Basics on Strategy, Structure and Environment

Abstract

In the classical Chandlerian view (Chandler, 1962, p. 14), strategy determines structure. However, nowadays strategy and structure are clearly seen as two sides of the same coin (e.g. Hall and Saias, 1980; e.g. Chandler, 1992a; Whittington et al., 1999). Existing (inter-organizational) structures determine the capacity of the organization to pursue specific strategies, and may also entrench managerial interests that shape a firm’s specific strategy type. As a result, strategy and structure are gradually matched through ongoing mutual adaptation. Furthermore, strategy and structure are influenced by the external environment. In the case of transition economies research shows that the institutional context, in particular, is highly crucial (e.g. Hoskisson et al., 2000; Peng 2000; 2003; Hitt et al., 2004; Child and Tsai, 2005).