The Measurement of Strategic Orientation and Its Efficacy In Predicting Financial Performance

Abstract

For decades, the strategic management literature has recognized strategicorientation as an important cultural attribute in the investigation of the link betweenorganizational culture and firm performance. Using three studies, we develop a surveymeasure of strategic orientation that is unidimensional, reliable, and predictiveof financial performance. Our final study uses a sample of 779 respondents from 20companies and empirically demonstrates a positive relationship between strategicorientation and firm performance. Our results support the notion that managersshould both encourage and support behaviors and execute actions that are consistentwith our measure of strategic orientation to create a coherent strategic approach,resulting in improved financial performance.

Strategic Attributes and Organizational Performance: Toward an Understanding of the Mechanism Applied to the Banking Sector

“…The competitive position of an organization is strengthened through organizational strategies ( Wheelen and Hunger, 2010 ). In the existing literature on organizational behavior, strategic management, and strategic marketing, strategic orientation is considered very critical in an organization because it determines the organizational success or failure ( Weinzimmer et al, 2012 ). Typically, studies have linked strategic orientation with performance prospects ( Ardito and Dangelico, 2018 ; Adams et al, 2019 ; Otache, 2019 ; Azaj et al, 2020 ).…”

“…Strategic orientation predicts organizational performance and is considered an important strategic attribute ( Weinzimmer et al, 2012 ). Strategic orientation is explained as, “the inclination of an organization to focus on strategic direction and proper strategic fit to ensure superior organizational performance” ( Weinzimmer et al, 2012 , p. 82). Effective strategic orientation by internal management can create many opportunities ( Cheng et al, 2014 ).…”

“…However, multiple studies have been conducted to inspect the effect of strategic orientation on organizational performance, such as Weinzimmer et al (2012) and Innocent (2015) . Nonetheless, findings from the past studies are inconsistent ( Han and Verma, 2012 ; Deshpandé et al, 2013 ; Ariyarathne, 2014 ; Choi and Yoon, 2015 ; Chahal et al, 2016 ; Song and Jing, 2017 ).…”

“…Denison (1990) defined organizational culture as the system of norms and values which is common among an organization’s employees and it determines the attitudes and approaches of organizational members toward confronting different problems in an organization. As a key strategic attribute, a healthy organizational culture is vital as it directly influences organizational performance ( Weinzimmer et al, 2012 ; Storey and Hughes, 2013 ; Ahmed and Othman, 2017 ). Existing literature confirms both positive and negative effects of organizational culture on organizational performance ( Chuang et al, 2012 ; Sokro, 2012 ).…”

“…Existing literature confirms both positive and negative effects of organizational culture on organizational performance ( Chuang et al, 2012 ; Sokro, 2012 ). Regardless of the significance and potential effects of organizational culture, the relationship between organizational culture and organizational performance is immature, both empirically and theoretically ( Sackmann, 2010 ; Weinzimmer et al, 2012 ). Thus, it is necessary to assess the importance of organizational culture in the banking sector of Pakistan to determine the discipline, acceptance of strategies, and focus on goals and their effect on organizational performance.…”