Abstract
In this chapter we re-orientate our analysis to consider a set of topics related to changes in corporate strategy. So far we have suggested that corporate strategy is determined by balancing synergy gains against hedging considerations; synergy is obtained from internal relationships, while hedging is designed to permit the firm to cope with its environmental threat. The argument of this chapter revolves around the point that if the environment becomes more threatening we would expect strategy changes to follow.
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Notes and References
This is not to say that mechanistic systems automatically note unusual environmental signals quickly and efficiently. The mechanistic system may be associated with complacency and inertia, and such signals may be screened out of the system because they do not have programmed responses.
A recent text by Wieland and Ulrich (1976) provides a comprehensive analysis of theory and findings concerning the relationship between technology and structure (pp.74–95).
However, restricting the analysis in Chapter 3 to internal transaction costs may be justified on the grounds of principle as well as convenience. We may argue that control loss results from the need for hierarchical coordination which in turn results from inter-group transaction costs inhibiting effective management of synergy. The imposition of hierarchy (and resulting control-loss) may itself be regarded as a direct consequence of internal transaction costs.
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© 1982 Neil M. Kay
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Kay, N.M. (1982). Strategy and Structure. In: The Evolving Firm. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-06112-9_8
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DOI: https://doi.org/10.1007/978-1-349-06112-9_8
Publisher Name: Palgrave Macmillan, London
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