We begin by describing the mechanistic perspective on strategy. We then introduce organic thinking by discussing the development of pertinent research streams. The bulk of the paper is devoted to building on these two developments to propose a three-pillared foundation for an organic perspective on strategy. In conclusion, we summarize the contributions and potential implications of the new perspective, and propose avenues for future work.
The mechanistic perspective consists of a concept of strategy, related explanatory models, and managerial frameworks. These three elements have common epistemological assumptions.
In the mechanistic perspective, strategy is mainly viewed as a posture—a relatively stable configuration—a fit or alignment—between mutually supporting organizational elements, such as activities and organizational structure, and environmental elements, such as a customer group. Two main types of strategy postures are position (e.g., differentiation strategy) and scope (e.g., vertical integration) (Chandler, 1962; Rumelt, 1974, 1984; Porter 1980, 1991; Wernerfelt, 1984). Strategy postures have been the traditional focus of research on strategic groups (e.g., Cool and Schendel, 1988), diversification (e.g., Montgomery, 1982), and strategy–structure (e.g., White, 1986). In addition, early treatments of strategy, rooted in strategic planning models, have viewed it primarily as a rational plan. In this view, which still guides much of the thought in the strategy field, action is purposive and prospective, and strategies are realized as planned (Mintzberg, Ahlstrand, and Lampel, 1998).
Two concerns of mainstream strategy research are to explain what determines firm performance, and to identify what affects firm strategy. Three research programs have been particularly influential in addressing these questions. The Structure–Conduct–Performance (SCP) paradigm (e.g., Bain, 1956) and its derivative, the industry structure model (Porter, 1980), view the external environment as a key determinant of strategy and performance. In the SCP model, the main causality flows from industry structural variables to firm conduct (i.e., strategy) and then to firm and industry performance. Porter’s model retained the basic flow of the SCP but, rather than focusing on the industry, used the model to discuss the strategies open to the firm (e.g., positioning strategies) to improve its performance.
The Strategy–Structure–Performance (SSP) paradigm highlights the significance of factors complementary to strategy, such as organizational structure, to firm performance. Originating in Chandler’s (1962) classic study of the growth of large American firms, the model proposes that different growth strategies are driven by the accumulation and deployment of internal resources, and are matched by different internal structural arrangements such as the functional and multidivisional organizational structures. Chandler’s theoretical model particularly implied that the match between strategy and structure results in better performance. This proposition has guided subsequent studies (e.g., Stopford and Wells, 1972; Rumelt, 1974; Franko, 1976; Miles and Snow, 1978), has been integrated into contingency research in organizational theory (e.g., Galbraith and Nathanson, 1978), and has been extended by configuration theorists to other organizational processes (e.g., Miller and Friesen, 1978). This literature provides a causal model that relates strategy, organizational structure (and processes), and performance.
A related and more recently embraced model is the Resource-Based View (RBV). Anticipating Chandler’s work, early work in RBV delineated a process theory of the role of resources in firm growth (Penrose, 1959). Several more recent variants of the model have been proposed (e.g., Wernerfelt, 1984; Teece, Pisano, and Shuen, 1997), all of which complement the external view of the SCP by their mirror emphasis on internal firm-specific attributes that affect strategy and performance. The RBV sees certain resource attributes, such as inimitability, uniqueness, and flexibility, as enabling certain strategies (e.g., cost leadership), and contributing to sustained competitive advantage (Penrose, 1959; Wernerfelt, 1984; Barney, 1991; Teece et al., 1997).[6]
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