Strategy Formulation Process in Large Family-Based Businesses

AUTHOR(S):

TITLE

Strategy Formulation Process in Large Family-Based Businesses

ABSTRACT

This paper proposes a strategy formulation process for large family businesses in Gulf Cooperation Council (GCC) countries. After analyzing and critically evaluating both the formal strategy formulation process theory and adaptive strategy formulation process theory, a novel ambidexterity strategy formulation process was developed. To verify this new process, structured interviews with an associated questionnaire were used with 15 CEOs and 15 strategic managers from large family businesses in Gulf countries. The results show the new process is seen as important by all participants. However, they are not effective enough in doing all of the activities. Also, it has been found that most of companies are adopting mixed top down/bottom up and mixed iterative and linear processes. This research is the first to investigate strategy formulation process in large family businesses. This paper can help in understanding the strategic management approach of business leaders in GCC countries.

KEYWORDS

Strategy Formulation Process Stg-FP, Family Business, Large Family Based-Business, ambidexterity Strategy

REFERENCES

[1] Aaken, D., Rost, K. and Seidl, D., The substitution of governance mechanisms in the evolution of family firms, Long Range Planning, Vol. 14, No.1, 2017, pp.2-13.

[2] Agrawal, A. and Knoeber, C., Firm Performance and Mechanisms to Control Agency Problems between Managers and Shareholders, The Journal of Financial and Quantitative Analysis,Vol.31, No.3, 1996, p.377.

[3] Andersen, T. and Nielsen, B., Adaptive strategy making: The effects of emergent and intended strategy modes, European Management Review, 6(2), 2010, pp.94-106.

[4] Andersen, T., Strategic planning, autonomous actions and corporate performance, Long Range Planning, Vol.33, No.2, 2000, pp.184-200.

[5] Andrews, K., The Concept of Corporate Strategy, Dow-Jones Irwin, 1980.

[6] Ansoff, H. and Hayes, R., Introduction. In H. I. Ansoff, R. P. Declerck, & R. L. Hayes (Eds.), From strategic planning to strategic management, New York: Wiley, 1976.

[7] Arregle, J., Hitt, M., Sirmon, D. and Very, P., The Development of Organizational Social Capital: Attributes of Family Firms, Journal of Management Studies, Vol.44, No.1, 2007, pp.73-95.

[8] Barnett, T., Long, R. and Marler, L., Vision and Exchange in Intra-Family Succession: Effects on Procedural Justice Climate Among Nonfamily Managers, Entrepreneurship Theory and Practice, Vol.36, No.6, 2012, pp.1207-1225.

[9] Bartholmé, R. and Melewar, T., The end of silence? Qualitative findings on corporate auditory identity from the UK, Journal of Marketing Communications, Vol.22, No.4, 2014, pp.419-436.

[10] Beard, D. and Dess, G., Corporate-Level Strategy, Business-Level Strategy, and Firm Performance, Academy of Management Journal, Vol. 24, No.4, 1981, pp.663-688.

[11] Block, J. and Wagner, M., The Effect of Family Ownership on Different Dimensions of Corporate Social Responsibility: Evidence from Large US Firms. Business Strategy and the Environment, Vol. 23, No.7, 2014, pp.475-492.

[12] Bower, T., Development in infancy, San Francisco: W.H.Freeman, 1982.

[13] Brandl, J. and Schneider, A., HeadquartersSubsidiary Relationships from a Convention Theory Perspective: Plural Orders of Worth, Arrangements and Form-Giving Activities, Multinational Corporations and Organization Theory: Post Millennium Perspectives, Vol. 49, 2017, pp.295-324.

[14] Castells, M., The Information Age: Economy, Society and Culture; Volume II: The Power of Identity, Wiley-Blackwell, 1997.

[15] Chaffee, E., Three Models of Strategy, Academy of Management Review, Vol. 10, No.1, 1985, pp.89-98.

[16] Chandler, A., Strategy and structure, Cambridge: M.I.T. Press, 1962.

[17] Child, J., Management in China during the age of reform, Cambridge

[England]: Cambridge University Press, 1996.

[18] Chrisman, J., Chua, J. and Sharma, P., Trends and directions in the development of a strategic management theory of the family firm, Entrepreneurship Theory and Practice, Vol.29, No.5, 2005, pp.555-576.

[19] Chua, J., Chrisman, J. and Sharma, P., Defining the family business by behavior, Entrepreneurship Theory and Practice, Vol.23, No.4, 1999, pp.19-39.

[20] Collis, D. and Montgomery, C., Corporate strategy: A Resource-based Approach, Boston (Mass.): Irwin McGraw-Hill, 2005.

[21] Collis, D. and Montgomery, C., Corporate Strategy: A Resource-based Approach, McGraw-Hill Higher, 2005.

[22] Denison, D., Bringing corporate culture to the bottom line, Organizational Dynamics, Vol. 13, No. 2, 1984, pp.5-22.

[23] Denison, D., Corporate culture and organizational effectiveness, New York: Wiley, 1990.

[24] Drnevich, P. and Croson, D., Information Technology and Business-Level Strategy: Toward an Integrated Theoretical Perspective, Mis Quarterly, Vol.37, No.2, 2017, pp.483-509.

[25] Dutton, J., ”Understanding strategic agenda building and its implications for management change". In Hickson, D. J. (ed.), Dartmouth: Managerial Decision Making, 1995.

[26] Dvir, D. and Lechler, T., Plans are Nothing, Changing Plans is Everything: The Impact of Changes on Project Success, Research policy, Vol. 33, 2004, pp.1-15.

[27] Fitzgerald, M., Haynes, G., Schrank, H. and Danes, S., Socially Responsible Processes of Small Family Business Owners: Exploratory Evidence from the National Family Business Survey, Journal of Small Business Management, Vol. 48, No. 4, 2010, pp.524- 551.

[28] Frank, H., Kessler, A., Rusch, T., SuessReyes, J. and Weismeier-Sammer, D., Capturing the Familiness of Family Businesses: Development of the Family Influence Familiness Scale (FIFS), Entrepreneurship Theory and Practice, 2016, pp.1-34.

[29] Gimbert, X., Bisbe, J. and Mendoza, X., The Role of Performance Measurement Systems in Strategy Formulation Processes. Long Range Planning, Vol. 43, N0.4, 2010, pp.477-497.

[30] Goffee, R., Entrepreneurial Middle Class (Routledge Revivals), Taylor and Francis, 2015.

[31] Goffee, R., Understanding family businesses: issues for further research, International Journal of Entrepreneurial Behavior & Research, Vol.2, No.1, 1996, pp.36-48.

[32] Govindarajan, V. and Trimble, C., The other side of innovation, Boston: Harvard Business Review Press, 2010.

[33] Grant, R., Strategic planning in a turbulent environment: evidence from the oil majors, Strategic Management Journal, Vol.24, No.6, 2003, pp.491-517.

[34] Gupta, A. and Govindarajan, V., Business Unit Strategy, Managerial Characteristics, and Business Unit Effectiveness at Strategy Implementation, Academy of Management Journal, Vol. 27, No.1, 1984, pp.25-41.

[35] Hart, S., An Integrative Framework for Strategy-Making Processes, The Academy of Management Review, Vol.17, No.2, 1992, pp.327-351.

[36] Hendry, J., Strategic Decision Making, Discourse, And Strategy As Social Practice. Journal of Management Studies, Vol.37, No.7, 2000, pp.955-978.

[37] Hofer, C., Some Preliminary Research on Patterns of Strategic Behavior, Academy of Management Proceedings, No.1, 1973, pp.46-54.

[38] Hunger, J. and Wheelen, T., Strategic management and business policy, N.J.: Pearson Prentice Hall, 2011.

[39] Jarzabkowski, P. and Kaplan, S., Strategy tools-in-use: A framework for understanding “technologies of rationality” in practice, Strategic Management Journal, Vol.36, No.4, 2015, pp.537-558.

[40] Jarzabkowski, P. and Silince, J., A Rhetoricin-Context Approach to Building Commitment to Multiple Strategic Goals, Organization Studies, Vol. 28, No.11, 2007, pp.1639-1665.

[41] Klettner, A., Clarke, T. and Boersma, M., The Governance of Corporate Sustainability: Empirical Insights into the Development, Leadership and Implementation of Responsible Business Strategy, Journal of Business Ethics, Vol.122 , No.1, 2014, pp.145-165.

[42] Lant, T. and Shapira, Z., Managerial reasoning about aspirations and expectations, Journal of Economic Behavior & Organization, Vol.66, No.1, 2008, pp.60-73.

[43] Laszlo, C. and Zhexembayeva, N., Embedded Sustainability: The Next Big Competitive Advantage, Stanford, Calif.: Stanford University Press, 2011.

[44] Leong, L. and Jarmoszko, A., Analyzing Capabilities And Enterprise Strategy: A Value Proposition Framework, International Journal of Management & Information Systems (IJMIS), Vol.14, No.1, 2010, pp.53- 60.

[45] Lorange, P. and Vancil, R., How to design a strategic planning system, Harvard Business Review, Vol.54, No.5, 1976, pp.75-81.

[46] Miles, R. and Cameron, K., Coffin nails and corporate strategies, Englewood Cliffs: Prentice-Hall, 1982.

[47] Miller, C. and Cardinal, L. (1994). Strategic Planning and Firm Performance: A Syntheses of More than Two Decades of Research, Academy of Management Journal, Vol.37, No.6, 1994, pp.1649-1665.

[48] Miller, D. and Le Breton-Miller, I., Managing for the Long Run: Lessons in Competitive Advantage from Great Family Businesses, Boston,MA:Harvard BusinessSchool Press, 2005.

[49] Miller, D., Le Breton-Miller, I. and Scholnick, B., Stewardship vs. Stagnation: An Empirical Comparison of Small Family and Non-Family Businesses, Journal of Management Studies, Vol.45, No.1, 2008, pp.51-78.

[50] Mintzberg, H. and Waters, J., Of strategies, deliberate and emergent, Strategic Management Journal, Vol.6, No.3, 1985, pp.257-272.

[51] Mintzberg, H., Patterns in Strategy Formation, Management Science, Vol.24, No.9, 1978, pp.934-948.

[52] Mintzberg, H., Rise and fall of strategic planning, Simon and Schuste, 1994.

[53] Neubauer, F. and Lank, A., Family Business: Its Governance for Sustainability, Palgrave Macmillan, 2014.

[54] Ocasio, W. and Joseph, J., Rise and Fall- or Transformation? The Evolution of Strategic Planning at the General Electric Company, 1940-2006, Long Range Planning, Vol.41, No.3, 2008, pp.248-272.

[55] Pearce, J. and Robinson, R., Strategic management: Formulation, Implementation, and Control, Boston: McGraw-Hill Irwin, 2011.

[56] Pidun, U., Comments on ‘How to ensure that headquarters add value’, Harald Hungenberg. Long Range Planning, Volume 26, Issue 6, December 1993, Pages 62–73, Long Range Planning, Vol.50, No.1, 2017, pp.20-21.

[57] Porter, M. and Kramer, M., Strategy and Society: The Link between Competitive Advantage and Corporate Social Responsibility, Harvard Business Review, Vol.84, No.12, 2006, pp.78-92.

[58] Powell, T., Research notes and communications strategic planning as competitive advantage, Strategic Management Journal, Vol.13, No.7, 1992, pp.551-558.

[59] Puranam, P. and Vanneste, B., Corporate strategy: Tools for Analysis and DecisionMaking, Cambridge University Press, 2016.

[60] Steyn, B. and Niemann, L., Enterprise strategy, Journal of Communication Management, Vol.14, No.2, 2010, pp.106- 126.

[61] Whittaker, D. and Beer, S., Think before you think: Social Complexity and Knowledge of Knowing, Wavestone Press, 2009.

[62] Whittington, R., Completing the Practice Turn in Strategy Research, Organization Studies, Vol.27, No.5, 2006, pp.613-634.

[63] Zellweger, T. and Dehlen, T., Value Is in the Eye of the Owner: Affect Infusion and Socioemotional Wealth Among Family Firm Owners, Family Business Review, Vol.25, No.3, 2011, pp.280-297.

[64] Zellweger, T., Nason, R., Nordqvist, M. and Brush, C., Why Do Family Firms Strive for Nonfinancial Goals? An Organizational Identity Perspective, Entrepreneurship Theory and Practice, Vol.37, No.2, 2013, pp.229-248.

[65] Zerfass, A. and Viertmann, C., Creating Business Value Through Corporate Communication: A Theory-Based Framework and its Practical Application, Journal of Communication Management, Vol.21, No.1, 2017, pp.68-81.

Cite this paper

Binladen Hania, Al-Ashaab Ahmad. (2017) Strategy Formulation Process in Large Family-Based Businesses. International Journal of Economics and Management Systems, 2, 91-102