Strategy and Structured Management
Abstract: We provide the first large-scale empirical evidence on the link between firm strategy and the uptake and performance of “structured” management practices. Working with the U.S. Census Bureau, we developed a novel measure of strategic commitment to flexibility versus efficiency at the production-unit level. Evidence from over 30,000 establishments in the U.S. manufacturing sector reveals that heretofore-unobserved process strategy decisions help explain variation in the adoption of structured management, even within the same firm. Performance of these practices is also contingent on the degree of strategy-practice alignment: plants that deviate from an empirically-derived measure of fit suffer significantly lower productivity. Among many possible drivers of misalignment, unionization and peer effects are associated with greater strategy-practice misalignment. These findings draw attention to critical contingencies that should inform measurement and research at a time of fast-growing interest among academics, practitioners, and government agencies.
