Lecture 5 - Cultural school + Environmental school + Configuration school + Differences between strategy schools Flashcards
(!) Describe the culture school in general & how to destroy it
General:
- Descriptive
- Strategy formation: Collective process
- Beyond individual: Forces & actors
- Collective cognition in firms
- Strategy formation based on shared beliefs & values
- Build over long time
- Reflected in behavior, traditions & habits, stories & symbols
- Eg. Being a low cost firm in all aspects
- Linked to emotions: Commitment to work
- Collective & cooperative process
- Often unconscious & take for granted: Not forced. Ref. Iceberg.
- May resist change: Seek strategic stability
- Process of social interaction & socialization
- Simple vision, complex culture
- Both inside humans & outside society: Interact with environment
- Can delegate into subcultures
- Often change required if strategic change
- (Important in Japan)
Destroyed:
- Manage people as money: Hire/fire. Treat as machines
- Plan every action: No spontaneity & learning
- Move managers: Never get into stuff
(.) Describe the root dimensions of the culture school
Sources:
- Rhenman and Normann in Sweden
Base discipline:
- Anthropology
Champions:
- The Socially / Spiritually / Collectively Inclined
Intended message:
- Coalesce
Realized message:
- Perpetuate
(.) Describe culture in strategy formation
(!) Describe the strengths & weaknesses of the cultural school
Strengths:
- Highlight resistance to change
- Highlight how strategies become fastened
- Show important re-framing & transforming in strategic change
- Introduce idea of collective cognition & organizational styles
- Based on rich organizational data
Weaknesses:
- Blinding to external conditions
- Strong culture = Barrier for change. Incompatible
- Difficult, time consuming & require commitment to create
- Difficult to manage & change
- Risk of conflicts, cults & religious movements
- Favor consistency & stability
(!) Describe the environmental school
General:
- Descriptive
- Strategy formation: Reactive process
- Beyond individual: Forces & actors
- Seek to understand external pressure on organizations
- Environment dictate strategy: Environment as actor
- Organization is passive/reactive: No free choice of strategy
- Focus on adaption & evolution
Three theories:
- The contingency perspective
- Population ecology theory
- Institutional theory
(!!) Describe the contingency perspective & relate it to Management Accounting / MA
General:
- Part of environmental school
- Selection should fit situation & context: Eg. MCS to strategy
- Balance internal need & external pressure
- No one best strategy: Depend on product, task & environment
- Categorize environment: Stable vs. Dynamic, Complex vs. Simple
- More generic than MCS tailored to specific organization
- Solutions based on similar problems
- Not strict on non-strategy part
- Ref. Prospector & defender, Generic strategies & Innovations
Relation to MA:
- “Something true under specified conditions”
- Explain many MA-practices
- Earlier: 1 IV to 1 DV
- Later: Many IV to 1 or many DV: Rarely last one
- Understand IV´s interrelation = Better DV framework
- (Non-financial & qualitative measures neglected: Yet important)
(!!) Describe the critiques to contingency theory
- Firms differ in similar environment
- Theories may differ in firms: Eg. Categorize a prospector
- Too generalizing: Eg. No clear stability actegory
- Adaption is key to succes
- Always more contexts to consider: Never full knowledge
- Too few, simple, abstract & narrow: IRL many simultan IV´s
- IRL no generic best way
- Often limited to survey studies
(!) Describe independent & dependent variables / IV & DV
Independent variables / IV:
General:
- Also called contingent variables
Internal:
- Firm size
- Structure
- Strategy
- Reward systems
- PLC-stage
- Info systems
- Market position
- Psychological variables
- Participation in CS
- Systems change
External:
- Uncertainty
- Competition
- Technology
- Hostility
- National culture
____________
Dependent variables / DV:
- Performance
- Performance measures
- Budgeting behavior
- MCS design & use
- Effectiveness
- Job satisfaction
- Change in practices
- Product innovation
(!) Describe population ecology theory
- Holistic view: Which environment will specific firms survive in?
- Darwinistic way: Survival of the fittest
- No-strategy theory
- Number of companies depend on resource amount
- Uncertain environment favor generalists
- Firms form network to survive
- Organization look different when observed in long run
(!) Institutional theory
General:
- Part of environmental school
- Institutional pressure form organization
- Companies become more & more alike: Follow norm & rules
- “Just do what is told”: Not rational
- Adopt practices & forms to gain legitimacy
- Early adopters gain efficiency benefits
- Late adopters gain legitimacy benefits
- Strategic since response to these pressures
- Eg. Safety rules or sustainability norm
Pressure types from stakeholder:
- Coercive isomorphism: Standards & regulations
- Mimetic isomorphism: Borrow & imitate others
- Normative isomorphism: Professional expertise & norms. Eg. How lawyer look at X
(!!) Describe the relation of the environmental school to the other schools
Planning & positioning school:
- Dictated by planners & analyst instead of environment
Positioning school:
- Also dictated by environment
- Outside-in vs. inside-out
Design + Entrepreneurial school:
- Dictated by CEO instead of environment
Cognitive school:
- Limitation of strategic thinking: Limitation & bias
Learning, power & cultural school:
- Also complex environment
- Interact with environment
(.) Describe the root dimensions of the environmental school
Sources:
- Hannan and Freeman
- Contingency Writers
Base discipline:
- Biology
Champions:
- Population Ecologists
- Splitters
- Positivists
Intended message:
- React
Realized message:
- Capitulate
(!) Describe the strengths & weaknesses of the environmental school
Strengths:
- Admit firm not being superior
- Environment as central actor with leadership & organization
Weaknesses:
- No free will
- Underestimate creativity & imagination if hostility
- (Based on arguments from statistical averages)
- (Degenerate into debate about existence of strategic choice)
(!) Describe the configuration school in general
General:
- Strategy formation: Process of tranformation
- Context & situation set strategy
- Either stability or big changes
- Change resistent: Necessary at some point
- Combine multiple schools
- Specific strategies for specific stages: Ref. Life cycle
- Mainly theoretical: Irl world too complex
- (Strategy perspective: Seek optimal relationship among choices)
- (Incorporate “strategic change” literature)
(.) Describe the root dimensions of the configuration school
Base discipline:
- History
Champions:
- Lumpers & integrators
- Change Agents
Intended message:
- Lump
- Revolutionize
(?) Describe the choices, their limitations & implication
Choices:
- Outputs
- Inputs
- Choices affecting subsystems
- Choices affecting interaction among subsystems
Limits:
- Constrained by constraints
- Constrained by internal dynamics of subsystems
- Constrained by interaction among subsystems
- Constrained by limits on cognition
Implications:
- Some choices are opposite, other reinforce each other
- Choices form configuration: Eg. low cost archetype
- Configurations shape choices
- Configurations are optimal: In their own way
- Configurations resist change
(!) Describe the two sides of the configuration school
Organization & context as configuration:
- Cluster of specific conditions to models or types: Eg. Defender
- Decisions made at situations with multiple decisions to be aligned
Strategy-making process as transformation:
- Consequence of configuration
- Time for coherence vs. time for change
- Change in stage/state/period/life cycle
- Maybe complete reconstruction of organization
(.) Describe the different organizations
Entrepreneurial organization:
- Simple structure
- Usually small & young
- Informal coordination
- Dynamic environment
- Need change when becoming too big: Mass production & economies of scale
Machine organization:
- Highly programmed
- Dominated by technical staff
- Line hierarchy
- Stable, mature industries
- Common if mass production
- Lots of middle managers
- Formal
- May refer to planning school
Professional organization:
- Professionals has power
- Highly decentralized
- Coordination achieved by peer control
- Extensive support system
Diversified organization:
- Composed of independent units
- Loose administrative structure
- Each division has own structure
- Control exercised by central headquarters
- Closer to market
Adhocracy organization:
- Project based
- Experts from different fields into teams
- Line/staff distinction is low
- Matrix structure common
- Common in aerospace & film making
- Adjusted to situation
Missionary organization:
- Highly decentralized
- Loose division of labor
- Little job specialization
- TM little to say
- Little distinction between line/staff
- Shared values and beliefs hold organization together
- Common in religious & Japanese corporations
- Ref. Cultural school
Political organization:
- No stable system of power
- Conflicts are common
- Government agencies
- Organizations has power battle: Firms may go down
- Often if many stakeholders with different interest: Public organizations
- Never stable
(!) Describe different change processes
Planned Change:
- Programmatic
- Follows procedure
Driven Change:
- Guided change
- Driven by individuals or groups from top
Evolved Change:
- Organic in nature
- Neither managed nor under control
(!) Describe the top-down & bottom up change
General:
- Ref. Hut & grass
Top down change:
- Create & communicate vision
- Empower other to act on vision
- Powerful guidance
- Establish sense of urgency
- Until stable environment
- Plan & create short-term wins: Eg. SAP
Bottom up change:
- People involved in process
- Commitment through joint problem diagnose
- Shared vision of organization & managing competitiveness
- Spread renewal to all functions without pushing it from the top
- Foster renewal through formal policies, systems & structures
- Foster consensus for new vision, competence to enact & cohesion to move it along
(!) Describe the strengths & weaknesses of the configuration school
Strengths:
- Bring order to strategy formation
- Highlight impact from environment
- Typology & categories help make sense of world
- Balance freedom & constraint of choice
- (Tie together strategic management)
Weaknesses:
- Categories & typologies are twisted
- Most important contexts often hard to categorize
- Low guidance to process of strategy making & doing strategy
- No free will
(!!) Describe aspects in research design weakening relationship between MCS & strategy
- Research focus on intended strategy
- Constructs need case study research or multiple IV
- Distinction between intended & realized strategy not explicit
- Using certain strategic typologies can result in circular research designs
- Some survey instruments made inaccurate classification of strategic types
- Assume managers understand strategy or give same relevance to it as researcher
- Variation in amount & type of control make creating coherent knowledge difficult
- Dont acknowledge distinction between existence & use of controls
- Breath of control measures
- May require wider control definition
- Effectiveness seen as DV or IV? What is the causation?
- Effectiveness as financial performance may not be appropriate
- Some use innovation to measure effectiveness as mean of strategic performance
