Modeling the dynamics of strategic fit: A normative approach to strategic change

Edward J. Zajac*, Matthew S. Kraatz, Rudi K.F. Bresser

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

503 Scopus citations

Abstract

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.

Original languageEnglish (US)
Pages (from-to)429-453
Number of pages25
JournalStrategic Management Journal
Volume21
Issue number4
DOIs
StatePublished - Apr 2000

Keywords

  • Contingency theory; resources
  • Performance
  • Strategic change
  • Strategic fit

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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