0% found this document useful (0 votes)

26 views25 pages

Zajac Et Al., 2000

This study presents a dynamic model of strategic fit, emphasizing the importance of environmental and organizational contingencies in predicting strategic changes and their performance implications. Using longitudinal data from over 4000 U.S. savings and loan institutions, the authors find that deviations from the model's predictions lead to negative performance outcomes. The research aims to contribute to the understanding of strategic fit and change by offering a normative framework for assessing organizational strategy in response to changing conditions.

Uploaded by

Ishita Baviskar

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as PDF, TXT or read online on Scribd

0% found this document useful (0 votes)

26 views25 pages

Zajac Et Al., 2000

Uploaded by

Ishita Baviskar

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as PDF, TXT or read online on Scribd

You are on page 1/ 25

Strategic Management Journal

Strat. Mgmt. J., 21: 429–453 (2000)

MODELING THE DYNAMICS OF STRATEGIC FIT: A

NORMATIVE APPROACH TO STRATEGIC CHANGE
EDWARD J. ZAJAC1*, MATTHEW S. KRAATZ2 and RUDI K. F. BRESSER3
1
J. L. Kellogg Graduate School of Management, Northwestern University, Evanston,
Illinois, U.S.A.
2
College of Commerce and Business Administration, University of Illinois, Cham-
paign, Illinois, U.S.A.
3
Department of Business Administration, Free University of Berlin, Berlin, Germany

This study develops and tests a dynamic perspective on strategic fit. Drawing from contingency
and resource-based arguments in the strategy and organizational theory literatures, we propose
a distinctive analytical approach to identify environmental and organizational contingencies
that should predict changes in a firm’s strategy and the performance implications of such
changes. We test our model using extensive longitudinal data from over 4000 U.S. savings and
loan institutions during a period when many S&Ls considered changing strategic direction.
The findings support our model of dynamic strategic fit. Specifically, we find that (1) the
timing, direction, and magnitude of strategic changes can be logically predicted based on
differences in specific environmental forces and organizational resources, and (2) organizations
that deviated from our model’s prediction of dynamic strategic fit (i.e., changed more or
changed less than our model prescribed) experienced negative performance consequences. We
conclude by discussing the implications of our approach and findings for future research on
strategic fit and strategic change. Copyright  2000 John Wiley & Sons, Ltd.

One of the most widely shared and enduring that this situation may be attributable to three
assumptions in the strategy formulation literature potential problems that have hindered the theo-
is that the appropriateness of a firm’s strategy retical development and empirical testing of the
can be defined in terms of its fit, match, or concept of strategic fit.
congruence with the environmental or organi- First, some researchers remain justifiably
zational contingencies facing the firm (Andrews, uncomfortable with the static orientation that the
1971; Hofer and Schendel, 1978). Strategic fit is concept of fit has historically implied (Miller and
a core concept in normative models of strategy Friesen, 1984; Zajac and Shortell, 1989; Rajago-
formulation, and the pursuit of strategic fit has palan and Spreitzer, 1997; Bresser, 1998). While
traditionally been viewed as having desirable per- fit seems to imply a match at a single point in
formance implications (Ginsberg and Venkatra- time, understanding dynamic fit requires that any
man, 1985; Miles and Snow, 1994). Yet despite new perspective on strategic fit must also come
the concept’s historical centrality and intuitive to grips with the question of strategic change.
appeal, one finds relatively little explicit attention Venkatraman (1989: 441), after having compre-
to strategic fit in the most recent strategy litera- hensively reviewed research on strategic fit, con-
ture (Kraatz and Zajac, forthcoming). We believe cludes that existing studies ‘have focused on
static, cross-sectional approaches for specifying
and testing fit within strategy research,’ and he
Key words: strategic fit; strategic change; contingency calls for research on ‘the development of appro-
theory; resources; performance priate mechanisms to specify and test fit within a
*
Correspondence to: Edward J. Zajac, J. L. Kellogg Graduate
School of Management, Northwestern University, Leverone longitudinal perspective.’ While one might expect
Hall, 2001 Sheridan Road, Evanston, IL 60208-2001, U.S.A. such progress to be evident in the recently

Received 1 July 1997

Copyright  2000 John Wiley & Sons, Ltd. Final revision received 6 August 1999
10970266, 2000, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/(SICI)1097-0266(200004)21:4<429::AID-SMJ81>3.0.CO;2-# by Loughborough Universitaet, Wiley Online Library on [07/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
430 E. J. Zajac, M. S. Kraatz and R. K. F. Bresser

expanding body of research on strategic change of specific changes for specific organizations. This
(Rajagopalan and Spreitzer, 1997), that literature is challenging given the inherent difficulty in
has tended to emphasize process-related issues, specifying precisely which environmental and
such as inertial barriers to change. Thus, neither organizational contingencies a firm should take
strategic fit nor strategic change research has into account when formulating (and
offered the conceptual or methodological tools reformulating) its strategy to maximize firm per-
needed to predict and assess whether an organi- formance. Ensuring that those contingencies are
zation’s strategy will fit with changing environ- general enough to apply across contexts yet speci-
mental and organizational circumstances.1 fic enough to accurately reflect the reality of the
A second problem relates to the multi- context under study represents another related
dimensionality of strategic fit. Simple bivariate challenge. Taken together, these challenges
approaches do not permit an accurate conceptuali- explain to some extent why researchers have
zation or measurement of strategic fit, given that generally opted to emphasize what might be
organizations face multiple environmental and behavioral barriers to strategic change, instead of
organizational contingencies that can affect stra- attempting to provide a normative analysis, as
tegic fit. In addition, the fact that the contin- described above.
gencies are both environmental and organizational In this study, we seek to address the three
suggests a potential tension in a firm’s seeking a problems discussed above by developing and test-
fit between its strategy and its environmental ing a model of strategic fit that is dynamic,
situation vs. a fit between its strategy and its multidimensional, and normative (see also Figure
unique competencies. This tension is also ampli- 1).3 Our analytical approach is developed in sub-
fied if one begins to conceptualize strategic fit in sequent sections, and can be summarized as fol-
more dynamic terms, given that the desirability lows: We first propose that within a given popu-
of changing strategy in response to changing lation of organizations the likely existence of
environments becomes much more uncertain significant cross-sectional and longitudinal differ-
when it moves an organization away from its ences in organizational resources and environ-
traditional or ‘distinctive’ competencies (Prahalad mental conditions will create very different situ-
and Hamel, 1990; Ghemawat, 1991; Selznick, ations for firms attempting to maintain strategic fit
1957). over time. We classify these differing situations in
A third problem in studying the dynamics of terms of four prototypical change/performance
strategic fit is that it goes against a natural con- relationships (two of which imply dynamic stra-
servatism among researchers by requiring that a tegic fit, and two which imply misfit). We then
researcher ‘go out on a limb’ and develop a identify the environmental and organizational cir-
normative framework that will allow for pre- cumstances under which each relationship should
dicting (or even prescribing) strategic fit. apply, utilizing insights from classical contin-
Developing such a framework necessitates making gency arguments, the more recent resource-based
predictions as to which, when, in what direction, perspective, as well as industry-specific knowl-
and how much organizations should change their edge. We then assess the validity of our predic-
strategies.2 It also requires that one make a priori tions by assessing empirically the actual (vs.
predictions about the performance consequences predicted) changes made by the organizations in
our study, and the performance implications of
1
Miles and Snow’s (1994) more recent discussion represents those changes.4
an important effort to discuss dynamic fit, but they are not We develop and test our approach in an indus-
specific in defining when a particular strategy is well suited
(or poorly suited) to a particular environment. Their emphasis
tends more to highlight the general value of linking strategy
3
to internal organizational structure and processes. A fourth problem that may also have contributed to difficul-
2
We use the term normative to distinguish among models ties in research on fit relates to the measurement of the
that are primarily descriptive (i.e., this is what did happen), conceptualization of fit (Van de Ven and Drazin, 1985; Venka-
primarily predictive (i.e., this is what was expected to traman, 1989). As this issue is more empirical in nature, we
happen), and primarily normative (this is what should have address it in our methods section.
4
happened). Note that frameworks can be predictive without Our approach most closely resembles what Venkatraman
being normative (e.g., the weather at time t + 1 can be (1989: 434) describes as the ‘profile deviation’ approach,
predicted fairly well simply by taking the weather at time t). which he suggests is ‘particularly useful for testing the effects
The latter two can also be tested empirically, of course. of environment–strategy coalignment.’

try-specific setting, using detailed longitudinal and Lorsch, 1967; Donaldson, 1995), which has
data from over 4000 U.S. savings and loan (S& tended to emphasize environment–structure
L) institutions spanning the decade of the 1980s. relationships, rather than environment–strategy
We identify critical environmental and organi- relationships (the focus of this study). Another
zational factors facing S&Ls and discuss the important difference between the strategy and
likely effects of these contingencies on the desir- organizational theory literature’s focus on fit is
ability of a change in an S&L’s longstanding that the latter literature has been rather unambigu-
core strategy of residential mortgage lending. We ous in proposing that particular structures are
test the predictions of our contingency model more appropriate for given environments, and that
regarding the magnitude, direction, and timing of changes in environmental conditions require a
changes in S&Ls’ core strategies by comparing reassessment of the choice of structure.5 Such
actual vs. expected strategic change, and we then predictions can be unambiguously made because
examine the performance implications of adhering the contingency factor in the environment–
to vs. deviating from our model. By focusing on structure framework is essentially unidimensional:
generating and testing a model of dynamic stra- certain environmental conditions suggest certain
tegic fit, we hope to offer a distinctive analytical structures.
approach that contributes conceptually and The strategy literature’s concept of matching
empirically to the literature on strategic fit and and alignment, on the other hand, has historically
strategic change. been multidimensional, and hence more ambigu-
ous in prediction: if environmental conditions
change (either through the emergence of new
THEORETICAL BACKGROUND opportunities or threats), it is not obvious that an
organization should change its strategy to achieve
The concept of fit has theoretical roots in contin- better fit with environmental conditions if such
gency perspectives found in both the strategy changes would imply a clear ‘misfit’ with estab-
and organization theory literatures (Ginsberg and lished organizational strengths. The older
Venkatraman, 1985). As Venkatraman and Cam- ‘SWOT’ framework in strategy certainly does not
illus (1984: 513) have noted: ‘The field of busi- provide a resolution of this problem, and more
ness policy—the initial strategy paradigm recent theory-based frameworks in the strategy
(Schendel and Hofer, 1979: 8)—is rooted in the literature (i.e., industry and competitive analysis,
concept of “matching” or “aligning” organi- and the resource-based approach) have also not
zational resources with environmental opportuni- addressed this problem directly, given that each
ties and threats (Andrews, 1971; Chandler, emphasizes different halves of the SWOT frame-
1962).’ Miles and Snow (1994: 12) suggest that work (OT and SW, respectively).6
‘the process of achieving fit begins, conceptually
at least, by aligning the company to its market- 5
There have been some debates in this literature as to whether
place % this process of alignment defines the environments vs. size vs. technology best determines appropri-
company’s strategy.’ ate organizational structure (e.g., Donaldson, 1995).
6
In the organization theory literature, the notion An exception is the model developed by Amit and Schoe-
maker (1993), who propose that strategic industry factors
of fit has long been associated with structural need to be considered before a firm decides what strategic
contingency theory (Thompson, 1967; Lawrence assets it wishes to build and leverage.

Figure 2. Towards a generic model of dynamic strategic fit: Antecedents and consequences

In addition, both the industry and resource- We seek to offer such an approach by propos-
based perspectives have historically tended to ing that (1) one can define a set of organizational
emphasize static equilibria, and thus are not easily and environmental factors that theoretically
adapted to the discussion of strategic change. should define strategic fit, (2) variation in those
Other strategy researchers more centrally inter- factors implies variation in the necessity for stra-
ested in strategic change and strategic fit have tegic change (across organizations and/or across
tended to emphasize process over content issues. time), (3) the comparison of actual and necessary
For example, Quinn’s (1980) discussion of stra- strategic change determines the degree of
tegic change and ‘logical incrementalism’ is use- dynamic strategic fit, which should then influence
ful in proposing a process for bringing together subsequent organizational performance. This logic
issues in strategy formulation, as is the more is summarized in Figure 2, which represents our
recent work on strategic fit by Miles and Snow generic model, on a construct-to-construct basis,
(1994), but both stop short of proposing speci- of these antecedents and consequences of
fically how the content of an organization’s strat- dynamic fit (we discuss the appropriateness of
egy should fit (and/or be changed to fit) with the specific variables in the model in the later
its environmental and organizational context. In section on hypotheses).
summary, what is needed is a distinctive analyti- Given that the concept of dynamic strategic fit
cal approach that simultaneously considers how is at the center of our conceptual and empirical
multiple organizational and environmental factors analyses, we also provide Figure 3 to highlight
should affect strategic fit over time, as well as how, at the broadest level, the connection between
subsequent firm performance.7 strategic change, dynamic strategic fit, and organi-
zational performance can be characterized in
7
Similar concerns are raised by Miller and Friesen (1984),
terms of four distinct situations. The vertical
who offer a configurational approach that is generally consis- dimension in Figure 3 captures whether strategic
tent with our approach, with the following exceptions: they change is necessary to establish dynamic strategic
emphasize elements of organizational structure, rather than fit (as suggested by relevant environmental and
organizational resources, and their approach is more empiri-
cally driven, rather than based on a priori predictions (see organizational contingencies), and the horizontal
also Venkatraman, 1989). dimension captures whether strategic change
Copyright  2000 John Wiley & Sons, Ltd. Strat. Mgmt. J., 21: 429–453 (2000)
10970266, 2000, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/(SICI)1097-0266(200004)21:4<429::AID-SMJ81>3.0.CO;2-# by Loughborough Universitaet, Wiley Online Library on [07/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Modeling the Dynamics of Strategic Fit 433

Figure 3. Four possible scenarios in the pursuit of dynamic strategic fit

occurs or not. The individual quadrants of this a firm’s existing strategy. Organizational contin-
matrix highlight that strategic change may have gencies can also play a role in this situation,
very different performance consequences for such as when a lack of organizational resources
organizations in a given population. These differ- or competency prevents the successful implemen-
ent consequences should be predictable based on tation of a particular strategy, implying a need
an a priori assessment of the contingencies that for strategic change.
suggest the necessity for strategic change in the Organizations confronting these types of unfav-
pursuit of dynamic strategic fit. Each of the four orable contingencies should achieve performance
quadrants in Figure 3 is discussed in greater detail benefits as a result of altering their strategies.
below; taken together, they form the theoretical Firms that adapt their strategies in response to
building blocks for our approach to analyzing these contingencies are basically acting in accord
dynamic strategic fit.8 with the recommendations of traditional perspec-
tives on strategy and strategic change (Hofer and
Schendel, 1978; Miles and Cameron, 1982; Zajac
Beneficial strategic change → Dynamic fit
and Kraatz, 1993). These perspectives tend to
This quadrant represents the situation where an view organizations as continually striving to
organization faces the necessity to change (i.e., achieve coalignment with changing environmental
as defined by environmental and organizational and organizational contexts, and also highlight
contingencies) and does change as needed, the functional benefits of this search (Ginsberg,
resulting in a performance benefit. Environmental 1988; Kraatz and Zajac, 1996).9
contingencies can encompass shifting consumer Our effort to conceptualize fit in a way that is
preferences, changes in government policy, com- multidimensional, dynamic, and normative sug-
petitors’ actions, technological changes, and other gests several additional issues relating to ben-
exogenous shifts that can affect the viability of
9
However, this characterization of the strategic adaptation
8
We recognize that fit is a continuous rather than a binary perspective does not assume that organizations are highly
outcome (we use binary terms simply for ease of exposition), proactive (i.e., changing even in the absence of environmental
and we wish to note that Figure 1 is, of course, not intended stimuli), or that organizations are able to instantaneously
to capture all the complexities involving strategic change, observe, recognize, and interpret changing environmental con-
strategic fit, and organizational performance; rather, it serves ditions. Rather, this conservative characterization simply views
as a useful starting point for our discussion of dynamic organizations as purposively and intendedly seeking to adapt
strategic fit. to changing environmental and organizational conditions.

eficial strategic change. First, strategic change adapting to new environmental circumstances that
will be more beneficial when it increases fitness are at odds with their existing capabilities. For
with multiple relevant contingencies. Changes that purposes of our study, conceptualizing and meas-
increase fitness with one contingency but signifi- uring insufficient change in a dynamic, multi-
cantly decrease fitness along other important dimensional sense create the same complexities
dimensions are not likely to prove beneficial. noted earlier in our discussion of beneficial
Second, we must explicitly acknowledge that change. We must consider multiple contingencies
since contingencies will likely vary significantly and also consider the timing, magnitude, and
over time, changes that are beneficial at one point direction of change in determining whether
in time are not necessarily beneficial if undertaken change is insufficient.
much sooner or much later. Third, we must recog-
nize that strategic change is not a discrete or a
Beneficial inertia → Dynamic fit
unidirectional choice. Strategic changes in the
pursuit of dynamic strategic fit will likely be of This quadrant represents the situation wherein an
varying magnitudes and will move in different organization faces no (or little) need to change
directions. Finally, an important implication of its current strategy and does not change, enjoying
considering all these issues is that it highlights a performance benefit as a result. Inertia is likely
the uniqueness (across organizations and across to be beneficial when fit has already been
time) of strategic fit, and that beneficial strategic achieved, and is not threatened by shifting contin-
change needs to be assessed in organization- gencies. An organization’s general environment
specific and time-specific terms. may be relatively unchanging, or its local
environment may shelter it from larger changes
in its industry. Our emphasis on environmental
Insufficient strategic change → Dynamic misfit
and organizational contingencies, however, sug-
This quadrant represents the situation wherein an gests that factors internal to the organization may
organization faces the necessity for change but also play a significant role in defining when
fails to respond adequately, resulting in a per- inertia is beneficial, such as the situation in which
formance detriment. As the obverse of the ben- a firm possesses resources that offset external
eficial change quadrant discussed above, it cap- pressures for change.
tures what strategists and adaptation theorists In fact, Selznick’s (1948, 1957) original con-
might envision as a ‘worst case scenario,’ i.e., cept of ‘distinctive competencies’ suggests that
an organization with a strategy that has become organizations pursuing a particular strategy have
obsolete, outdated, or otherwise inappropriate in also been accumulating strategy-specific com-
light of changing conditions. For organizations in petencies, and that staying within these com-
this category of dynamic misfit, the nonoccur- petencies may be a preferred course of action. In
rence of such necessary change may be due to fact, Selznick (1957) does not see environmental
either an organizational inability or unwillingness coalignment as the ultimate organizational objec-
to change, or perhaps an unawareness of the need tive or solution. He suggests that there are multi-
to change. ple paths toward organizational viability and that
The growing body of strategic change research resources can often provide meaningful protection
has documented the various behavioral forces that from environmental changes for organizations that
may act as barriers to change (Rajagopalan and possess them. Miles and Cameron (1982: 237)
Spreitzer, 1997), and several studies have echo this view, arguing that ‘forms of inertia
explicitly discussed—with some surprise—the may also represent opportunities . . . it may be
situation whereby firms do not change strategies, more important for executive leaders to under-
but should. Oster (1982), for example, notes that stand the limits of their organization’s distinctive
firm strategies may be ‘sticky’ from a behavioral competencies and predispositions than to try and
point of view; i.e., organizations may be unwill- change them.’
ing or unable to change strategies which have While this relative deemphasis on environmen-
become entrenched. Similarly, Henderson and tally driven adaptation may seem unusual, one can
Clark (1990) and Leonard-Barton (1992) discuss find parallel arguments elsewhere in the strategy
the problems that incumbent firms have with literature. Early work by Hofer and Schendel
Copyright  2000 John Wiley & Sons, Ltd. Strat. Mgmt. J., 21: 429–453 (2000)
10970266, 2000, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/(SICI)1097-0266(200004)21:4<429::AID-SMJ81>3.0.CO;2-# by Loughborough Universitaet, Wiley Online Library on [07/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Modeling the Dynamics of Strategic Fit 435

(1978: 144), for instance, suggested that excep- initial work, for instance, specifically argues that
tional resources can ‘parry the threats that [a adapting too readily to environmental changes
firm] faces in its external environment’ and thus may negatively affect organizational performance
mitigate its need for strategic adaptation to and damage organizational competencies. He
achieve environmental fitness. Also, more recent warns repeatedly against the dangers of what
work in the resource-based view of the firm has he terms ‘opportunistic adaptation,’ defined as
emphasized the merits of constructing strategies organizational change undertaken without suf-
designed to capitalize on an organization’s histori- ficient consideration of the organization’s histori-
cal strengths, and counseled the wisdom of adher- cal competencies or commitments. Hedberg
ing to these strategies over time (Barney, 1991; (1981) also suggests that if a firm pursuing a
Ghemawat, 1991). From this perspective, a firm’s particular strategy has also been accumulating
unique, historically accumulated, inimitable strategy-specific competencies, then a shift away
resources may provide the only potential source from that strategy is likely to be costly (at least
of sustained competitive advantage and, in in the short run) in terms of learning new com-
addition, there may be difficulties entailed in petencies or unlearning existing ones. Rumelt
developing resources necessary to support and (1995) also argues that resources such as repu-
implement alternative strategies (Peteraf, 1993). tation and customer loyalty may be damaged if
This suggests that both environmental and organi- an organization attempts to enter expanding mar-
zational factors should be used to assess the kets far from its traditional domain, or offers
possibility of beneficial inertia. lower-quality products that could weaken cus-
tomers’ identification with the firm. Finally, some
organizational ecologists have also made broader,
Excessive change → Dynamic misfit
noncontingent claims about the costliness of
This quadrant represents the situation whereby an change and the benefits of inertia (Hannan and
organization’s environmental and organizational Freeman, 1984).
contingencies do not suggest the need to change, To summarize, Figure 3 provides the foun-
but the organization does so anyway, resulting in dation for understanding the dynamic pursuit of
a performance detriment. Such excessive change strategic fit and its likely performance impli-
may be viewed as reflecting an organization’s cations. One implication of Figure 3 is that an
well-intentioned but miscalculated pursuit of stra- emphasis on strategic fit can allow for a more
tegic fit. In this situation, the organization may nuanced approach to conceptualizing and testing
have changed too much, overshooting its target of the relationship between strategic change and per-
dynamic coalignment with relevant environmental formance. More specifically, while theorists have
and organizational contingencies. Excessive debated whether adaptation is rare vs. common
change may also result when an organization and whether it is beneficial vs. harmful (Astley
rightly attempts to adapt its strategy to one and Van de Ven, 1983; Bourgeois, 1984), Figure
element of its context (e.g., its competitive 3 highlights that one should expect to find evi-
environment), but fails to take account of how dence for each of the situations discussed above:
this change will affect its fitness along other (1) some organizations will change as much as
dimensions (e.g., its resource base). Excessive they should, (2) others will not change as much
change might also reflect less well-intentioned as they should, (3) yet others will not change
motives that are unrelated to adaptation, such as and should not change, and finally (4) others will
change aimed at empire building, or unreflective change more than they should. To explain this
‘change for change’s sake.’10 variety and predict its consequences, we suggest
The possibility of excessive change has that it is necessary to conceptualize a model of
received relatively little attention in either the dynamic strategic fit that identifies and incorpo-
strategy or organization theory literatures—with rates the environmental and organizational contin-
several notable exceptions. Selznick’s (1957) gencies that should make strategic change more
likely (and advantageous) for a given organi-
10
zation at a particular point in time. This modeling
It is possible, of course, that such changes might also
represent highly proactive or anticipative changes before con- approach reflects our view that strategic fit is
tingencies are clear. organizationally and temporally unique (rather
Copyright  2000 John Wiley & Sons, Ltd. Strat. Mgmt. J., 21: 429–453 (2000)
10970266, 2000, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/(SICI)1097-0266(200004)21:4<429::AID-SMJ81>3.0.CO;2-# by Loughborough Universitaet, Wiley Online Library on [07/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
436 E. J. Zajac, M. S. Kraatz and R. K. F. Bresser

than common across many organizations in a ateness of changing core strategies (otherwise,
given context). there would be no situation in which inertia
Such an approach can then be used to (1) would be considered a viable option). Fourth,
generate an organization- and time-specific pre- the empirical context would be sufficiently well
diction of how much an organization should be understood by observers such that specific rel-
changing, (2) compare predicted change with evant environmental and organizational factors
actual change empirically, and (3) assess whether likely to affect strategic fit could be identified
organizations not acting in accordance with the (otherwise, one would have difficulty trying to
contingency model, i.e., those falling in the two identify the contingencies likely to affect the
quadrants of excessive change and insufficient desirability of staying with vs. changing that core
change in Figure 3, are apt to experience poor strategy). Finally, one would also be able to
subsequent performance. We develop and test observe empirically both the changes in core
such a model in a longitudinal analysis of the strategies (otherwise, one could not compare pre-
U.S. S&L industry, as discussed below. dicted changes in strategy with actual changes),
and the performance implications of such change
(otherwise, one could not examine whether
HYPOTHESES AND EMPIRICAL organizations following the contingency model of
CONTEXT change outperform those that do not).
The American S&L industry provides an excel-
As noted earlier, surprisingly little attention has lent arena for predicting and assessing empirically
been devoted to identifying the environmental the likelihood and performance implications of
and organizational circumstances that might make changes in an organization’s core strategy. It
change more vs. less beneficial, due partly to the meets virtually all of the empirical desiderata
complexity of the task, and due partly to concerns mentioned above. In particular, the industry faced
about possible limited generalizability. Certain comprehensive and dramatic changes during the
factors may be relevant in one industry, but not 1980s (White, 1991; Haveman, 1992). Tradition-
in another, or relevant at one time, but not in ally, the central mission of firms in the S&L
another. We propose a two-step approach to rem- industry was to take in small deposits and make
edy this concern. Specifically, we first identify these funds available as residential mortgage
several broad categories of organizational and loans within a particular geographic region
environmental factors that can make strategic (Eichler, 1989). These activities historically took
change more vs. less desirable (based on existing place within a highly regulated environment with
strategy and organization theory literatures), and limited competition. However, in the late 1970s
then discuss the specific operationalization of and early 1980s, S&Ls faced unprecedented and
such factors in conjunction with our industry and unanticipated major increases in interest rates,
time-specific empirical context (the S&L industry effectively threatening the capital base of the
in the 1980s). industry.11 At that time, S&Ls, with their histori-
We suggest that an ideal empirical context for cal emphasis on long-term residential mortgage
developing and testing a contingency model of lending, were somewhat inflexible in their ability
dynamic strategic fit and performance would have to pass these costs onto their customers. Congress
the following features. First, the organizations also passed numerous acts that deregulated the
under study would be facing changing environ- industry (e.g., the Garn–St. Germain Depository
mental conditions, suggesting a possible need for Institutions Act of 1982), the effect of which was
strategic change (otherwise, there would be much to allow S&Ls to move away, if they wished, from
less—if any—general impetus for change). their traditional strategy of residential mortgage
Second, within this changing industry-specific set- lending. The deregulation process was essentially
ting, there would also be differences in organi-
zational attributes and local environmental con-
ditions (otherwise, there would be much less—
11
if any—organizational and local environmental A widely acknowledged and well-understood environmental
feature that affects virtually all S&Ls is the interest rate
heterogeneity). Third, there would also be some structure for monies that S&Ls either collect as deposits or
controversy/ambiguity surrounding the appropri- make available as loans.

complete by the beginning of 1984 (United States internal and external factors that comprise the multi-
League of Savings Institutions, 1989). variate model of dynamic strategic fit for S&Ls.13
Although the industry continued to be the
major provider of residential mortgage loans Organizational factors: Competencies and
(White, 1991), deregulation gave S&Ls broad resource advantages
new investment powers. New strategies emerged
As noted earlier, organizational resources and
such as attempts by S&Ls to position themselves
competencies can be critical contingencies for
as providers of nonmortgage commercial and con-
organizations contemplating strategic change
sumer loans. Further, many S&Ls ventured into
(Selznick, 1957; Snow and Hrebiniak, 1980; Wer-
real estate development as well as investments
nerfelt, 1984; Barney, 1991). Accordingly, we
into stock and corporate debt securities
also propose that there exists a set of organi-
(Balderston, 1985; Eichler, 1989; Haveman,
zational competencies and input resource differ-
1992). Subsequently, however, a considerable
ences specific to the S&L industry that can pro-
number of thrifts experienced financial difficulties
vide an S&L with an advantage (or disadvantage)
and required assistance from regulators. It should
relative to other S&Ls.14
also be noted that the majority of S&Ls remained
From our perspective, such resource differences
profitable and solvent during the turbulent period
and competencies serve as potentially important
that followed deregulation (White, 1991). Clearly,
contingencies that can influence the desirability of
some organizations changed their core strategy
an S&L’s changing its reliance on the traditional
by altering their traditional reliance on residential
strategy of residential mortgage lending. Such
mortgage lending, and some did not, and some
features can include (1) differences in an S&L’s
benefited from changing while others did not.
input resource costs, (2) the efficiency with which
What is absent from the many discussions of the
an S&L is able to manage its asset portfolio, and
changes among S&Ls in this time period, how-
(3) the composition of that portfolio. We also
ever, is a more nuanced analysis that seeks to
consider how the trend in an S&L’s overall fi-
predict and explain this variety based on an
nancial performance can influence its likelihood
understanding of the multivariate set of environ-
of making strategic changes.
mental and organizational contingencies facing
In terms of the cost of input resources, it is
each organization over this time period.12
generally believed that S&Ls whose cost of funds
Developing a model of strategic fit for S&Ls
(i.e., the funds used to make subsequent loans)
that is dynamic, multivariate, and normative, as
is high will be disadvantaged relative to those
offered below, may help in explaining why and
whose input resource costs are lower (White,
when an S&L might move away from (or back
1991). Also, given that depositors generally rep-
toward) their traditional strategy of residential
resent the cheapest form of funds (Balderston,
mortgage lending, and why some experienced
1985), one can extend this logic to suggest that
financial performance and survival advantages
S&Ls relying more heavily on other sources of
from their specific actions while others did not. In
funds, e.g., governmental sources, are at a com-
other words, a contingency approach to dynamic
petitive disadvantage, in terms of the cost of input
strategic fit can predict and explain how each of
resources. This suggests the following hypotheses:
the prototypical situations discussed earlier can be
found in this industry: beneficial strategic change,
Hypothesis 1: As an S&L’s cost of funds
beneficial inertia, insufficient strategic change, and
increases (decreases), its reliance on the tra-
excessive change. We now discuss the specific
ditional S&L strategy of residential mortgage
lending should decrease (increase).

13
Given the wide variety of new strategic directions available
to S&Ls in the 1980s, this study emphasizes changes in
12
Haveman (1992), for instance, assumes that all S&Ls face their traditionally established strategy of residential mortgage
the same environment at a given point in time (she studies lending (and the performance implications of such change).
14
only S&Ls in California), and that all S&Ls have the same We have attempted to identify resource or competency
competencies. Our study, on the other hand, begins with the differences that have been established and recognized in the
opposite assumption of heterogeneous and changing organi- recent literature on S&Ls. However, we do not assume that
zational competencies and environmental conditions. ours is an exhaustive list.

Hypothesis 2: As an S&L’s reliance on bor- cated by poor prior performance. Poor perform-
rowing from governmental and other nonde- ance can also be viewed as providing indirect
positor sources of funds increases (decreases), evidence of a lack of organizational competency.
its reliance on the traditional S&L strategy of While poor prior performance does not suggest
residential mortgage lending should decrease specifically whether a change in strategy will
(increase). improve performance, it does imply that the cur-
rent strategy is inadequate, and therefore that a
An organizational competency that may dis- change in that core strategy may be necessary
tinguish one S&L from another is an S&L’s (Ginsberg, 1988; Ocasio, 1995). For S&Ls, a
ability to efficiently manage its mortgage port- common indicator of overall performance is net
folio. In other words, if an S&L’s portfolio man- worth (Haveman, 1992). This suggests the fol-
agement skills are high (as evidenced by a high lowing hypothesis:
rate of return on its mortgage portfolio), then
maintaining or even expanding its reliance on the Hypothesis 5: As an S&L’s net worth
traditional strategy of residential mortgage lending decreases (increases), its reliance on the tra-
may be appropriate. On the other hand, if an ditional S&L strategy of residential mortgage
S&L’s portfolio management skills are low (as lending should decrease (increase).
evidenced by a low rate of return on its mortgage
portfolio), this implies an operational deficiency
Environmental factors: Micro and macro
that puts that S&L at a competitive disadvantage.
forces
Such a deficiency represents an organizational
contingency that would likely lead an S&L to Dess, Ireland, and Hitt (1990) have suggested
reduce its reliance on its traditional strategy. This that single-industry studies should identify suben-
competency-based argument suggests: vironments when analyzing environmental effects
on strategy. Lenz’s (1980) study of savings insti-
Hypothesis 3: As an S&L’s rate of return on tutions also highlights the importance of microen-
its mortgage portfolio decreases (increases), vironmental variation, as does Thompson’s (1967)
its reliance on the traditional S&L strategy of well-known discussion on the relevance of task
residential mortgage lending should decrease environments for understanding adaptation. One
(increase). central feature that may affect the propensity
of organizational adaptation is the competitive
Another prominent organizational resource dif- environment of a local area. Organizations often
ference that would suggest that an S&L needs to look to local competitors for cues regarding the
move away from its traditional mortgage business appropriateness of potential strategic changes.
is the composition of the mortgage portfolio itself, Such attempts could be explained from perspec-
i.e., the degree to which the S&L’s loan portfolio tives assuming greater rationality (e.g., adaptation
is heavily weighted towards fixed-rate (vs. adjust- via vicarious learning) and lesser rationality (e.g.,
able rate) mortgages. Specifically, the interest rate bandwagon effects due to blind imitation). In
gap between what an S&L pays for deposits and either case, one might expect that S&Ls will be
what it receives from loans is most problematic more likely to change their reliance on residential
for an S&L that holds many long-term, fixed-rate mortgage lending if they observe local competi-
mortgages (White, 1991). This suggests: tors doing the same, ceteris paribus. This suggests
the following hypothesis:
Hypothesis 4: As an S&L’s emphasis on fixed
rate mortgages increases (decreases), its Hypothesis 6: As an S&L’s local competitors’
reliance on the traditional S&L strategy of reliance on residential mortgage lending
residential mortgage lending should decrease decreases (increases), its reliance on the tra-
(increase). ditional S&L strategy of residential mortgage
lending should decrease (increase).
Finally, an overall measure of a resource
deficiency that may stimulate needed change is Macroenvironmental factors, i.e., those that
the financial situation of the organization, as indi- affect all organizations in the population, clearly
Copyright  2000 John Wiley & Sons, Ltd. Strat. Mgmt. J., 21: 429–453 (2000)
10970266, 2000, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/(SICI)1097-0266(200004)21:4<429::AID-SMJ81>3.0.CO;2-# by Loughborough Universitaet, Wiley Online Library on [07/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Modeling the Dynamics of Strategic Fit 439

can also affect the desirability of strategic change work does not specify any asymmetry between
over time. As noted above, the late 1970s and the performance implications of deviations from
early 1980s were particularly turbulent times for the contingency model that are ‘above the line,’
S&Ls, driven largely by the dramatic and unpre- vs. ‘below the line,’ it does allow an isolation of
cedented increases in interest rates. S&Ls with the two forms of deviation from the model. This
heavier emphases on long-term residential mort- may be of interest to students of strategic fit
gage lending would be less able to respond to because the literature has emphasized the negative
these short-term fluctuations by passing the costs performance consequences of insufficient change
of higher interest rates onto their customers. Inter- and has generally not considered the conse-
estingly, there was a substantial decline in interest quences of excessive change (Donaldson, 1995).
rates later in the 1980s. From a dynamic strategic Secondly, while our framework also specifies no
fit perspective, this pattern of interest rate vari- asymmetry between the performance implications
ation implies that when faced with higher interest of the other two quadrants in Figure 3 (beneficial
rates S&Ls should attempt to move away from change and beneficial inertia), it does permit a
their traditional strategy of residential mortgage relative assessment of the performance conse-
lending, but not in lower interest periods. This quences associated with each. This may also be
suggests the following straightforward hypothesis: of interest to researchers interested in strategic
fit, given that literature’s traditional assumption
Hypothesis 7: As interest rates increase of comparably positive performance consequences
(decrease), an S&L’s reliance on the tra- for beneficial change and beneficial inertia,
ditional strategy of residential mortgage lend- respectively.15 Assessing such differences may
ing should decrease (increase). also be of interest to researchers interested more
generally in organizational change, such as those
strategists and ecologists who have debated—or
Performance implications
at least differentially emphasized—the positive
A core assumption of a contingency model of performance consequences of beneficial adap-
strategic fit is that performance suffers for organi- tation vs. functional inertia, respectively (Boeker,
zations whose behavior is at odds with the norma- 1989; Hannan and Freeman, 1984).16 Therefore,
tively specified model. Similarly, in the present in addition to the specific directional hypotheses
context, our model of dynamic strategic fit sug- stated above, we also explore the following sup-
gests that S&Ls whose strategic actions deviate plemental hypotheses:
from the model will experience deleterious per-
formance effects. However, as the 2 × 2 frame- Supplemental Hypothesis #8a: Are there per-
work developed earlier in Figure 3 highlights, formance differences between S&Ls deviating
there are two forms of such deviations, each of in different directions (i.e., insufficient change
which implies misfit of the organization’s strategy vs. excessive change) from the contingency
with its environmental and organizational context. model of change?
Specifically, a firm can be either ‘above the line,’
i.e., excessive change, or ‘below the line,’ insuf- 15
Note that although the quadrant comparison of beneficial
ficient change. Since contingency predictions of change and beneficial inertia refers to dichotomous characteri-
strategic fit view both forms of deviation as zations (change vs. no change), the empirical test of this
specific research question views change in continuous terms,
evidence of misfit that negatively affects perform- examining whether organizations engaging in larger amounts
ance, we propose the following: of actual change (motivated by larger amounts of needed
change) experience the same positive performance outcomes
as organizations engaging in smaller amounts of change
Hypothesis 8: S&Ls deviating from the con- (motivated by smaller amounts of needed change). Specifying
tingency model of change will perform worse beneficial inertia as only the condition of absolutely no change
than S&Ls following the model. (actual and needed) would have been unnecessarily restrictive.
16
Note that our contingency approach defines functional iner-
tia as the absence of both actual organizational change and
Figure 3 also illuminates another aspect of the the absence of any need to change, as defined by relevant
question of fit that allows us to explore the organizational and environmental contingencies. While we
view this as an improvement over other noncontingent per-
performance hypothesis (Hypothesis 8) in further spectives on functional inertia, the difference should be
detail. Specifically, while our contingency frame- remembered when interpreting the empirical findings.

Supplemental Hypothesis #8b: Are there dif- 1991; Bresser, Dunbar, and Jithendranathan,
fering performance consequences for S&Ls 1994). It is also particularly appropriate for our
whose actions reflect beneficial change vs. ben- study, since our strategy measure captures how
eficial inertia? S&Ls allocate their assets, and ROA measures
how these assets perform subsequently. A 1-year
time lag is appropriate, because our strategic
METHOD change measure assesses realized changes in asset
allocation, and there is little reason to believe
Data
that ROA should lag long behind asset changes.
Financial reports submitted by all S&Ls to the Our second performance measure was organi-
Federal Home Loan Bank Board were the major zational failure. There were numerous failures
source of data for this study. In particular, we among S&Ls during the 1980s. We defined fail-
included in the study all U.S. S&Ls that reported ure as the point when an S&L was taken into
data between the years 1980 and 1988. Our conservatorship by government regulators. This is
resultant data set contained observations on over an appropriate measure of failure because the
4000 S&Ls over a 9-year period.17 Additional regulatory safety net provided by the government
data on organizational failures were obtained prevents failing S&Ls from closing in a conven-
directly from the Office of Thrift Supervision. tional manner. Regulators take over failing S&Ls
and arrange for their liquidation or, more typi-
cally, their subsequent merger with healthy thrifts
Measures
(White, 1991).19
Strategic change
Organizational and environmental contingencies
We defined strategic change in terms of change
in residential mortgage lending from year to year. The specific internal and external contingency
As mentioned above, residential mortgage lending measures which we included in our model are as
constitutes the historic core business of thrifts follows. In order to test Hypothesis 1, we meas-
and the alteration of this business represents a ured cost of funds as total interest paidt /total
significant change in strategy. More specifically, deposits and liabilitiest, consistent with prior
our measure of change in each year was research (Bresser et al., 1994). For Hypothesis
(residential mortgage lendingt+1 /total assetst+1 ) − 2, we measured percentage of borrowed funds
(residential mortgage lendingt /total assetst ).18 as total borrowed fundst /total liabilitiest. To test
Hypothesis 3, we measured return on mortgage
lending as total interest received on
Firm performance
mortgagest /total mortgage assetst. For Hypothesis
We employed two separate measures of organi- 4, we measured emphasis on fixed rate mortgages,
zational performance. First, we used ROA at time as fixed rate mortgagest /total mortgagest. For
t + 1, which we defined as (net incomet+1 /total Hypothesis 5, we created a dummy variable cap-
assetst+1 ). ROA is a standard measure of operating turing decline in net worth, which was coded as
performance in organizational research (Baliga, 1 when (total assetst − total liabilitiest ) was less
Moyer, and Rao, 1996; Wiersema and Bantel, than (total assetst−1 − total liabilitiest−1 ). To test
1993), in banking research (Deephouse, 1996), Hypothesis 6, we measured an S&L’s local com-
and in prior studies of S&Ls (Lenz, 1980; White, petitors’ reliance on residential mortgage lending

17
The number of reporting S&Ls varies from year to year as
19
a result of closures, mergers, and new entries. The number We also estimated models predicting exit by any means,
of years included varies across some analyses because of the including mergers. Given that mergers can occur among heal-
need to lag certain variables. thy thrifts, failure is a preferable measure of performance; in
18
As an example, consider a hypothetical S&L with 90 any event, the results of both analyses were generally similar.
percent of its assets in residential mortgages in 1985 and 70 In addition, while our analyses examine subsequent perform-
percent in 1986. This firm would receive a score of –20 on ance with a 1-year lag, we also examined both ROA and
this variable, indicating a movement away from mortgage failure over a 2-year period, and again obtained generally
lending. An S&L increasing residential mortgage lending from similar findings. These results are available from the authors
70 to 90 percent would receive a score of +20. upon request.

as the percentage of total assets that other S& × deviation type, we can assess whether deviation
L’s within a focal thrift’s 3-digit zip code had in that exceeds recommended levels (excessive
residential mortgage lending at time t.20 Finally, change) results in a different performance effect
to test Hypothesis 7, we defined the macroenvi- relative to deviation that fails to reach the level
ronmental variable interest rates as the average suggested by the contingency model (insufficient
prime rate which banks charged during a parti- change). The second interaction term uses the
cular period. same absolute deviation score described above
and multiplies it by the level of predicted strategic
change. Using this measure of absolute value of
Deviation from needed strategic change
residual × absolute predicted value allows us to
Three different methods are used to assess the examine whether functional inertia has a same
degree to which S&Ls’ changes in strategy were positive effect on performance as beneficial stra-
consistent with these internal and external contin- tegic change.
gencies in a given year. First, we measured the Finally, although our residual analysis is suf-
difference between the actual amount of change ficient to test Hypothesis 8, we used individual
that was undertaken by an S&L in a given year and interactions as an additional test of this hypoth-
the level of strategic change that was suggested, esis. Specifically, we computed a series of seven
cumulatively, by our contingency model. To create interaction terms by multiplying our strategic
this measure of (in)congruence, we obtained a change measure with each of the seven individual
standardized residual from our generalized least- contingency factors. This alternative approach is
squares model of strategic change (discussed consistent with the ‘fit as moderation’ approach
further below) for each observation in our data, to testing contingency relations described by Ven-
and then computed the absolute value of this katraman (1989), whereas our earlier residual
residual. The resulting measure (absolute value of analysis is most consistent with what Venkatra-
residual) captures the extent to which the change man calls the ‘fit as profile deviation’ approach.
undertaken by an individual thrift in a given year These interaction terms also allow us to examine
deviates from the amount of change predicted by the individual importance of each of our seven
our multivariate contingency model. This absolute contingency factors. Thus, for example, if a high
deviation, then, was used to predict subsequent cost of funds suggests a need to decrease depen-
performance in terms of both ROA and organi- dence on residential mortgage lending (as
zational survival chances. The use of residuals to Hypothesis 1 suggests), we should expect to see
examine contingency relationships is considered an a negative and significant coefficient for the
accepted technique, as discussed in Van de Ven ‘change × cost of funds’ term in our models
and Drazin (1985) and Venkatraman (1989). of financial performance. We would expect this
Second, we also computed two interaction because such a coefficient would suggest that
terms to explore the Supplementary Hypotheses further increasing residential mortgage lending
8a and 8b, which addressed the possible perform- when saddled with a high cost of funds is inap-
ance differences or asymmetries between insuf- propriate. Likewise, such a coefficient would sug-
ficient and excessive strategic change, and gest that decreasing residential mortgage lending
between beneficial inertia and beneficial strategic (to compensate for the burden of a high cost of
change. The first interaction term uses the abso- funds) would have a beneficial effect on perform-
lute deviation score described above and multi- ance for a given S&L within a given year.
plies it by a dichotomous variable measuring
whether the deviation overshoots vs. undershoots
Control variables
the amount of change predicted by the model.
Using this measure of absolute value of residual We also added a number of control variables to
our models of change and performance. These
include total assets (as a measure of organizational
20
Some S&Ls have no competition within their local area. size), prior return on assets, prior change in resi-
In these instances, we used the mean level of residential dential mortgage lending, prior level of residential
mortgage lending within the thrift’s home state as a proxy
measure of its competitor’s activities. This substitution was mortgage lending, and the number of S&Ls within
necessary for about 4 percent of all observations. a focal S&L’s home state (state density). Together,
Copyright  2000 John Wiley & Sons, Ltd. Strat. Mgmt. J., 21: 429–453 (2000)
10970266, 2000, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/(SICI)1097-0266(200004)21:4<429::AID-SMJ81>3.0.CO;2-# by Loughborough Universitaet, Wiley Online Library on [07/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
442 E. J. Zajac, M. S. Kraatz and R. K. F. Bresser

these controls enable a more precise interpretation log(P(t)/(1 − P(t)) = a + b1×1 + b2×2(t)
of our strategic change and performance results.
The various models involving interaction terms where log(P(t)/(1 − P(t)) represents the log-odds
which we estimated also included both lower order of the event occurring for a particular organi-
terms to improve the precision of the interaction zation at any time t, a represents the baseline
term (Harrison and Mitchell, 1995). Descriptive hazard of the event occurring, b1 represents the
statistics and correlations for all variables are change in the log-odds for each one unit increase
presented in Table 1. in a time invariant covariate ×1, and b2 represents
the change in the log-odds for each one unit
increase in a time varying covariate ×2(t). The
Analysis
main advantage of using this model over a con-
We employed time series regression methods to tinuous time model is that the discrete time model
assess the hypothesized relationships between does not require exact information on the timing
change, performance, and organizational/ of events and is thus well suited to handling
environmental contingencies. Specifically, we used ties on the dependent variable. Accordingly, it is
generalized least-squares regression (Sayrs, 1989; appropriate when measurement is based on dis-
Judge et al., 1982) to examine how the variables crete times of fairly large intervals (e.g., years)
in our multivariate contingency model affected stra- and when the event of interest sometimes occurs
tegic change among S&Ls and, in turn, to examine for a substantial number of organizations at the
the effects of dynamic strategic fit/misfit on sub- same time, as is the case in this study (Petersen,
sequent financial performance. Generalized least- 1991; Yamaguchi, 1991). The discrete time model
squares regression is appropriate because pooled has been shown to produce results that very
cross-sectional time series data (i.e., multiple closely approximate those produced by continuous
organizations observed at multiple points in time) time models in virtually all cases (Allison, 1984).
of the type we employ violate basic assumptions
about homoskedasticity which are required for ordi-
nary least-squares regression. Generalized least- RESULTS
squares mitigates the problems caused by noncon-
stant variance across firms, and has increasingly Our contingency model of dynamic strategic fit
been used in strategy and organizational research predicts that certain organizational and environ-
for this reason (e.g., Bergh and Holbein, 1997). mental factors (Hypotheses 1–7) should affect
To examine how adhering to our contingency the direction, magnitude, and timing of changes
model related to our other performance measure in the traditional core strategies of S&L insti-
(organizational mortality), we employed a discrete tutions. The results of our regression models indi-
time event history model (Allison, 1984; Yamagu- cate considerable support for this set of hypoth-
chi, 1991).21 This form of analysis entails per- eses. Specifically, Table 2 reveals that S&Ls were
forming simple logit analysis on pooled time series most likely to decrease significantly their reliance
data with a binary dependent variable. It allows on residential mortgage lending when they faced:
one to estimate the hazard of an event a high cost of funds (Hypothesis 1), a heavy
(organizational failure) occurring in any one of t dependence on borrowed funds (Hypothesis 2),
discrete time periods as a function of covariates poor returns on their mortgage portfolio
that are allowed, but not required, to vary over (Hypothesis 3), heavy reliance on fixed-rate mort-
time. The discrete time model has the following gages (Hypothesis 4), declining net worth
general form: (Hypothesis 5), local competition which had al-
ready diversified away from mortgage lending
(Hypothesis 6), and an environment of high inter-
21
Given the unavoidable left censoring, it is important to note est rates (Hypothesis 7).22 Taken together, these
that 1980 is a relevant time point from which to begin the
analyses. Specifically, as noted earlier, the 1980s represented
a decade in which environmental and organizational hetero-
22
geneity and change became most pronounced (White, 1991). Stated differently, our results also suggest that S&Ls were
Furthermore, very recent research on change suggests that most likely to increase their reliance on their traditional
dynamic analyses can be fruitfully applied despite left cen- business when faced with the opposite set of internal and
soring (Haveman, 1992; Kelly and Amburgey, 1991). external contingencies.

Copyright  2000 John Wiley & Sons, Ltd. Strat. Mgmt. J., 21: 429–453 (2000)
Copyright  2000 John Wiley & Sons, Ltd.
Table 1. Descriptive statistics and correlationsa

Mean Std. 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Dev.

1. Change in res. mortgage lending (t to t+1) −0.013 0.072

2. Cost of funds (t) 0.044 0.008 −0.140
3. Borrowings/total liabilities (t) 0.063 0.078 −0.009 0.068
4. Return on mortgage portfolio (t) 0.050 0.008 0.060 0.463 0.038
5. Fixed rate mortgages/total mortgages (t) 0.696 0.253 −0.066 0.034 −0.122 −0.284
6. Decline in net work (t−1 to t) 0.312 0.463 −0.074 0.410 0.077 −0.015 −0.014
7. % of competitor assets in mortgages (t) 0.764 0.090 −0.043 0.057 −0.035 −0.242 0.437 0.022
8. Interest rate (t) 0.085 0.023 −0.135 0.298 −0.006 −0.111 0.453 0.101 0.398
9. Mortgages/total assets (t) 0.772 0.115 −0.279 0.110 −0.020 −0.298 0.351 0.041 0.411 0.307
10. Total assets (t) 11.312 1.341 −0.003 0.012 0.453 0.028 −0.233 0.002 −0.113 −0.130 −0.019
11. Change in res. mortgage lending (t−1 to t) −0.011 0.078 −0.073 −0.071 −0.014 −0.148 −0.077 −0.014 0.015 −0.003 0.247 −0.058
12. Return on assets (t+1) −0.002 0.019 0.042 −0.017 −0.065 0.073 0.129 −0.207 0.067 0.075 0.102 −0.046 0.055
13. Return on assets (t) 0.000 0.014 0.035 −0.130 −0.070 0.057 0.087 −0.338 0.052 0.019 0.091 −0.021 0.053 0.413
14. Organizational death (t+1 to t+2) 0.012 0.111 −0.013 −0.045 0.082 −0.049 −0.109 0.140 −0.077 −0.083 −0.089 0.046 −0.014 −0.298 −0.255
15. State density (t) 144.188 97.072 −0.019 −0.025 −0.100 −0.079 0.078 0.022 0.026 0.072 0.021 −0.044 −0.001 −0.046 −0.020 0.007

a
Coefficients greater than 0.03 are significant at 0.01.
Modeling the Dynamics of Strategic Fit
443

Strat. Mgmt. J., 21: 429–453 (2000)

10970266, 2000, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/(SICI)1097-0266(200004)21:4<429::AID-SMJ81>3.0.CO;2-# by Loughborough Universitaet, Wiley Online Library on [07/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
10970266, 2000, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/(SICI)1097-0266(200004)21:4<429::AID-SMJ81>3.0.CO;2-# by Loughborough Universitaet, Wiley Online Library on [07/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
444 E. J. Zajac, M. S. Kraatz and R. K. F. Bresser
Table 2. Generalized least squares regression: Effects period. The positive coefficient for this variable
of organizational and environmental contingencies on in Model 4 indicates that deviation from the
change in residential mortgage lending from t to t+1
model significantly increased the probability of
Predictor Coefficient failure. In other words, S&Ls conforming more
(standard error) closely to our model (i.e., those with smaller
absolute residual values in a given period)
Cost of funds (t) −1.2052*** enjoyed higher subsequent ROA (Model 1) and
(0.0985) a lower risk of failure (Model 4).
Borrowings/total liabilities (t) −0.0199*** Table 3 also provides evidence for the explora-
(0.0058)
Return on mortgage portfolio (t) 0.9612*** tory Supplementary Hypotheses #8a and #8b,
(0.0680) which address possible asymmetries in
Fixed rate mortgages/total −0.0060** change/performance relationships that are not
mortgages (t) (0.0023) implied directly by our contingency model. Sup-
Decline in net worth (t−1 to t) −0.0032** plemental Hypothesis #8a, which asks whether
(0.0010)
% of competitor assets in 0.0534*** there are differences between the two types of
mortgages (t) (0.0056) dynamic misfit that we identified, is answered in
Interest rate (t) −0.2530*** Models 2 and 5 in Table 3. The negative coef-
(0.0304) ficient for the interaction term ‘Absolute value of
Mortgages/total assets (t) + −0.1834*** residual × deviation type’ in Model 2 suggests
(0.0043)
Total assets (t) + 0.0012*** that insufficient change is more damaging to sub-
(0.0003) sequent ROA than is excessive change. The posi-
Change in % mortgage lending 0.0043 tive interaction term in Model 5 has the same
(t−1 to t) (0.0055) implication: insufficient change is more likely to
Constant 0.1218*** lead to organizational failure than is excessive
(0.0081)
change. Thus, the relationship between deviation
N 28718 from the contingency model and subsequent per-
(Org-Years) formance does, in fact, vary depending on
Chi square 4034.93 whether the deviation score is positive (i.e.,
excessive strategic change) vs. negative
Notes:
(1) *p ⬍ 0.05; **p ⬍ 0.01; ***p ⬍ 0.001 (two-tailed). (insufficient strategic change).
(2) + Indicates that variable has been log-transformed. Supplementary Hypothesis #8b, which asked
(3) The model also includes a series of period dummy whether the two types of fit we identified (i.e.,
variables which are not reported.
(4) Time periods are one year long. beneficial strategic change and functional inertia)
are equally performance enhancing, is answered
in Models 3 and 6 in Table 3. The positive
findings suggest that the our normative model of and significant coefficient for the interaction term
dynamic strategic fit does predict which S&Ls ‘absolute value of residual × absolute predicted
would change strategies, when they would value’ in Model 3 indicates that there is a differ-
change, in which direction they would change, ence between these two types of fit. Specifically,
and how much they would change. it suggests that S&Ls achieving strategic fit by
Turning to the performance implications of engaging in substantial strategic changes (i.e.,
fitness, our first set of analyses regarding perform- having high levels of needed and actual change)
ance generally supports the notion that S&Ls obtained more positive performance changes that
adhering to our normative model benefited from S&Ls facing the situation of beneficial inertia
doing so. We begin with Models 1 and 4 in (i.e., low levels of needed and actual change).23
Table 3. They indicate that—consistent with One draws a similar conclusion from the negative
Hypothesis 8—the greater an S&L’s deviation coefficient for this variable in Model 6, which
from the contingency model of change, the worse indicates that S&Ls that required—and engaged
its performance. The negative coefficient for the
variable ‘absolute value of deviation’ in Model 1 23
Recall that we control for prior performance; i.e., the results
indicates that S&Ls deviating from our model are not driven by a ‘regression to the mean’ performance
experienced lower subsequent ROA in any given effect.

Copyright  2000 John Wiley & Sons, Ltd. Strat. Mgmt. J., 21: 429–453 (2000)
Table 3. Generalized least squares estimates of effects of deviation from contingency prediction line on subsequent performance and survival chances

Random effects regression dependent variable: Event history analysis dependent variable:
Return on assets at time t+1 Organizational death at time t+1

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6

Overall Insufficient Beneficial Overall Insufficient Beneficial
vs.excessive strategic change vs. excessive strategic change

strategic change vs. beneficial strategic change vs. beneficial
Predictor inertia inertia

Absolute value of residual (t) −0.0204*** −0.0174** −0.0277** 1.9413* 0.5069 7.1204***
(0.0021) (0.0026) (0.0032) (0.9645) (1.2830) (1.5031)
Absolute value residual X deviation type −0.0095* 4.1645*
(0.0044) (1.9184)
Deviation type 0.0004 −0.1242
(0.0003) (0.1492)
Absolute value residual X absolute predicted value 0.2352** −215.2164***
(0.0812) (48.9880)
Absolute predicted value −0.0130 28.1128***
(0.0093) (5.1003)
ROA (t) 0.5523*** 0.5520*** 0.5525*** −33.4640*** −33.2931*** −33.5690***
(0.0073) (0.0073) (0.0073) (2.0236) (2.0281) (2.0404)
State Density (t) −6.28E-06*** −6.29E-06*** −6.27E-06*** −6.43E-04) −6.35E-04 −5.33E-04)
(1.05E-06) (1.05E-06) (1.05E-06) (5.63E-04) (5.64E-04) (5.62E-04)
Constant −0.0013*** −0.0014*** −0.0010** −3.7815*** −3.7426*** −4.3236***
(0.0003) (0.0003) (0.0003) (0.1124) (0.1405) (0.1526)
N 28718 28718 28718 28718 28718 28718
Chi squared 6549.7*** 6555.06*** 6560.36*** 601.57*** 606.71 631.57
Number of events 357 357 357

Notes:
(1) *p ⬍ 0.05; **p ⬍ 0.01; ***p ⬍ 0.001.
(2) + Indicates that variable has been log-transformed.
(3) The model also includes a series of period dummy variables which are not reported.
(4) Time periods are one year long.
(5) Deviation type: 1 = insufficient, 0 = excessive.
Modeling the Dynamics of Strategic Fit
445

Strat. Mgmt. J., 21: 429–453 (2000)

in—relatively higher levels of change enjoyed a benefit more from change, it may be that efficient
lower risk of failure than did S&Ls that required portfolio management skills represent a more gen-
and engaged in lower levels of change. In other eralized competency or ‘meta-competency’
words, S&Ls with similar levels of deviation from (Collis, 1994) that also serves them well in other
the contingency model do experience different banking activities. Model 5 of Table 4 shows
subsequent performance outcomes (ROA), based that decreasing residential mortgage lending was
on the magnitude of change that was required. more appropriate in performance terms for S&
Taken together, these two empirical findings Ls which had a higher proportion of fixed-rate
regarding possible asymmetries in comparative mortgages (see the coefficient for ‘change in
states of fit and misfit suggest that (1) the dangers residential mortgage lending × percentage fixed
of misfit are greater under the situation of insuf- rate mortgages’). Stated differently, S&Ls with
ficient change—relative to the situation of excess- the resource advantage of a mortgage portfolio
ive change, and (2) there may be some positive comprised less of fixed rate-mortgages can con-
externalities associated with engaging in substan- tinue to maintain or even increase their reliance
tial change to achieve strategic fit—relative to on residential mortgage lending. Model 6 suggests
achieving fitness with little or no strategic change. that the interaction between level of strategic
The residual approach discussed above provides change and decline in net worth is not a signifi-
appropriate evidence for testing the performance cant predictor of performance.26
implications of S&Ls’ adhering (or not adhering) Models 7 and 8 of Table 4 provide statistically
to our normative model of strategic fit significant evidence on the performance impli-
(Hypothesis 8), using the full set of variables in cations of congruence with the micro- and macro-
our model. Nonetheless, we provide in Table 4 environmental contingencies that we identified
additional evidence as to how S&Ls’ adherence earlier. In Model 7, the negative coefficient for
to each of the seven individual contingencies in ‘change in residential mortgage lending × percent-
our model affected subsequent ROA (see Models age mortgages of competitors’ indicates that S&
2–8, respectively).24 For example, in Model 2, Ls tended to perform worse when they imitated
the negative coefficient for the interaction term the strategies of their peers (recall that Table
‘change in residential mortgage lending × cost of 2 showed evidence that imitation of geographic
funds’ indicates that decreasing residential mort- competitors did tend to occur). Thus, while learn-
gage lending was more beneficial for those S& ing perspectives (Levitt and March, 1988) imply
Ls burdened with a high cost of funds.25 In Model possible performance advantages from imitation
3, the negative coefficient for the interaction term (and S&Ls doing so may have also expected
‘change in residential mortgage lending × bor- such gains), our results suggest that changing
rowed funds’ indicates that decreasing residential strategies in a way that differentiates an S&L
mortgage lending was more appropriate in per- from its local competition are more effective in
formance terms for S&Ls with higher levels of enhancing both financial performance and survival
dependence on borrowed funds. chances. Finally, the results in Model 8 of Table
Model 4 of Table 4 shows that S&Ls with 4 (i.e., the coefficient for ‘change in residential
poor returns on their mortgage portfolios found mortgages × interest rate’) clearly indicate that
it less advantageous to decrease their mortgage increasing residential mortgage lending was detri-
lending activity, relative to those S&Ls with mental to performance for S&Ls operating in an
higher returns on their mortgage portfolios (as environment of high interest rates.27
evidenced by the negative coefficient for ‘change
in residential mortgage lending × return on mort- 26
Recall that we suggested earlier that the poor prior perform-
gage lending’). While our expectation was that ance hypothesis (Hypothesis 5) did not suggest specifically
S&Ls with poorly performing mortgages would whether a change in strategy will improve performance; rather,
it was intended to test whether declining performance stimu-
lates a change in an S&L’s current strategy.
27
In unreported analyses, we also examined the same set of
24
Model 1 in Table 4 simply shows the main effects of the seven interaction terms and their relation to a more severe
various contingency variables and the strategic change variable measure of organizational performance; namely, organizational
on subsequent performance. failure. The results, while not quite as strong, generally mir-
25
Stated differently, such change was less necessary and less rored those reported in Table 4. These results are available
beneficial for those S&Ls having a lower cost of funds. from the authors upon request.

Copyright  2000 John Wiley & Sons, Ltd. Strat. Mgmt. J., 21: 429–453 (2000)
Table 4. Pooled cross sectional time series regression: Main and contingent effects of change in residential mortgage lending on change in ROA

Predictor Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8

Change in res. mort. −0.5252**

X cost of funds (0.1041)
Change in res. mort. −0.0521***
X % borrowed funds (0.0137)
Change in res. mort. −0.3505***
X return on morts. (0.0410)
Change in res. mort. −0.0731***
X % fix rate morts. (0.0051)
Change in res. mort. −0.0010
X decline in net worth (0.0029)

Change in res. mort. −0.1115***
X % mort. of comps. (0.0147)
Change in res. mort. −0.6215***
X interest rate (0.0709)
Cost of funds (t) −0.2821*** −0.3336*** −0.2848*** −0.3769*** −0.2696*** −0.2822*** −0.2805*** −0.2798***
(0.0248) (0.0268) (0.0248) (0.0272) (0.0247) (0.0248) (0.0248) (0.0248)
Borrowings/total liabilities −0.0022 −0.0019 −0.0026+ −0.0020 −0.0022 −0.0022 −0.0023 −0.0021
(t) (0.0014) (0.0014) (0.0015) (0.0014) (0.0014) (0.0014) (0.0014) (0.0014)
Return on mortgage 0.2139*** 0.1904*** 0.2133*** 0.2575*** 0.1973*** 0.2137*** 0.2129*** 0.2098***
portfolio (t) (0.0171) (0.0177) (0.0171) (0.0178) (0.0171) (0.0171) (0.0171) (0.0171)
Fixed rate mortgages/total 0.0127*** 0.0126*** 0.0127*** 0.0127*** 0.0122*** 0.0127*** 0.0127*** 0.0126***
mortgages (t) (0.0006) (0.0006) (0.0006) (0.0006) (0.0006) (0.0006) (0.0006) (0.0006)
Decline in net worth (t−1 −0.0048*** −0.0048*** −0.0048*** −0.0046*** −0.0048*** −0.0048*** −0.0048*** −0.0048***
to t) (0.0003) (0.0003) (0.0003) (0.0003) (0.0003) (0.0003) (0.0003) (0.0003)
% of competitor assets in 0.0062*** 0.0061*** 0.0062*** 0.0061*** 0.0059*** 0.0062*** 0.0049*** 0.0060***
mortgages (t) (0.0014) (0.0014) (0.0014) (0.0014) (0.0014) (0.0014) (0.0014) (0.0014)
Interest rate (t) −0.0069 −0.0119 −0.0069 −0.0143+ −0.0112 −0.0070 −0.0090 −0.0148+
(0.0076) (0.0076) (0.0075) (0.0076) (0.0075) (0.0076) (0.0075) (0.0076)
Mortgages/total assets (t) 0.0152*** 0.0153*** 0.0152*** 0.0157*** 0.0154*** 0.0153*** 0.0154*** 0.0153***
(0.0011) (0.0011) (0.0011) (0.0011) (0.0011) (0.0011) (0.0011) (0.0011)
Total assets (t) + −0.0001 −0.0001 −0.0001 0.0000 0.0000 −0.0001 −0.0001 −0.0001
(0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001) (0.0001)
Change in residential 0.0153*** 0.0390*** 0.0192*** 0.0341*** 0.0592*** 0.0157*** 0.0966*** 0.0663***
mortgages (t to t+1) (0.0015) (0.0049) (0.0018) (0.0026) (0.0034) (0.0018) (0.0108) (0.0060)
Change in res. mortgage 0.0112*** 0.0111*** 0.0110*** 0.0115*** 0.0114*** 0.0112*** 0.0113*** 0.0113***
(t−1 to t) (0.0014) (0.0014) (0.0014) (0.0014) (0.0014) (0.0014) (0.0014) (0.0014)
State density −5.10E-06*** −5.15E-06*** −5.03E-06*** −5.11E-06*** −5.03E-06*** −5.10E-06*** −5.07E-06*** −5.20E-06***
(1.03E-06) (1.03E-06) (1.03E-06) (1.03E-06) (1.03E-06) (1.03E-06) (1.03E-06) (1.03E-06)
ROA (t) 0.4592*** 0.4589*** 0.4598*** 0.4556*** 0.4605*** 0.4591*** 0.4606*** 0.4585***
(0.0076) (0.0076) (0.0076) (0.0076) (0.0076) (0.0076) (0.0076) (0.0076)
Constant −0.0278*** −0.0240*** −0.0276*** −0.0258*** −0.0270*** −0.0277*** −0.0267*** −0.0267***
(0.0020) (0.0022) (0.0020) (0.0020) (0.0020) (0.0020) (0.0020) (0.0020)
Organization years 28718 28718 28718 28718 28718 28718 28718 28718
n: 4438 4438 4438 4438 4438 4438 4438 4438
Modeling the Dynamics of Strategic Fit

Chi squared: 8430.58 8463.22 8449.08 8524.21 8695 8430.46 8504.65 8529.7

Notes:
(1) *p ⬍ 0.05; **p ⬍ 0.01; ***p ⬍ 0.001 (two-tailed).
447

Strat. Mgmt. J., 21: 429–453 (2000)

(2) + Indicates that variable has been log-transformed.
(3) The model also includes a series of period dummy variables which are not reported.
(4) Time periods are one year long.

In summary, our use of two methods (i.e., One implication of our findings on the ante-
deviation/residual and interaction term analyses) cedents of strategic change is that organizations
to test the performance implications of adherence appear generally able to recognize changing
to our model of dynamic strategic fit (Hypothesis environmental situations and to assess their
8) provides convergent statistical support. Models resource limitations (Smith and Grimm, 1987;
1 and 4 of Table 3 directly support Hypothesis Zajac and Shortell, 1989; Zajac and Kraatz,
8, showing that adherence to our normative model 1993). These same results also highlight that S&
of strategic change had positive performance Ls with distinctive competencies or resource-
consequences. Table 4 yields similar overall con- based advantages were most able to continue or
clusions, and also shows that congruence with even expand their emphasis on the traditional
the individual contingencies in our model gener- core S&L strategy of residential mortgage lend-
ally had a beneficial effect on subsequent per- ing. This suggests that observed patterns showing
formance. that an organization is not changing its core
strategy do not necessarily imply an unconscious
or routinized activity path (Kelly and Amburgey,
DISCUSSION 1991), but may instead reflect a deliberate attempt
to exploit or leverage its distinctive competencies.
In this study, we have endeavored to develop a Only by specifying the relevant environmental
model of strategic fit that is dynamic, multi- and organizational contingencies (i.e., developing
variate, and normative in nature. We have a model of dynamic strategic fit) can one dis-
attempted to identify—in an industry-specific tinguish between the two explanations.
(S&L) context—a set of organizational and Poor prior firm performance accelerated stra-
environmental factors that should affect the desir- tegic change, as predicted. One literature-based
ability of an S&L’s changing its reliance on its interpretation is that this represents evidence of
core strategy. We then tested whether these fac- adaptation to performance feedback, rather than
tors led to the predicted differential changes in a threat-rigidity response (Ocasio, 1995; Staw,
core strategies, and whether following vs. not Sandelands, and Dutton, 1981). This inter-
following the contingency framework for dynamic pretation is consistent with the notion of adap-
strategic fit resulted in the predicted performance tation as a form of problemistic search (Cyert
implications. In this way, we hope to provide a and March, 1963), whereby organizations experi-
distinctive analytical approach that can shed light encing a performance problem begin to consider
on both the antecedents and consequences of alternative strategies. Our interpretation is that,
strategic change. independent of its other effects, poor prior per-
We have argued that identifying specific formance provides firms with an indirect indicator
environmental and organization factors can pro- of a lack of organizational competency and/or
vide unique time- and organization-specific pre- environmental misfit. This recognition of a lack
dictions regarding strategic fit. We suggested that of fitness, at least in part, leads an organization
such an approach could provide clear, testable to consider alternative strategies. In summary, the
predictions regarding the desirable direction, mag- ability of our environmental and organizational
nitude, and timing of strategic change. We found contingency variables to predict the direction,
that the theory-based contingencies that we iden- magnitude, and timing of strategic change sug-
tified (i.e., environmental changes, as well as gests that our model can identify those organi-
organizational heterogeneity in attributes such as zations for whom change would be most desirable
distinctive competencies and resource advantages) (and thus more likely).
all significantly predicted changes in the core We also used performance outcomes to test
strategies of S&Ls. As we predicted, S&Ls facing more explicitly whether our contingency model
the most severe environmental threats (e.g., a could identify the circumstances under which
high interest rate environment) and the largest change would be most desirable. First, we used
organizational resource and competency deviation/residual analyses to examine the per-
deficiencies tended to move away the most (and formance implications of actual deviations from
the earliest) from the traditional S&L strategy of the level of expected change. Here, we observed
residential mortgage lending. that S&Ls ‘off the line,’ i.e., deviating in either
Copyright  2000 John Wiley & Sons, Ltd. Strat. Mgmt. J., 21: 429–453 (2000)
10970266, 2000, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/(SICI)1097-0266(200004)21:4<429::AID-SMJ81>3.0.CO;2-# by Loughborough Universitaet, Wiley Online Library on [07/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Modeling the Dynamics of Strategic Fit 449

direction from the contingency model, experi- approaches by posing and testing two additional
enced worse financial performance and higher supplemental hypotheses not predicted by a strict
death rates relative to those S&Ls changing in contingency model. First, we found evidence of
accordance with our model. In other words, an asymmetry between the performance impli-
change that is at odds with our contingency model cations of insufficient change and excessive
(i.e., insufficient change and excessive change) is change, with insufficient change emerging as the
problematic for the S&Ls in our study. Sup- worse of the two forms of deviations from our
plemental interaction analyses (Table 4) that iso- contingency model. In other words, the dangers
lated the performance effects for each of the of misfit are greater under the situation of insuf-
organizational and environmental contingency ficient change, relative to the situation of excess-
factors provided results that were largely, if not ive change. This may reflect more general differ-
fully, consistent with the performance hypotheses. ences in the reactive vs. proactive types of
In summary, the two types of performance analy- organizations: organizations acting more proac-
ses suggest that the contingency model was gener- tively, even when that proaction goes beyond
ally able to specify a priori not only when a what changing internal and external conditions
change in an S&L’s core strategy was likely, but require, may be better positioned for future per-
also when it was desirable (in terms of financial formance gains relative to reactive organizations
performance and survival chances). changing too little or too late (Hedberg, Nystrom,
Given that our model of dynamic strategic fit and Starbuck, 1976).
is based on a contingency logic, it is important Secondly, we compared the two positive
to note how this study has addressed several change/performance relationships, i.e., beneficial
potential limitations of traditional contingency change and beneficial inertia, and found that ben-
models, as discussed in the strategy and organi- eficial change emerged as the better of the two
zation theory literatures. Ginsberg and Venkatra- forms of fit with the contingency model. As noted
man (1985), for example, suggest that contin- earlier, this implies that there may be positive
gency approaches have tended to focus too much externalities associated with a firm having to
on the environment–strategy (or structure) engage in substantial change to attain an
linkage—at the expense of the environment– improved alignment of its strategy with its inter-
performance linkage. Our study examines both of nal and external circumstances, relative to a firm
these linkages. Ginsberg and Venkatraman (1985) in a more stable situation of strategic fit. Perhaps
also criticize contingency approaches that seek strategic change stimulates a variety of other
to develop overly general measures and fail to performance-enhancing changes within an organi-
recognize the need for industry-specific contin- zation. Viewed differently, the result suggests
gency measures. Our study emphasizes the that, at least in this empirical context, the ‘tran-
construction of an industry-specific approach to sition costs’ borne by firms making substantial
predicting dynamic strategic fit and its perform- strategic changes appear relatively low when
ance implications (although we described our compared with the benefits of attaining dynamic
industry-specific measures in terms of more gen- strategic fit. In any event, while a strict contin-
eral constructs such as organizational com- gency perspective presumes symmetry regarding
petencies, competitive context, etc.). Traditional the two sets of diagonal quadrants in Figure 3,
contingency theories have also been critiqued for our findings suggest that subsequent research on
usually focusing on bivariate relationships and strategic fit should consider not only the four
static research designs (Miller and Friesen, 1984). change/performance relationships defined earlier,
Our study uses a longitudinal design to examine but also consider theoretical rationales for poten-
the issue of fit dynamically, and does so using a tial asymmetries in those relationships. Empiri-
multivariate model. Finally, from an empirical cally, the residual approach that we employed in
perspective, evidence for contingency relation- our study can be useful for other researchers
ships may be sensitive to the specific method- investigating such asymmetries in fit.
ology chosen (Van de Ven and Drazin, 1985). Our contingency approach for assessing
Our study used both residual analysis and inter- dynamic strategic fit also has implications for the
action analysis techniques, as noted above. strategic change literature. First, we believe our
We also sought to extend contingency study is uncommon in attempting to theorize
Copyright  2000 John Wiley & Sons, Ltd. Strat. Mgmt. J., 21: 429–453 (2000)
10970266, 2000, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/(SICI)1097-0266(200004)21:4<429::AID-SMJ81>3.0.CO;2-# by Loughborough Universitaet, Wiley Online Library on [07/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
450 E. J. Zajac, M. S. Kraatz and R. K. F. Bresser

about the sources of environmental and organi- Our contingency approach and our empirical
zational heterogeneity that should make change analyses help reconcile these debates not by
more vs. less desirable, rather than emphasizing showing that either strategic adaptationists or
only the behavioral factors that make change ecologists are more correct in their predictions
more vs. less difficult (Zajac and Kraatz, 1993; regarding change and performance, but by speci-
Rajagopalan and Spreitzer, 1997). We view our fying the circumstances under which each is cor-
emphasis on dynamic strategic fit as providing a rect. For example, our finding that insufficient
needed missing piece in the discussion of strategic adaptation has a negative subsequent performance
change and performance, given that organizations effect indicates that those organizations unable to
differ at least as much in terms of their resource change may bear negative performance conse-
profiles, distinctive competencies, and local quences as a result of their inertia, as ecologists
environmental contexts as they do in terms of have contended, but also that those organizations
internal political/social constraints (Kraatz and that change in a timely and appropriate way will
Zajac, forthcoming). Indeed, the recent growth in experience performance benefits, as strategists
the resource-based perspective in the strategy field have suggested. Similarly, we show that inertia
(Wernerfelt, 1984; Barney, 1991; Peteraf, 1993) can be functional, as ecologists maintain, but
suggests that such resource heterogeneity may be also that its functionality is defined by strategic
a dominant factor predicting performance differ- considerations; i.e., inertia is functional when spe-
ences across organizations and across time. In cific environmental conditions and organizational
any event, our study suggests the value of con- competencies suggest little or no need to change.
sidering not only an organization’s ability or will- Additionally, we suggest that our analytical
ingness to change, but also its need to change approach and empirical findings study can
(i.e., the potential for dynamic misfit). untangle the industry-specific debate between
In addition, we believe our analytical approach those who have contended that S&Ls generally
can address two related and longstanding debates overreacted to changing environmental and
in the strategy and organization theory literature: organizational conditions in the 1980s and those
(1) do organizations typically change their strate- who have argued the opposite, i.e., that S&Ls
gies in response to environmental shifts and (2) underreacted to the need for strategic changes
what are the likely performance effects of such (Eichler, 1989; White, 1991). Specifically, our
changes (Astley and Van de Ven, 1983; Bour- results show that some S&Ls overreacted while
geois, 1984; Hannan and Freeman, 1977, 1984; others underreacted, suggesting that neither single
Miller and Friesen, 1984; Singh, House, and extreme view is correct. More generally, we
Tucker, 1986). Ecological and strategy believe our analytical approach can be applied in
researchers have historically maintained different other contexts. Ideally, such application would
emphases on the phenomenon of strategic change. lead to a deemphasis of broad, industry- or sector-
Ecologists have stressed that change should be wide generalizations regarding strategic fit, and
rare because organizations find it very difficult to turn attention toward recognizing and establishing
change (particularly larger and older ones), and the uniqueness of strategic fit for a particular
because change is typically not beneficial. Strate- organization at a particular point in time. In this
gists, on the other hand, have discussed how change way, our results provide empirical support for a
should be more common because organizations can dynamic conception of the matching/alignment
adapt, albeit not without difficulty, and that organi- concept in strategy, whereby a firm’s core strate-
zations will generally find it advantageous to do gies need to be continuously aligned and
so, given changing organizational and environmen- realigned with internal resource profiles as well
tal conditions.28 as external environmental factors (Amit and
Schoemaker, 1993; Kraatz and Zajac,
28
forthcoming).
Note that we are referring to central tendencies in the two
perspectives. We do not view ecologists as arguing that In conclusion, we hope that our analytical
change never happens, nor do we view adaptationists as approach toward assessing dynamic strategic fit
arguing that change always (and easily) happens. Note also
that the type of strategic change discussed and examined
empirically in this study is a change in an organization’s the most risky and unadvisable type of organizational change
core—not peripheral—strategy, which ecologists suggest are (Haveman, 1992; Singh et al., 1986).

can help in the effort to answer three related with a study of the diversification and divestiture
questions that have long interested strategy relationship’, Strategic Management Journal, 18(7),
pp. 557–571.
researchers: What factors drive a firm’s strategic Boeker, W. (1989). ‘Strategic change: The effects of
choices, what determines the appropriateness of founding and history’, Academy of Management
such choices, and when are these choices no Journal, 32, pp. 489–515.
longer appropriate? The generalizability of our Bourgeois, L. J. (1984). ‘Strategic management and
analytical approach can be examined in address- determinism’, Academy of Management Review, 9,
pp. 586–596.
ing these questions for firms in other industries. Bresser, R. K. F. (1998). Strategische Managementtheo-
While our variables are certainly industry-specific, rie. Walter de Gruyter, Berlin/New York.
our approach is not. In addition, we do not claim Bresser, R. K. F., R. L. M. Dunbar and T. Jithendrana-
to have considered all possible environmental and than (1994). ‘Competitive and collective strategies:
organizational factors that would predict dynamic An empirical examination of strategic groups’. In P.
Shrivastava, A. Huff and J. Dutton (eds.), Advances
strategic fit. Again, additional research could help in Strategic Management, Vol. 10B. JAI Press,
in extending the set of factors examined in this Greenwich, CT, pp. 187–211.
study. Ideally, the result of increased attention to Chandler, A. D. (1962). Strategy and Structure: Chap-
these issues would be that the concept of strategic ters in the History of American Industrial Enterprise.
fit—a key implicit concept in strategy research— MIT Press, Cambridge, MA.
Collis, D. (1994). ‘How valuable are organizational
becomes a more explicit and well-researched con- capabilities?’, Strategic Management Journal,
cept. Winter Special Issue, 15, pp. 143–152.
Cyert, R. and J. G. March (1963). A Behavioral Theory
of the Firm. Prentice-Hall, Englewood Cliffs, NJ.
ACKNOWLEDGEMENTS Deephouse, D. (1996). ‘Does isomorphism legitimate’,
Academy of Management Review, 39, pp. 1024–
1039.
The comments of Don Bergh, Joel Baum, Ranjay Dess, G. G., R. D. Ireland and M. A. Hitt (1990).
Gulati, Richard Harrison, Willie Ocasio, Huggy ‘Industry effects and strategic management research’,
Rao, Jim Wade, and Jim Westphal have been Journal of Management, 16, pp. 7–27.
helpful in shaping this paper. We also thank Tina Donaldson, L. (1995). American Anti-Management
Theories of Organization. Cambridge University
Dacin for providing some of the data used in Press, Cambridge.
the study. Eichler, N. (1989). The Thrift Debacle. University of
California Press, Berkeley, CA.
Ghemawat, P. (1991). Commitment: The Dynamic of
Strategy. Free Press, New York.
REFERENCES Ginsberg, A. (1988). ‘Measuring and modelling
changes in strategy: Theoretical foundations and
Allison, P. D. (1984). Event History Analysis. Sage, empirical directions’, Strategic Management Journal,
Newbury Park, CA. 9(6), pp. 559–575.
Amit, R. and P. Schoemaker (1993). ‘Strategic assets Ginsberg, A. and N. Venkatraman (1985). ‘Contingency
and organizational rent’, Strategic Management perspectives of organizational strategy: A critical
Journal, 14(1), pp. 33–46. review of the empirical research’, Academy of Man-
Andrews, K. R. (1971). The Concept of Corporate agement Review, 10, pp. 421–434.
Strategy. Dow Jones Irwin, Homewood, IL. Hannan, M. T. and J. Freeman (1977). ‘The population
Astley, W. G. and A. H. Van de Ven (1983). ‘Central ecology of organizations’, American Journal of Soci-
perspectives and debates in organization theory’, ology, 82, pp. 929–964.
Administrative Science Quarterly, 28, pp. 245– Hannan, M. T. and J. Freeman (1984). ‘Structural
273. inertia and organizational change’, American Socio-
Balderston, F. E. (1985). Thrifts in Crisis: Structural logical Review, 49, pp. 149–164.
Transformation of the Savings and Loan Industry. Harrison, J. R. and L. Mitchell (1995). ‘Interaction
Ballinger, Cambridge, MA. effects in quasi-linear models’, working paper, Uni-
Baliga, B., R. Moyer and R. Rao (1996). ‘CEO duality versity of Texas at Dallas.
and firm performance’, Strategic Management Jour- Haveman, H. A. (1992). ‘Between a rock and a hard
nal, 17(1), pp. 41–53. place: Organizational change and performance under
Barney, J. B. (1991). ‘Firm resources and sustained conditions of fundamental environmental transfor-
competitive advantage’, Journal of Management, 17, mation’, Administrative Science Quarterly, 37, pp.
pp. 121–154. 48–75.
Bergh, D. and G. Holbein (1997). ‘Assessment and Hedberg, B. L. T. (1981). ‘How organizations learn
redirection of longitudinal analysis: Demonstration and unlearn’. In P. C. Nystrom and W. H. Starbuck

Copyright  2000 John Wiley & Sons, Ltd. Strat. Mgmt. J., 21: 429–453 (2000)
10970266, 2000, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/(SICI)1097-0266(200004)21:4<429::AID-SMJ81>3.0.CO;2-# by Loughborough Universitaet, Wiley Online Library on [07/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
452 E. J. Zajac, M. S. Kraatz and R. K. F. Bresser
(eds.), Handbook of Organizational Design. Oxford histories’, Sociological Methods and Research, 19,
University Press, Oxford, pp. 3–27. pp. 270–323.
Hedberg, B. L. T., P. Nystrom and W. Starbuck (1976). Prahalad, C. and G. Hamel (1990). ‘The core com-
‘Camping on seesaws: Prescriptions for a self petence of the corporation’, Harvard Business
designing organization’, Administrative Science Review, 68(3), pp. 79–91.
Quarterly, 21, pp. 41–65. Quinn, J. B. (1980). Strategies for Change: Logical
Henderson, R. M. and K. B. Clark (1990). ‘Architec- Incrementalism. Macmillan, New York.
tural innovation: The reconfiguration of existing Rajagopalan. N. and G. Spreitzer (1997). ‘Towards a
product technologies and the failure of established theory of strategic change: A multi-lens perspective
firms’, Administrative Science Quarterly, 35, pp. and integrative framework’, Academy of Manage-
9–30. ment Review, 22, pp. 48–79.
Hofer, C. and D. E. Schendel (1978). Strategy Formu- Rumelt, R. P. (1995). ‘Inertia and transformation’.
lation: Analytical Concepts. West, St. Paul, MN. In C. A. Montgomery (ed.), Resource Based and
Judge, G. G., C. R. Hill, W. E. Griffith, H. Lutkepohl Evolutionary Theories of the Firm: Towards a Syn-
and T.-C. Lee (1982). Introduction to the Theory thesis. Kluwer, Boston, MA, pp. 251–268.
and Practice of Econometrics. Wiley, New York. Sayrs, L. W. (1989). Pooled Time Series Analysis.
Kelly, D. and T. L. Amburgey (1991). ‘Organizational Sage, Newbury Park, CA.
inertia and momentum: A dynamic model of stra- Schendel D. E. and C. Hofer (1979). Strategic Manage-
tegic change’, Academy of Management Journal, 34, ment. Little, Brown, Boston, MA.
pp. 591–612. Selznick, P. (1948). ‘Foundations of the theory of
Kraatz, M. S. and E. J. Zajac (1996). ‘Exploring the organization’, American Sociological Review, 13, pp.
limits of the new institutionalism: The causes and 25–35.
consequences of illegitimate organizational change’, Selznick, P. (1957). Leadership in Administration.
American Sociological Review, 61, pp. 812–836. Harper & Row, New York.
Kraatz, M. S. and E. J. Zajac (forthcoming). ‘How Singh, J. V., R. J. House, and D. J. Tucker (1986).
organizational resources affect strategic change and ‘Organizational change and organizational mor-
performance in turbulent environments: Theory and tality’, Administrative Science Quarterly, 31, pp.
evidence’, Organization Science. 587–611.
Lawrence, P. R. and J. W. Lorsch, (1967). Organization Smith, K. G. and C. M. Grimm (1987). ‘Environmental
and Environment. Graduate School of Business variation, strategic change and firm performance: A
Administration, Harvard University, Boston, MA. study of railroad deregulation’, Strategic Manage-
Lenz, R. T. (1980). ‘Environment, strategy, organi- ment Journal, 8(4), pp. 363–376.
zational structure and performance: Patterns in one Snow, C. C. and L. G. Hrebiniak (1980). ‘Strategy,
industry’, Strategic Management Journal, 1(3), pp. distinctive competence, and organizational perform-
209–226. ance’, Administrative Science Quarterly, 25, pp.
Leonard-Barton, D. (1992). ‘Core capabilities and core 317–336.
rigidities: A paradox in managing new product Staw, B. M., L. E. Sandelands and J. Dutton (1981).
development’, Strategic Management Journal, Sum- ‘Threat-rigidity effects in organizational behavior: A
mer Special Issue, 13, pp. 111–125. multilevel analysis’, Administrative Science Quar-
Levitt, B. and J. G. March (1988). ‘Organizational terly, 26, pp. 501–524.
learning’, Annual Review of Sociology, 14, pp. Thompson, J. D. (1967). Organizations in Action.
319–340. McGraw-Hill, New York.
Miles, R. H. and K. C. Cameron (1982). Coffin Nails United States League of Savings Institutions (1989).
and Corporate Strategies. Prentice-Hall, Englewood Savings Institutions Sourcebook. Washington, DC.
Cliffs, NJ. Van de Ven, A. H. and R. Drazin (1985). ‘The concept
Miles, R. E. and C. C. Snow (1994). Fit, Failure and of fit in contingency theory’. In L. L. Cummings
the Hall of Fame. Macmillan, New York. and B. M. Staw (eds.), Research in Organizational
Miller, D. and P. H. Friesen (1984). Organizations: A Behavior, Vol. 7. JAI Press, Greenwich, CT, pp.
Quantum View. Prentice-Hall, Englewood Cliffs, NJ. 333–365.
Ocasio, W. (1995). ‘The enactment of economic Venkatraman, N. (1989). ‘The concept of fit in strategy
adversity: A reconciliation of theories of failure- research: Toward verbal and statistical correspon-
induced change and threat-rigidity’. In L. L. Cum- dence’, Academy of Management Review, 14, pp.
mings and B. M. Staw (eds.), Research in Organiza- 423–444.
tional Behavior, Vol. 17. JAI Press, Greenwich, CT, Venkatraman, N. and J. C. Camillus (1984). ‘Exploring
pp. 287–331. the concept of fit in strategic management’, Academy
Oster, S. (1982). ‘Intraindustry structure and the ease of Management Review, 9, pp. 513–525.
of strategic change’, Review of Economics and Sta- Wernerfelt, B. (1984). ‘A resource-based view of the
tistics, 64, pp. 376–383. firm’, Strategic Management Journal, 5(2), pp.
Peteraf, M. A. (1993). ‘The cornerstones of competitive 171–180.
advantage: A resource-based view’, Strategic Man- White, L. J. (1991). The S&L Debacle: Public Policy
agement Journal, 14(3), pp. 179–192. Lessons for Bank and Thrift Regulation. Oxford
Petersen, T. (1991). ‘The statistical analysis of event University Press, New York.

Activating Strategies, Behavioral Implementation
No ratings yet
Activating Strategies, Behavioral Implementation
16 pages
Synopsis HRM Britannia
No ratings yet
Synopsis HRM Britannia
10 pages
002 Satisfaction Level of Employees With Special Reference On Textile Industry
No ratings yet
002 Satisfaction Level of Employees With Special Reference On Textile Industry
51 pages
Labour Welfare Measures in Neyveli Lignite Corporation Limited Neyveli
No ratings yet
Labour Welfare Measures in Neyveli Lignite Corporation Limited Neyveli
4 pages
Project On Welfare Measures Submitted by Sneha Desaraju
0% (1)
Project On Welfare Measures Submitted by Sneha Desaraju
122 pages
Business & Trivia Enthusiasts Quiz
No ratings yet
Business & Trivia Enthusiasts Quiz
4 pages
Review of Literature: Misra, K.K (1974) - Labour Welfare in Indian Industries, Meerut, Meenakshi Prakashan
No ratings yet
Review of Literature: Misra, K.K (1974) - Labour Welfare in Indian Industries, Meerut, Meenakshi Prakashan
36 pages
A Study On Employees Welfare Measures in Subburaj Spinning Mills
50% (2)
A Study On Employees Welfare Measures in Subburaj Spinning Mills
6 pages
Edited SYNOPSIS ON Project Tata Steel
No ratings yet
Edited SYNOPSIS ON Project Tata Steel
21 pages
A Study On Stress Management of Banking Sector Employees With Special Reference To PNB Palakkad District Kerala C 1185
No ratings yet
A Study On Stress Management of Banking Sector Employees With Special Reference To PNB Palakkad District Kerala C 1185
7 pages
Objectives:: A Study On Welfare of The Employees in CPCL Manali
No ratings yet
Objectives:: A Study On Welfare of The Employees in CPCL Manali
9 pages
Octapace Model
No ratings yet
Octapace Model
6 pages
ROHIT
No ratings yet
ROHIT
66 pages
Study of Workers Welfare
100% (1)
Study of Workers Welfare
94 pages
Carnelian Shift Strategy Presentation - August 2025
No ratings yet
Carnelian Shift Strategy Presentation - August 2025
37 pages
Action Technology Limited
No ratings yet
Action Technology Limited
2 pages
Welfare Measures in TCC
No ratings yet
Welfare Measures in TCC
72 pages
Spngenberg Integrated Model
100% (1)
Spngenberg Integrated Model
14 pages
Human Resources Introduction
No ratings yet
Human Resources Introduction
9 pages
Dnyansagar Institute of Management and Research: Multiple Choice Questions MCQS: - Unit-1
No ratings yet
Dnyansagar Institute of Management and Research: Multiple Choice Questions MCQS: - Unit-1
24 pages
Employee Welfare Insights
No ratings yet
Employee Welfare Insights
84 pages
Employee Welfare & Engagement Study
No ratings yet
Employee Welfare & Engagement Study
6 pages
Mba HR (Employee Motivation)
No ratings yet
Mba HR (Employee Motivation)
68 pages
Quality of Work Life Kesoram
No ratings yet
Quality of Work Life Kesoram
76 pages
Consumer Behavior Audit
No ratings yet
Consumer Behavior Audit
19 pages
Job Satisfaction: A Synopsis Report On
No ratings yet
Job Satisfaction: A Synopsis Report On
11 pages
Vinay 1 Final-Converted-Converted-Merged - 1 PDF
No ratings yet
Vinay 1 Final-Converted-Converted-Merged - 1 PDF
53 pages
Sundram Fasteners Limited
100% (1)
Sundram Fasteners Limited
4 pages
Questionnaire A. Personal Information
No ratings yet
Questionnaire A. Personal Information
6 pages
Labour Welfare
No ratings yet
Labour Welfare
69 pages
TCS HR Practices & Performance Insights
0% (1)
TCS HR Practices & Performance Insights
3 pages
Roshan Project (Employee Satisfaction Level On Welfare Measures)
No ratings yet
Roshan Project (Employee Satisfaction Level On Welfare Measures)
97 pages
Snapshots of Training Practices (1.10) PDF
No ratings yet
Snapshots of Training Practices (1.10) PDF
14 pages
Final Project
100% (1)
Final Project
74 pages
A Study On The Performance of HR Policies and Its Implementation-3
No ratings yet
A Study On The Performance of HR Policies and Its Implementation-3
100 pages
Job Satisfaction in Auto Industry
No ratings yet
Job Satisfaction in Auto Industry
5 pages
Chapter-Iv Data Analysis & Interpretation
No ratings yet
Chapter-Iv Data Analysis & Interpretation
29 pages
A Study On Employee Welfare Facilities and Its Impact On Employee Satisfaction at Hotel Industry With Special Reference To Uttarakhand
No ratings yet
A Study On Employee Welfare Facilities and Its Impact On Employee Satisfaction at Hotel Industry With Special Reference To Uttarakhand
13 pages
Vanraj Presentation
No ratings yet
Vanraj Presentation
31 pages
A Comprehensive Project Report ON "Influence of Organizational Climate On Employees' Committement and Job Satisfaction"
100% (1)
A Comprehensive Project Report ON "Influence of Organizational Climate On Employees' Committement and Job Satisfaction"
35 pages
Full Report
No ratings yet
Full Report
99 pages
TM1 - PPT - 01 - Strategic Management Essentials
No ratings yet
TM1 - PPT - 01 - Strategic Management Essentials
73 pages
A Study On Employees Welfare Measures Wi
No ratings yet
A Study On Employees Welfare Measures Wi
76 pages
Project Report
No ratings yet
Project Report
105 pages
Sush Final Project
No ratings yet
Sush Final Project
74 pages
MRP Project Telecom Sector Employee Retention
No ratings yet
MRP Project Telecom Sector Employee Retention
53 pages
WCL Training & Development Study
No ratings yet
WCL Training & Development Study
9 pages
A Study On Labour Welfare Measures in Ss Paint Manufacturing Industry at Salem
No ratings yet
A Study On Labour Welfare Measures in Ss Paint Manufacturing Industry at Salem
5 pages
Theories of Employee Welfare
100% (2)
Theories of Employee Welfare
33 pages
A Study On Employee'S Motivation in Hyundai Motor India Limited (Hmil)
No ratings yet
A Study On Employee'S Motivation in Hyundai Motor India Limited (Hmil)
11 pages
A STUDY ON Promotion and Reward Policy
No ratings yet
A STUDY ON Promotion and Reward Policy
4 pages
A Study On Employee Welfare PDF
No ratings yet
A Study On Employee Welfare PDF
76 pages
Reference
No ratings yet
Reference
4 pages
Quality Work Life
No ratings yet
Quality Work Life
12 pages
A Study On Motivation Among The Employees Questioner
No ratings yet
A Study On Motivation Among The Employees Questioner
6 pages
Strategic Fit in Transitional Economies: The Case of China's Electronics Industry
No ratings yet
Strategic Fit in Transitional Economies: The Case of China's Electronics Industry
21 pages
Exploring The Concept of Fit in Strategy
No ratings yet
Exploring The Concept of Fit in Strategy
14 pages
Strategic Fit: Analysis and Critique
No ratings yet
Strategic Fit: Analysis and Critique
19 pages
Strategic Management Fit Analysis
No ratings yet
Strategic Management Fit Analysis
14 pages
The Concept of Fit in Strategy Research: Toward Verbal and Statistical Correspondence
No ratings yet
The Concept of Fit in Strategy Research: Toward Verbal and Statistical Correspondence
23 pages
Sage 50 V
No ratings yet
Sage 50 V
7 pages
ACCA (Association of Chartered Certified Accountants) in Bangladesh
100% (2)
ACCA (Association of Chartered Certified Accountants) in Bangladesh
2 pages
Rachrll Pabiona Bsa 2
No ratings yet
Rachrll Pabiona Bsa 2
2 pages
Partnership Admission 2
No ratings yet
Partnership Admission 2
12 pages
Group AFM Assignment
No ratings yet
Group AFM Assignment
11 pages
Fishwealth Cannning Corp V CIR
No ratings yet
Fishwealth Cannning Corp V CIR
4 pages
You and You Private Property
100% (16)
You and You Private Property
6 pages
Investment Bank Strategies
No ratings yet
Investment Bank Strategies
22 pages
Case 3:09 CV 02053 JP
No ratings yet
Case 3:09 CV 02053 JP
14 pages
Assignment - CASH FLOW
No ratings yet
Assignment - CASH FLOW
6 pages
Residence Permit
No ratings yet
Residence Permit
19 pages
Estimate Q 302
No ratings yet
Estimate Q 302
3 pages
NABARD: Rural Development & Credit
No ratings yet
NABARD: Rural Development & Credit
64 pages
Risk and Return Slides PDF
No ratings yet
Risk and Return Slides PDF
26 pages
APM Revision Cards
100% (7)
APM Revision Cards
15 pages
Accountancy Exam Reviewer
No ratings yet
Accountancy Exam Reviewer
34 pages
146-2024 Empowerment
No ratings yet
146-2024 Empowerment
4 pages
Foundations of Modern Macroeconomics Third Edition
0% (1)
Foundations of Modern Macroeconomics Third Edition
59 pages
The Capital Asset Pricing Model: Theory and Evidence: Eugene F. Fama and Kenneth R. French
No ratings yet
The Capital Asset Pricing Model: Theory and Evidence: Eugene F. Fama and Kenneth R. French
22 pages
A New Me-2
No ratings yet
A New Me-2
9 pages
To: 31/05/2024 Statement From: 20/03/2024
No ratings yet
To: 31/05/2024 Statement From: 20/03/2024
11 pages
Fin 410: Financial Statement Analysis: Submitted To
No ratings yet
Fin 410: Financial Statement Analysis: Submitted To
26 pages
Chapter Two Investment Alternatives Multiple Choice Questions
No ratings yet
Chapter Two Investment Alternatives Multiple Choice Questions
13 pages
Pre-Test or Discussion Questions - Cash and Cash Equivalents
No ratings yet
Pre-Test or Discussion Questions - Cash and Cash Equivalents
2 pages
Rabia Dream View
No ratings yet
Rabia Dream View
15 pages
FRM Quant Question Bank
100% (5)
FRM Quant Question Bank
111 pages
Applied Economics ... Written Report...
No ratings yet
Applied Economics ... Written Report...
13 pages
Kumari Sumegha: Female, 23 Years
No ratings yet
Kumari Sumegha: Female, 23 Years
1 page
Client Trip 24
No ratings yet
Client Trip 24
24 pages
CurrentContentsBulletin Mar 2022
No ratings yet
CurrentContentsBulletin Mar 2022
51 pages

Zajac Et Al., 2000

Uploaded by

Zajac Et Al., 2000

Uploaded by

Strategic Management Journal

Strat. Mgmt. J., 21: 429–453 (2000)

MODELING THE DYNAMICS OF STRATEGIC FIT: A

Received 1 July 1997

Figure 3. Four possible scenarios in the pursuit of dynamic strategic fit

1. Change in res. mortgage lending (t to t+1) −0.013 0.072

Strat. Mgmt. J., 21: 429–453 (2000)

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6

Copyright  2000 John Wiley & Sons, Ltd.

Strat. Mgmt. J., 21: 429–453 (2000)

Predictor Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8

Change in res. mort. −0.5252**

Copyright  2000 John Wiley & Sons, Ltd.

Strat. Mgmt. J., 21: 429–453 (2000)

You might also like