Business strategy, manufacturing strategy and environmental dynamism : the case of small manufacturing firms
The impetus for the current study was to provide a better understanding of the small manufacturing firms operating under varying environmental conditions (dynamism). This study investigated the influence of dynamism on important strategy variables such as strategy, structure, production technologies employed, and performance. The results indicated that small manufacturing firms, depending on the environmental dynamism, tend to a adopt one of two adaptation approaches: product oriented, and operations oriented. It was shown that small manufacturing firms operating in unstable environments tend to have an organic organisational structure, follow differentiation strategies, and employ non-routine production technologies (product oriented approach), while small manufacturing firms operating in stable environments tend to adopt a mechanistic structure, along with price/cost leadership strategy, and employ routine manufacturing technologies. These findings advances the previous work don e by Miles and Snow, by clarifying that where they (Miles and Snow) have identified four generic adaptation types for all firms, it can be reduced to two for small manufacturing firms. This study also investigated a much discussed issue of planned versus emergent approaches to strategy formulation processes. The findings rejects both Ansoff's claims that firms tend to adopt a planning approach in unstable environments, and Mintzberg's argument that small firms regardless of the environmental conditions adopted an emergent approach to strategy formulation. The findings showed that small manufacturing firms operating in stable environment tend to adopt a planning approach, while small manufacturing firms operating in unstable environment adopted an emergent approach to strategy formulation. Another important area under investigation was the importance of manufacturing strategy for small manufacturing firms. The results showed that firms in stable environment tended to place a higher emphasis on production departments than their counterparts in unstable environments. However, this importance did not translate into a clear manufacturing strategy; rather it reduced the manufacturing strategy to a single important decision of choosing the right type of production technologies employed. Finally the current study investigated the relationship between environmental dynamism, strategy, and performance. The empirical findings indicate that dynamism interacts with strategy to determine performance.