A third distinct feature of the OESP model is in extending dyadic relationships to describe a network of potential relationships and multiple causal influences. One example of this feature of the model is the existence of multiple causal influences on firm performance. The notion of strategy is invoked to explain systematic differences in performance that are based on the firm coordinated (i.e., systemic) adaptive action. The effects of strategy on performance can be direct or indirect through changes in organization, such as changes in resource mix, and changes in environment, such as the reaction of competitors. At the same time firm performance can be affected by factors not necessarily mediated by strategy, such as superior resources, unfavorable environment, history, and unintended or uncoordinated actions outside of strategy (such as luck). Consequently, the model clearly separates between firm resources and firm strategy as two related but different forms of firmspecific effects on performance. Firm resources and structure may affect performance directly and not only through the specific positions and paths or as a result of managerial design.[12]
Another example of the network of relations exposed by the OESP model is the integration of organization (i.e., resources and administrative and social structure)—the traditional focus of the resource-based view—with the main constructs of the SCP model (E, S, and P in our model). Taken alone, the SCP mainly focuses on a single industry and therefore on business-level strategies. By contrast, the inclusion of organization in the model helps view firm-specific resources as not only alternative sources of business unit performance but also as potential means to affect the choice of potential environments. Consequently, by accommodating multiple product or geographic markets (i.e., environments) the model can also deal with corporate-level issues, such as location choices and global coordination.
A fourth and related feature of the OESP model is its accommodation of interactions. The model suggests that performance can be influenced by interactions between strategy, environment, and organization that are remote from performance in time and in the causal chain (e.g., Henderson and Mitchell, 1997). For example, the firm’s current strategy may be a result of its past performance, which in turn was determined by past states and paths of the firm’s organization and environment, which in turn co-determined each other in the past (e.g., Webb and Pettigrew, 1999). Alternatively, past strategy may have created a favorable environment that enables current strategies.
To further illustrate the applicability and distinctiveness of the OESP model, we chose Chandler’s (1962) ‘Strategy and Structure’ study and some of the subsequent studies it inspired (e.g., Amburgey and Dacin, 1994). The original study is important, widely recognized and contains rich evidence. However, the main reason for its selection is that the dominant view expressed throughout the study, as well the common way in which it has been subsequently interpreted, are in the spirit of the mechanistic perspective. Highlighting the less familiar organic aspects of the study, contained in the original narrative and theoretical propositions and in subsequent studies, serves to provide different and complementary lenses. Supplementing Figure 1, the Appendix lists the main aspects of the mechanistic perspective stressed in the study and provides illustrations for each of the distinctive features of the OESP model. As the Appendix shows, the OESP provides a more dynamic, integrated, and interactive view than the one drawn from a mechanistic perspective. For example, it drives home the point that firm coordinated actions (e.g., structural adjustment) are not instantaneously and flawlessly achieved; they trigger responses from other actors that affect the firm’s performance and are themselves products of historical and contextual influences and trajectories. Moreover, to a large extent the realized strategies of Chandler’s four focal firms were unique in their respective industries and potential sources of unique competitive capabilities. Nevertheless, there were different trajectories that led to a similar structural solution, and once in place imitation potentially eroded the benefits of distinctiveness. The OESP model’s synthesis and extension of individual organic developments portrays a more complex and rich picture of strategy and its relationships with organization, environment and performance, and enables the generation of new relationships and insights.
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