Lecture 5 - Cultural school + Environmental school + Configuration school + Differences between strategy schools Flashcards
(!) Describe the culture school in general & how to destroy it
General:
- Descriptive
- Strategy formation: Collective process
- Beyond individual: Forces & actors
- Collective cognition in firms
- Strategy formation based on shared beliefs & values
- Build over long time
- Reflected in behavior, traditions & habits, stories & symbols
- Eg. Being a low cost firm in all aspects
- Linked to emotions: Commitment to work
- Collective & cooperative process
- Often unconscious & take for granted: Not forced. Ref. Iceberg.
- May resist change: Seek strategic stability
- Process of social interaction & socialization
- Simple vision, complex culture
- Both inside humans & outside society: Interact with environment
- Can delegate into subcultures
- Often change required if strategic change
- (Important in Japan)
Destroyed:
- Manage people as money: Hire/fire. Treat as machines
- Plan every action: No spontaneity & learning
- Move managers: Never get into stuff
(.) Describe the root dimensions of the culture school
Sources:
- Rhenman and Normann in Sweden
Base discipline:
- Anthropology
Champions:
- The Socially / Spiritually / Collectively Inclined
Intended message:
- Coalesce
Realized message:
- Perpetuate
(.) Describe culture in strategy formation
(!) Describe the strengths & weaknesses of the cultural school
Strengths:
- Highlight resistance to change
- Highlight how strategies become fastened
- Show important re-framing & transforming in strategic change
- Introduce idea of collective cognition & organizational styles
- Based on rich organizational data
Weaknesses:
- Blinding to external conditions
- Strong culture = Barrier for change. Incompatible
- Difficult, time consuming & require commitment to create
- Difficult to manage & change
- Risk of conflicts, cults & religious movements
- Favor consistency & stability
(!) Describe the environmental school
General:
- Descriptive
- Strategy formation: Reactive process
- Beyond individual: Forces & actors
- Seek to understand external pressure on organizations
- Environment dictate strategy: Environment as actor
- Organization is passive/reactive: No free choice of strategy
- Focus on adaption & evolution
Three theories:
- The contingency perspective
- Population ecology theory
- Institutional theory
(!!) Describe the contingency perspective & relate it to Management Accounting / MA
General:
- Part of environmental school
- Selection should fit situation & context: Eg. MCS to strategy
- Balance internal need & external pressure
- No one best strategy: Depend on product, task & environment
- Categorize environment: Stable vs. Dynamic, Complex vs. Simple
- More generic than MCS tailored to specific organization
- Solutions based on similar problems
- Not strict on non-strategy part
- Ref. Prospector & defender, Generic strategies & Innovations
Relation to MA:
- “Something true under specified conditions”
- Explain many MA-practices
- Earlier: 1 IV to 1 DV
- Later: Many IV to 1 or many DV: Rarely last one
- Understand IV´s interrelation = Better DV framework
- (Non-financial & qualitative measures neglected: Yet important)
(!!) Describe the critiques to contingency theory
- Firms differ in similar environment
- Theories may differ in firms: Eg. Categorize a prospector
- Too generalizing: Eg. No clear stability actegory
- Adaption is key to succes
- Always more contexts to consider: Never full knowledge
- Too few, simple, abstract & narrow: IRL many simultan IV´s
- IRL no generic best way
- Often limited to survey studies
(!) Describe independent & dependent variables / IV & DV
Independent variables / IV:
General:
- Also called contingent variables
Internal:
- Firm size
- Structure
- Strategy
- Reward systems
- PLC-stage
- Info systems
- Market position
- Psychological variables
- Participation in CS
- Systems change
External:
- Uncertainty
- Competition
- Technology
- Hostility
- National culture
____________
Dependent variables / DV:
- Performance
- Performance measures
- Budgeting behavior
- MCS design & use
- Effectiveness
- Job satisfaction
- Change in practices
- Product innovation
(!) Describe population ecology theory
- Holistic view: Which environment will specific firms survive in?
- Darwinistic way: Survival of the fittest
- No-strategy theory
- Number of companies depend on resource amount
- Uncertain environment favor generalists
- Firms form network to survive
- Organization look different when observed in long run
(!) Institutional theory
General:
- Part of environmental school
- Institutional pressure form organization
- Companies become more & more alike: Follow norm & rules
- “Just do what is told”: Not rational
- Adopt practices & forms to gain legitimacy
- Early adopters gain efficiency benefits
- Late adopters gain legitimacy benefits
- Strategic since response to these pressures
- Eg. Safety rules or sustainability norm
Pressure types from stakeholder:
- Coercive isomorphism: Standards & regulations
- Mimetic isomorphism: Borrow & imitate others
- Normative isomorphism: Professional expertise & norms. Eg. How lawyer look at X
(!!) Describe the relation of the environmental school to the other schools
Planning & positioning school:
- Dictated by planners & analyst instead of environment
Positioning school:
- Also dictated by environment
- Outside-in vs. inside-out
Design + Entrepreneurial school:
- Dictated by CEO instead of environment
Cognitive school:
- Limitation of strategic thinking: Limitation & bias
Learning, power & cultural school:
- Also complex environment
- Interact with environment
(.) Describe the root dimensions of the environmental school
Sources:
- Hannan and Freeman
- Contingency Writers
Base discipline:
- Biology
Champions:
- Population Ecologists
- Splitters
- Positivists
Intended message:
- React
Realized message:
- Capitulate
(!) Describe the strengths & weaknesses of the environmental school
Strengths:
- Admit firm not being superior
- Environment as central actor with leadership & organization
Weaknesses:
- No free will
- Underestimate creativity & imagination if hostility
- (Based on arguments from statistical averages)
- (Degenerate into debate about existence of strategic choice)
(!) Describe the configuration school in general
General:
- Strategy formation: Process of tranformation
- Context & situation set strategy
- Either stability or big changes
- Change resistent: Necessary at some point
- Combine multiple schools
- Specific strategies for specific stages: Ref. Life cycle
- Mainly theoretical: Irl world too complex
- (Strategy perspective: Seek optimal relationship among choices)
- (Incorporate “strategic change” literature)
(.) Describe the root dimensions of the configuration school
Base discipline:
- History
Champions:
- Lumpers & integrators
- Change Agents
Intended message:
- Lump
- Revolutionize
