamberg et al, 2009). Consistency ensures that the competitive advantages of activities cumulate (Porter and Roach, 1996).…”

“…There is debate on the contemporary literature whether to adapt the consistency in strategic choice or remain flexible to have better performance. The proponents of consistency in strategic choice claim that firms produce better performance if they stick to the core strategy over the long run (Fehre et al, 2016;Lamberg et al, 2009;Parnell and Lester, 2003) while the supporters of flexibility in strategic choice argue that the necessary condition to bring better performance is to be flexible by exploiting the given situation through adjustment in strategy for competitive advantage (Herhausen and Morgan, 2014;Ouakouak and Ammar, 2015;Parnell, 2005). However, there is a consensus that inconsistency or reactor behavior in strategic choice leads to poor performance.…”

The Pleonasm in Strategic Initiation? Revisiting Concept, Content and Context

“…With this explanation, whatever type of chosen strategy, it should be able to provide direction and supporting for strategic decision making (Fehre et al, 2015). This is the essence of strategic management: how companies can strive so that the resources and capabilities of the organization can be prepared to anticipate changes in the external environment (Henry, 2011).…”