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Managem ent Review

1992, Vol. 17, No. 2, 3 2 7 - 3 5 1 .

AN INTEGRATIVE FRAMEWORK FOR

STRATEGY-MAKING PROCESSES

STUART L. HART

University of Michigan

Most prior literature on strategy making has focused on a limited set

of them es e.g., rationality) or actors e.g., top ma nagers). Resulting

typologies have, therefore, tended to be incomplete or overlapping.

None ha ve captured the full rang e of content ass ocia ted with the phe-

nomenon. In response, this article offers an integrative framework

consisting of five modes: command, symbolic, rational, transactive,

and generative. The framework is based on the varying roles top

managers and organizational members play in the strategy-making

process. It goes beyond existing strategy process models by contrast-

ing these roles and illustrating their interaction. Strategy making is

viewed as an organizationwide phenomenon. Research propositions

are also developed linking strategy-making processes to firm perfor-

mance.

Over the years, scholars have addressed strategy making from a num-

ber of different perspectives (e.g.,

Ansoff

1965; Barnard, 1938; Hofer &

Schend el, 1978; Lindblom , 1959; M arch & Simon, 1958; M intzberg, 1973;

Ouinn, 1978). These varying ap pro ac he s ha ve sp aw ne d a bewildering ar-

ray of competing or overlapping conceptual models. Indeed, during the

past three decades, authors have developed scores of different strategy-

making typologies (e.g.. Bourgeois Brodwin, 1984; Chaffee, 1985; Mintz-

be rg, 1978; Non aka , 1988), resu lting in mo del proliferation. Associa ted

em pirica l w ork (e .g., Fred rickson & Mitchell, 1984; Miller & Friesen, 1977,

1983; Sh riva stav a & G rant, 1985; W ooldridge & Floyd, 1990) ha s cov ered

such a wide range of considerations that little cumulative knowledge has

resulted. A conceptualization that is capable of providing a framework for

ongoing research is lacking.

This article offers an integrative framework for strategy-making pro-

cesses composed of five modes: command, symbolic, rational, transactive,

and generative. The framework is based on the contrasting roles top man-

agers and organizational members play in the strategy-making process. It

illustrates the roles and describes the interaction among them. The modes


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repre sent pu re proc ess types that ca n be ble nd ed into different com bin a-

tions.

Together, the five modes serve to integrate and reconcile a number of

previous models and typologies.

Research propos i t ions sugges t re la t ionships among the s t ra tegy-

making modes and dimensions of firm performance, including the moder-

ating effects of several key contingency factors. Because firms usually de-

velop competence in several modes, propositions also describe the most

effective combinations of the five strategy-making modes.

PRIOR LITER TURE

Historical Evolution of the Field

Strategy has a long and venerable intellectual history. The foundation

of this literature is the well-known rational model, which calls for compre-

hen sive a nd exha ustive ana lysis prior to decision (Fredrickson & Mitchell,

1984).

Rationality implies that a decision maker (a) considers all available

alternatives, (b) identifies and evaluates all of the consequences which

would follow from the adoption of each alternative, and (c) selects the al-

ternative that would be preferable in terms of the most valued ends (Mey-

erso n & Banfield, 1955). The ratio nal m ode l of decision m ak ing ap pl ied to

strategy sugg ests systematic environm ental ana lysis, asse ssm ent of internal

strengths and weaknesses, explicit goal setting, evaluation of alternative

courses of action, a nd the developmen t of a com prehe nsive plan to achie ve

the goals (e.g., Andrew s, 1971; Ansoff 1965; Hofer Sc he nd el, 1978; Porter,

1980).

Organizationally, this calls for the use of a formal strategic planning

system (Lorange Vancil, 1977; W ood LaForge, 1979).

An equally persuasive body of behavioral theory has challenged the

assumptions of rationality (Cyert M arch, 1963); ac co rd ing to this theory , a t

best, individuals and organizations can achieve only bounded rationality

(Simon, 1957). At the ind ividu al level, cogn itive limits ca u se dec ision m ake rs

to adopt simplified models of the world, to limit search behavior to incre-

me ntally different options, a n d to ac ce pt the first satisfactory outc om e (Lind-

blom , 1959; M arch Simon, 1958; Simon, 1952). Ind ivid ua ls rely on sche m a

or cognitive m ap s to organize issues an d events into ma n ag ea b le sets of

ca tego rie s (Dutton & Jackson, 1987; Schw enk , 1988). In ad dit ion , heu ristics

and biases in human judgment result in many departures from optimality

(Sch wenk, 1984; Tversky Kahneman, 1974).

At the organizational level, strategic assumptions form the basis for

organizational frames of reference (Mason & Mitroff 1981; Schneider &

Sh rivasta va, 1987; Sh rivas tava

Sch neid er, 1984), wh ich pre di sp os e firms

to act in particular ways. Finally, the difficulty of organizational goal setting


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emerges as a result of organized anarchy (Cohen, March, Olsen, 1972).

The beh avio ral literature thus suggests a more limited an d less enco mp ass-

ing role for top m an a g er s in the strategy-making process. It ch alle ng es both

the cognitive and motivational assumptions inherent in the rational model

and suggests that organizational members play a significant role in the

process (Mintzberg, 1978).

Recognizing these limitations, Ouinn (1978) proposed logical incremen-

talism as the normative ideal for strategy making. In this model executives

m ay b e ab le to predict the broa d direction, bu t not the precise n atu re, of the

ultimate strategy that will result. Accordingly, top managers focus on iden-

tifying a broadly defined direction for the organization, allowing the details

to em erg e over time. Following this line of thinking, a n increa sing nu m ber

of writers have advocated the importance of top management

vision

an d

the nurturing of strong corporate values in the strategy process (Conger

Kan un go , 1988; Kotter, 1988; Pas ca le , 1985; Pe ters , 1987; Weick, 1987). Thus,

rather than seeking to be comprehensive—the ideal of rationality—top

managers work to create a general sense of purpose and direction that will

guide the actions taken by organizational members (Bennis Nanus, 1985;

Johnson, 1988). The vision serves to create both chaos and order: It creates

chaos by continually challeng ing organizational m em bers to go beyond the

status quo yet provides order by offering a long-term direction as a beacon

that will guide individual, short-term action (Nonaka, 1988). As part of the

vision, top managers must capture the imagination of organizational mem-

be rs (Burns, 1978; Sta ta, 1988). Effective visionary le ad er sh ip is a two -way

street, implying mutual obligation (Westley Mintzberg, 1989). Without the

commitment and involvement of organizational members, there can be no

strategic vision.

Accordingly, commitment through involvement has emerged as an-

other important ingredient in the strategy-making literature of the past de-

cade .

Usually, in rational mod els strategy mak ing is envisioned as the prov-

ince of top managers only (e.g., Andrews, 1971;

Ansoff,

1965; Porte r, 1980).

However, scholars also have noted the increasing trend toward wider in-

volvement of organ izationa l m em ber s in strategic con cerns (Guth Mac-

Millan, 1986; Hickson, Butler, Cray, Mallory, Wilson, 1986; Imai, 1986;

Mintzberg, 1990; Rhy ne , 1986; W oo ldridge Floyd, 1990). Difficulties with

strategy implem entation (Galbraith Kazanjian, 1986) an d a n increa sing

rate of environm ental c ha ng e Ansoff, 1979) ar e often cited a s the rea so ns for

such involvement. Others have noted the growing importance of

intrapre

neurship

(by organizational members) to innovation and corporate success

(Burgelman, 1984; Kuratko, M ontagno r,

Hom sby , 1990; Ouinn , 1985).

Burgelman (1983) captured this theme well by identifying induced and


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ceptance) of individual initiative at the operating level, in the interest of

productivity im pro vem ent an d innov ation Imai, 1986). In this ca se , or ga ni -

zational members exercise autonomy by suggesting improvements, con-

ceiving new business opportunities, and engaging in product-championing

efforts. Middle managers try to convince top management to support these

initiatives, which often represent a departure from the current strategy

Bower, 1970).

Three recurring themes emerge. First is rationality—the extent to which

the strategic process can or should) be comp rehen sive, exhau stive, a nd

analytical in ap pro ac h. The literature mak es it clear that beh avio ral issues

e.g., bo un de d rationality, satisficing, political beh av ior) w ill limit the

achievable level of rationality. Rationality leads to the second theme in the

literature: the symbolic role of top managers in the strategy process. This

literature focuses on the extent to which leaders can articulate a clear stra-

tegic vision and motivate organizational members to adopt it. However,

implementation problems suggest the extent and type of involvement of

orga nization al me m ber s in the strategy-m aking proc ess a s a critical and

the third) theme. These three themes organize existing strategy-making pro-

cess typologies.

Strategy Making Process Typologies

Table 1 summarizes eleven key process typologies drawn from the lit-

era ture . They ar e catego rized into the three bro ad the m es: rationality com-

prehensive and bounded), vision, and involvement.

Rationality.

Several authors have developed strategy-making process

typologies based on rationality. In his classic analysis of decision making,

Allison 1971) articulate d thre e opposing m odels for explainin g the C ub an

missile crisis: rational actor, organizational process, and bureaucratic pol-

itics. The first model represented the classical comprehensive approach.

The latter two models suggested variations on the behavioral or bounded

rationality theme. Allison explained how outcomes can diverge from the

rational optimum due to the incremental nature of organizational routines

as well as the conflicting interests and objectives of individual actors. Nutt

1981,

1984) el ab or at ed on this framework, specifying six decisio n-m akin g

strateg ies ran gi ng from highly rationa l norm ative decision theory) to

heavily beh avio ral behavioral decision theory, gro up decision making).

Mintzberg

1973,

1978) prese nted the entrepre neu rial, plan ning , an d

adaptive modes of strategy-making. In the entrepreneurial mode, a strong

leader takes bold, risky actions on behalf of the organization. The planning

mode is characterized by formal analysis used to structure explicit, inte-

grated strategies for the future. In the adaptive mode, the organization


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TABLE 1

Categorizing the Strategy Making Process Typologies

331

Citation

Allison (1971)

Nutt

(1981,

1984)

Mintzberg (1973,

1978)

Chaffee (1985)

Mintzberg

(1987a)

Bourgeois

Brodwin

(1984)

Nonaka (1988)

Ansoff (1987)

G ra n d o n (1 9 8 4 )

Shrivas tava

Grant (1985)

Mintzberg

Waters (1985)

Themes from the Literature

Rationality

C o m p r e h e n s i v e

Rational

Normative;

Bureaucratic

Entrepreneurial-

Planning

Linear

Plan; Ploy;

Position

Commander;

Ch an g e

Deductive

Systematic

Optimizing

Managerial

autocracy;

Systematic

bureaucracy

Entrepreneurial-

Planned

Bounded

Organizational-

Bureaucratic

Behavioral-

Group;

Adaptive

Adaptive

Adaptive

Pattern

Collaborative

Ad Hoc;

Reactive

Satisficing;

Incremental

Adaptive

planning

Process;

Consensus

Vision

Interpretive

Perspective

Cultural

Cybernetic

Ideological-

Umbrella

Involvement

Crescive

Inductive;

Compressive

Organic

Random

Political

expediency

Unconnected;

Imposed

two contrasting mod es of com preh ensiv e rationality— one do min ated by a

strong leader (entrepreneurial) and another dominated by formal analysis

and procedure (planning).

These different dimensions of rationality are evident in the remaining

eight typologies as well. The commander (Bourgeois Brodwin, 1984) and

m an ag er ia l au toc rac y (Shriv astava C ran t, 1985) m od es both reflect a

strategy process dominated by a strong leader or chief executive (similar to

Mintzberg's entrepreneurial mode). In contrast, the linear (Chaffee, 1985),


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pie, Chaffee s (1985) ad ap tive , M intzberg s (1987a) pa tte rn , Ansoff s (1987) ad

hoc, G ran do ri s (1984) satisficing, Sh riva stav a an d G ran t s (1985) ad ap tiv e

pla nn in g, a n d M intzberg an d W aters (1985) pro ces s m od es all reflect strat-

egy making that is limited by cognitive and political realities (similar to

Allison s org an iza tion al m od e, 1971, an d Nutt s be ha vior al m od e, 1984).

Vision Similar to Allison, Chaffee (1985) also de scr ibe d th ree m od els of

strategy making: linear, adaptive, and interpretive. The first two models are

rooted in the rationality dim ension. The third mode l, ho we ver, tap s into the

vision theme. Strategy making according to the interpretive model is con-

cerned with metaphors and frames of reference that allow the organization

an d its environ me nt to be un derstood by organiz ation al stak eho lders. In this

way, stakeholders are motivated to believe and to act in ways that are

expected to produce favorable results for the organization.

M intzberg (1987a) ex ten de d the thinking o n this the m e with his five Ps of

strategy: play, ploy, position, pattern, and perspective. Although the first

four of these modes reflect different levels of rationality, the perspective

m ode clearly reflects the symbolic app ro ac h to strategy a s articulate d in the

previous section. Similarly, the Mintzberg and Waters (1985) framework

describes the ideological and umbrella modes of strategy making. Regard-

ing the ideological mode, strategies originate m shared beliefs, and inten-

tions exist as a collective vision for all actors. Regarding the umbrella mode,

leadership defines boundaries or targets within which actors can respond

or creat e. Similarly, Gra nd ori s (1984) cybe rnetic m od e involves organ iza-

tional learning within some broad set of goals or objectives.

Bourgeo is an d B rodwin (1984) also tap pe d this th em e in their framework

that emphasized the role of top management. Again, the first three models

relate to the rationality dimension. The cultural model, how eve r, reflects the

vision theme and interpretive aspects of strategy, with its emphasis on

shared values as moderators of work behavior. Their fifth model (the cres-

cive type), however, taps yet another domain. In this mode, strategy

emerges from the bottom up, with little guidance (analytical or symbolic)

from top management. In this case, organizational members play the crit-

ical role in the development of strategy.

nvolvement Several au thors h av e incorporated the them e of involve

me nt into their strateg y-m ak ing typolo gies. In Ansoff s (1987) org an ic, an d

Mintzberg an d W aters (1985) un con ne cted m ode s, for ex am ple , strategic

behavior is mainly unmanaged, and strategy is the result of serendipity

These modes posit high levels of independent action by organizational ac

tors a n d sho w distinct similarities to Bourgeois a n d Brodw in s (1984) crescive

type.

Shrivastava and Grant (1985) studied strategic decision-making pro


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tionality). The fourth, identified as the political expediency model, was sim-

ilar to Bourgeois and Brodwin's (1984) crescive model because in this case

strategy resulted from negotiation among decentralized coalitions and in-

terest groups within the organization.

N ona ka (1988) view ed s trateg y m aking a s an ex ercise in information

creation and posited three modes: deductive, inductive, and compressive.

Deductive management is driven from the top-down and entails high levels

of central pl an nin g a n d ana lysis (high rationality, low involvement). Induc-

tive m an ag em en t, by contrast, is bottom -up (like Bourgeois Brodw in's,

1984,

crescive model) and is driven by individual or group initiative within

the organization: Accordingly, the job of top management is primarily to

sponsor projects an d m ake s en se of the decentralized activity. C om pressive

m ana gem ent c om bines both the deductive an d inductive mo des an d entails

high levels of activity for both top managers and organizational members.

Thus, strategy making is both top-down and bottom-up.

N INTEGR TIVE FR MEWORK

As the literature review indicates, there has been extensive conceptual

development in the area of strategy-making process. Multiple streams of

literature exist. These streams tap several themes that have produced com-

peting or overlapping typologies. None of the individual typologies, how-

ever, captures the range of themes and dimensions associated with the

strategy-making process. Instead, each emphasizes only a portion of the

content. Given the fragmented and overlapping nature of the literature, the

field of management would benefit greatly from theoretical integration.

The proposed integrative framework builds upon the current typolo-

gies.

The framework is constructed ar ou nd the comp lem entary roles that top

managers and organizational members play in the making of strategy.

Such role definition has generally been implicit in prior literature. Where

roles have been defined, the focus is either on top managers or organiza-

tional m em bers , not on how the roles interrelate. From the previous discus-

sion, it can be noted that the role played by top managers can range all the

way from that of a

commander

where strategy is consciously formulated at

the top a n d issued to the rest of the organ ization (Bourgeois Brodwin,

1984),

to what might be called the

sponsor

where strategy emerges from

below and is merely recognized and supported by the top (Mintzberg, 1978).

Similarly, the role played by organizational members can range all the way

from that of a good

soldier

in which members execute the plans formulated

by top m a n a g e rs (Guth MacMillan, 1986), to that of a n enfre pren eur, in

which mem bers a re ex pected to be ha ve autonomously in the pursuit of new


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the identification of distinctive modes of strategy making. To this end. Table

2 specifies five strategy-m aking m ode s: co m m an d, symbolic, ra tiona l,

transactive, and generative. The second column, where top managers for-

mulate the strategy and organizational members execute it , describes a

command mode of strategy making. In such a case, a strong leader or a few

top m an ag er s design strategy and push it dow n in the organization. Top

m an ag er s a re in control. The third column des cribe s a symbolic m od e of

strategy making, whereby the leaders attend primarily to articulating a

mission and creating a vision and common perspective that help guide the

actions of organizational members toward a common goal.

The fourth column, where formal planning systems and hierarchical

relationships predominate, describes a rational mode of strategy making. In

this case, s trategy making is seen as the execution of plans produced

through comprehensive analysis and systematic procedure. Top managers

determine strategic direction through a formal planning process that entails

extensive data collection and highly structured organizational member in-

volvement. In the transactive mod e, organ izational m em ber s m ove to yet a

higher level of involvement in the strategic process. In such a case, top

managers' primary role is to facilitate an interactive process of strategy

formation; the content of the strategy emerges through transactions among

organizational members, suppliers, customers, and key stakeholders. Fi-

nally, with the generative mode of strategy making, central direction gives

w ay completely to internal entrep rene urship , an d top m an ag em en t adjusts

the strategy to fit the pattern of innovations that emerge from below.

Top managers, in particular, focus on different priorities for each of the

five m od es— they pull different orga nizatio nal levers. For ex am ple , in the

symbolic mode, top managers focus primarily on the organization's mission

and vision. In contrast, in the rational mode, top managers focus funda-

mentally upon the firm's goals and competitive strategy and the formal

structure and systems necessary for their implementation. With the trans-

TABLE 2

An Integrative Framework for Strategy Making Processes

Descriptors

Style

ConuncniQ

Imperial)

Strategy driven

by leader or

small top

team

Symbolic

{Cultural)

Strategy driven

by mission

and a vision

of the future

Rational

(Anaiyticaij

Strategy driven

by formal

structure and

planning

systems

Transactive

{Procedural)

Strategy driven

by internal

process and

mutua l

adjustment

Generative

(Organic)

Strategy driven

by organiza-

tional actors'

initiative


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active mode, top management emphasis is placed on the design and facil-

itation of effective orga nizatio nal systems an d proc esses. The orga nization al

levers available to top management can thus be conceptualized as ranging

from the articulation of corporate mission and vision, on the one extreme, to

concern for informal processes and people on the other, with a range of

levers falling in be tw ee n. Tab le 3 summ arizes the relationships betw een the

five strategy-making modes and the associated levers used by top manag-

ers.

The five modes of the framework integrate the wide range of literature

on the strategy-making process. Table 4 utilizes the framework to map the

key typologies discussed in the previous section. The com m and an d rational

modes clearly reflect the two different aspects of comprehensive rationality,

whereas the transactive mode contains much of the content from the

bo un de d rationality catego ry. The syrnbolic mo de reflects directly the vision

theme. Finally, content from the involvement theme is captured primarily in

the generative mode.

The five modes are not seen as mutually exclusive. In practice, orga-

nizations may combine two or more modes into distinctive combinations of

strategy-making processes. These process modes and configurations may

have significant implications for firm performance.

Command Mode

Regarding this mode, a strong individual leader or a few top managers

exercise total control over the firm. Strategy making is a conscious, con-

trolled proc ess that is cen tralized at the very top of the organizatio n Mintz-

berg, 1973). The strategic situation is analyzed, alternatives are considered,

an d the ap pro pria te course of strategic action is decid ed upon Vesper,

1980). In such a mode, strategies are deliberate, fully formed, and ready to

TABLE 3

Strategy-M aking Mode and the Or ganiza tional Levers of

Top Management

Levers Comm and Symbolic Rational Transactive Gen erative

Mission

Vision

Goals

Strategy * ** *

Sfructure * * * * *

Systems * * * **


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TABLE

Mapping the Typologies on the Integrative Framework

April

Citation

Allison (1971)

Nutt

(1981.

1984)

Mintzberg

(1973, 1978)

Chaffee (1985)

Mintzberg

(1987a)

Bourgeois

Brodwin

(1984)

Nonaka (1988)

Ansoff (1987)

Grandor i

(1984)

Shrivastava

Grant (1985)

Mintzberg

Waters

(1985)

Command

Normative

Entrepreneuria l

G o m m a n d e r

Manager ia l

autocracy

Entrepreneuria l

Symbolic

Interpretive

Perspective

Cultural

Compressive

Cybernetic

Ideological;

Umbrella

Rational

Rational

Bureaucrat ic

P lann ing

Linear

Plan; Position;

Ploy

C h a n g e ;

Collaborat ive

Deductive

Systematic

Optimizing

Systematic

b u r e a u c r a c y

Planned

Transactive

Organizat ional;

Bureaucrat ic

Behavioral;

Gr o u p ;

Adap t ive

Adap t ive

Adap t ive

Pattern

Ad hoc reactive

Satisficing;

Incremental

Adap t ive

p lann ing

Process;

C o n s e n s u s

Generative

Crescive

Inductive

Or g a n i c

Random

Political

expediency

Unconnected;

Imposed

be implemented. The top manager is the commander in this mode of strat-

egy making, and organizational members are good soldiers who execute

the strate gy a s it is artic ula ted by the top (Bourgeois Brodwin, 1984; Mintz-

berg Waters, 1982).

The annals of business history are filled with stories of strong entrepre-

neu rs and business le ade rs credited with presiding over either the creation

or gro w th of en ter pr ise s (GoUins Moore, 1970); for ex am ple, Hen ry Ford

(Ford Motor Gompany) and Tom Watson (IBM) have become folk heroes in

both the ac ad em ic a n d p op ular literatures. More recently, pe op le like Bill

Gates (Microsoft) and Steve Jobs (Apple) have attracted a great deal of

attention for their stunning success stories. In each case, a single individual

(or very small inner circle) had a comprehensive business plan and suc-

ceeded in imposing it on the organization.

Symbolic Mode


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me taphors, an d emotion a re central to this process (Conger & Kan ungo,

1988;

Ede lm an , 1971; W illner, 1984). NEC's vision, for exa m ple , is C& C,

the union between computers and communication, a powerful metaphor

that captures the importance of technological synergy within the firm.

Strategy making in the symbolic mode also requires the crafting of a

long-term mission for the organization—an articulation of strategic intent

(Hamel & P ra ha lad, 1989). This mission b ecom es t ran slate d into specific

targets, either internal to the organization (e.g., develop capability) or ex-

ternal (e.g., overtake a competitor), which inspire organizational members

to hig he r levels of ac hi ev em en t (H aseg aw a, 1986; Imai, 1986). At Kom atsu,

for exa m ple, th e mission is M aru-C — to encircle Cate rpillar, its prim ary

rival.

Similar to a coach in athletics, the role of top management in the sym-

bolic mode is to motivate and inspire organizational members (Nonaka,

1988).

Through spee ch es, pe rsuasio n, sloga ns, new projects, an d recogni-

tion, top management provides the necessary focus and momentum to

guide the creative actions of organizational players (Itami, 1987). In this

way, the symbolic mode creates an implicit control system, which is based

on sha red v alue s (Pasca le, 1985; Weick, 1987). It hing es on the nu rtur ing of

a shared perspective for all organizational members, that is, a clear mis-

sion, shared values, and an emotionally appealing corporate vision or

dream (Torbert, 1987). At Matsushita, for example, founder Konosuke Mat-

sushita developed a grand 250-year vision. The vision was operationalized

through the Seven Spirits of M atsushita —the sh ar ed v alu es of the com-

pan y. E ach year, Matsushita re ded icates the com pan y's mission to its vision

by weaving its short-term goals into the company dream, captured through

a slogan that serves as the theme for the year.

Rational ode

Unlike the com m and or symbolic m odes, the rational m ode seeks to be

comprehensive in scope. In the rational mode there is a high level of infor-

mation processing—the gathering and use of internal and external data

(Miller, 1989). In such a case, means are separated from ends, and structure

follows strategy (Cha ndle r, 1962). Form al ana lysis , such a s e nvir onm enta l

scanning, portfolio analysis, and industry and competitive analysis, is often

used to aid in competitive strategy formulation (Porter, 1980; Steiner, 1979).

Usually, this process is institutionalized through formal strategic planning,

involving written strateg ic an d o pe ratin g p lan s (Armstrong, 1982; Rh yne,

1986;

Wood & LaForge, 1979). Crg aniza tional m em bers participa te in a

formal system requiring the upward sharing of data and information. The

result is a detailed plan of action, including specifics about product-market


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To en su re effective implem entation, top m an ag em en t carefully mo ni

tors an d controls the activities of sub ord inate s w ho ar e held a cc ou nt ab le fo

performance benchmarked against the plan. Through structure and forma

systems, organizational members are induced to behave in desired ways

In short, the rational mode is rooted in top management's drive to conside

as m uch d ata as possible in the formulation of a n explicit busin ess strategy

Transactive Mode

The essence of the transactive mode is strategy making based on in

teraction and learning rather than the execution of a predetermined plan

(Fiol Lyles, 1985). Both cogn itive limits (March Sim on, 1958; Slovic

Fischhoff an d Lichtenstein, 1977) an d en viro nm en tal u ncerta inty (Dutton

Fahey, N ar ay an an , 1983; Lyles Mitroff 1980) ser ve to limit top m an a g

ment's ability to separate the formulation of strategy from its implementa

tion. Strategy is crafted based upon an ongoing dialogue with key stake

holders—employees, suppliers, customers, governments, and regulators

Cross-functional communication among organizational members is centra

to this mode. Feedback and learning necessitate an iterative approach t

strateg y m akin g (Argyris Schon , 1978). In this ca se , top m an ag em en t i

concerned with facilitating a process for transacting with key stakeholder

an d linking the outcomes of those proce sses toge ther over time to de term in

strategic direction (Mintzberg, 1987b).

The transactive mode is reflected in recent efforts by many companie

to foster employee involvement, customer focus, and total quality manage

ment (Ishikawa Lu, 1985; Lawler, 1986; Sh ap iro , 1988). This m ode usu all

necessitates the creation of lateral (cross-functional) communication chan

nels and new mechanisms for involving customers and other key stakehold

ers in planning and decision making. Initiatives common to the transactiv

mode include just-in-time management, program management, quality cir

cles,

a n d qua lity function deplo ym ent. In the United States, co m pa nie s su

as Motorola, Xerox, and Ford have dedicated great energy to the fosterin

of such transactive processes. The Demmg Prize m Japan and the recentl

created Malcolm Baldridge National Quality Award in the United States ar

granted based on a firm's ability to demonstrate strong organizationa

learning capability fostered by transactive relationships among suppliers

customers, and employees.

enera tive Mode

The generative mode of strategy-making is dependent upon the auton

omous behavior of organizational members. Strategy is made via intrapre

neurship—new product ideas emerge upward, and employee ini t iat iv


13/26

1992 Harf 339

vating activity from the day-to-day work of the operating organization

(Tushman Nadler, 1986).

Universities, hospitals, and professional organizations are well known

for their gen era tiv e pro perties (Cohen, M arch, Olsen, 1972). However, the

generative mode also can be found in industrial and manufacturing con-

texts. Kidder (1981) documented the generative processes through which

Data General's 32-bit supermini computer emerged. The development of

the Post-It note by the 3M C om pan y also epitomizes ge ne rativ e process:

The idea was developed by a research scientist in his leisure time and was

bootlegged internally an d sold up w ard in the com pan y. CEO Lewis Lehr

recognized its potential and became its key sponsor. The idea eventually

became a $200 million-per-year business for 3M.

The role of top management in this mode is to encourage experimen-

tation an d risk taking on the pa rt of pe op le in the organ ization a n d to nurt ure

the development of the highest potential ideas. This sponsor role is accom-

plished through a variety of processes such as skunkworks, innovation time,

and the staffing of critical innovation roles designed to encourage individ-

ual an d te am -ba sed innovation (Burgelman, 1984; Peters & W aterm an,

1982).

Regarding this mode, of particular importance are the identification,

development, and reward of product champions—the people who are able

to link new ide as with organ izational resources to m ake them a com m ercial

reality (M aidique , 1980; Roberts Fusfeld, 1981). The gen era tiv e m od e thu s

involves the ongoing adjustment of strategy to reflect the pattern of high-

potential innovations that emerge from below.

IMPLICATIONS FOR RESEARCH

The posited framework suggests several directions for future research.

As a first step, it will b e ne ce ssa ry to ope ration alize a n d em pirically v alid ate

the five strategy-making modes. Beyond this, attention should be directed

toward (a) determining the link between strategy-making mode and firm

performance, (b) examining the effect of key structural contingency factors,

an d (c) explo ring effective com bina tions or configurations of strateg y-

making modes.

Strategy Making Mode and Firm Performance

Existing empirical work indicates significant differences between suc-

cessful and unsuccessful firms with respect to strategy-making processes

(Fredrickson, 1984; Fre drickson & Mitchell, 1984; Miller & Friesen , 1977,

1983). The five strategy-making modes developed in this article should also

exhibit significant performance differences. At one extreme (command


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Academy of Manag ement Review

April

ingly. Strategy results from the action of wild ducks — the in de pe nd en t

initiatives of internal entrepreneurs.

With both the command and generative modes, particular organiza-

tional skills and capabilities go underutilized. Between these two extremes

are strategy-making modes that combine elements of top-management in-

tention and organizational-m em ber initiative. In these cases, top m an ag er s

provide som e sen se of strategic direction throug h either sym bolic, techn ical,

or process means, and organizational members are active participants in

the strategic process (see Figure 1). Because the three middle modes make

better use of organizational skills and resources, they should be associated

with higher levels of overall performance than either the command or the

generative modes in their pure form. This leads to the following general

proposition:

Proposition la: The symbolic rational and transactive

modes of strategy making will be more predictive of high

performance than will the comm and and generative

modes.

To render the proposition testable, however, it is necessary to specify

how a firm's performance will be measured. As Venkatraman and Ra-

m an uja m (1986) h av e pointed out, firm pe rform an ce is a m ultidim ensio nal

construct. They proposed three general levels of firm performance:

FIGURE

Strategy Making Mode and Firm Performance

Command Sym bolic Rational Tran sactive

Generative

Role of

Top Management

Role of

Organizational

Members

Strategic

Abdication

ise of Strategic

Direction


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1992

Hart

341

1. F inanc ia l pe r forma nce . Acco unt ing-based me asu res such as re tu rn on as se t s

(ROA), return on sales (ROS), and return on equity (ROE). These indicators really

ta p curre nt profitabili ty.

2.

Bus iness pe r formance . Marke t -based measures such as marke t sha re , g rowth ,

divers i fica tion, an d product develo pm ent . There ap pe ar to be two dime nsion s

h e r e :

those indicators re la ted to grow th/sh are in exis ting bus in esse s (i .e. , sa le s

growth and market share) and those indicators re la ted to the future pos i t ioning of

the f i rm (e .g . , new product development and divers i f ica t ion) .

3.

Orga niza t iona l e ff ect iveness . S takeho lde r -based m easu res such as em ploye e sat -

isfaction, qu ality, an d social responsibili ty. There seem to be two dim en sion s h ere

a lso :

those indicators re la ted to qual i ty (e .g . , product qual i ty , em plo yee sa t is fac-

tion, overall quality) and those indicators related to social responsibili ty (e.g. ,

environmental and community responsibi l i ty) .

Thus, five dimensions of firm performance are proposed: (a) current

profitability, (b) grow th /sh are , (c) future positioning , (d) qua lity, a n d (e) so-

cial responsibility. Given the distinctive orientations of the five strategy-

making modes, each should relate to particular aspects of performance.

The command mode is not expected to predict firm performance on any

dimension because in this case a significant number of organizational

member skills go underutilized. This mode may, in some cases, even be

negatively related to performance. Similarly, the generative mode is not

expected to bear a significant relationship to performance. In contrast, the

three hybrid modes (symbolic, rational, and transactive) should be strongly

associated with positive outcomes for different dimensions of performance.

These relationships are captured in the following specific propositions:

Proposition lb: Given its emp hasis on mission and vision

the symbolic mod e will be positively associated with fu-

ture positioning and growth/share.

Proposition lc: Given its emphasis on formal planning

and con trol systems the rational mode will be positively

associated with current profitability and growth/share.

Proposition Id: Given its emphasis on feedback and

learning the transactive mode will be positively associ-

ated with quality and social responsibility.

Proposition Ie: Given its orientation toward total top man-

agement control the comm and mode will not be associ-

ated with any of the performance dimensions.

Proposition If: Given its complete dependence upon em-

ployee initiative the generative mod e will not be associ-

ated with any of the performance dimensions.

Key ontingency Factors


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4

Academy of Managem ent Review

April

1989; Miller, 1987a, 1989). It is clear that future researchers must examine or

control for key contingency factors.

Miller 1987b) h a s a rg u ed that a nu m be r of forces restrict orga niz atio na l

variety and give rise to particular modes of strategy making. He cited four

imperatives that drive strategy mak ing: environment, structure, le ade rship ,

an d strategy. Be cause leade rship is cap tured within the integrative frame-

work, three key contingency factors ar e prop osed — env ironm ent, structure

firm size, stage of firm development) and strategy. Contingencies for these

factors are therefore developed for each of the five modes of strategy

ma king Table 5).

Command mode.

Because strategy is driven almost completely by the

top manager in the command mode, it is essential that the industry envi-

ron m ent not be too com plex for on e per so n or a very sm all top-

m ana gem ent team) to com prehend. The com ma nd mo de should, therefore,

function well only in relatively simple situations—a task environment low in

complexity Dess Beard, 1984). For the sam e reaso n, th e co m m an d mo de

should be found more often in relatively small organizations, where one

person can still maintain effective control. Virtually any competitive strategy

should be achievable through the command mode, so long as the top man-

ager maintains adequate levels of control over the company. Thus, the

following proposition:

Proposition 2a: The comm and mode will be most preva-

lent among small organizations in relatively simple envi-

ronments. Furthermore the comm and mode will be as-

sociated with higher performance in these situations.

Symbolic mo de. Unlike the command mode, which should be limited to

small organizations, the symbolic mo de might becom e ne ces sary in larger,

m ore differentiated org an izatio ns. To b e effective, the symbo lic m od e must

produce a corporate mission and vision that permeate the entire organiza-

tion. If organizational me m bers ca nnot be p ers ua de d to sh ar e the vision or

if they perceive it as false or superficial, the resulting lack of commitment

TABLE 5

Strategy Making Modes and Contingency Factors

Contingency

Factors

Environment

Firm Size

Command

Simple;

Low-level

complexity

Small

Symbolic

Dynamic; High

velocity or

radical

c h a n g e

Medium-Large

Rational

Stable; Low

degree of

c h a n g e

Medium-Large

Transactive

Complex; Many

stakeholders

Large

Generative

Turbulent;

Dynamic

a n d

complex


17/26

1992 Harf 343

may threaten organizational performance. The mission and vision must

reach everyone in the firm and serve as a guide to their individual behav-

ior. In a d yn am ic, high-velocity enviro nm ent (Bourgeois & Eisen hardt,

1988),

the symbolic mode may hold the key to the speed and flexibility

nec essa ry for competitive su ccess b ec au se in such a ca se th ere is little time

for top management to develop detailed plans or formal systems. Further-

more, the symbolic mode may be effective in hostile (low munificence) in-

dustries (Dess Beard, 1984) whe re cha ng e in strategic orientation becom es

essential. Given its emphasis upon mission and motivation for change, the

symbolic mode should be more effective in supporting proactive strate-

g ies—

p r o s p e c t o r s o r a n a l y z e r s

—

ra the r than r eac t ive s t r a teg ie s —

defenders o r reac tor s (Foster, 1986; Miles

Snow , 1978). Thus, the following

proposition:

Proposition 2b: The symbolic mode will be most prevalent

among either rapidly grow ing or reorienting firms follow-

ing proactive strategies in dynam ic high-velocity envi-

ronments. Furthermore the symbolic mode w ill be asso-

ciated with higher performance in these situations.

Rational mode

Comprehensiveness of analysis is a key feature of the

rational mode, and research has shown that such a strategy-making pro-

cess functions best in a stable or predictable competitive environment

(Fredrickson, 1983). Because of the great demands placed upon top man-

age m ent by this m ode , the risks of cognitive overload a nd paralysis by

analysis ar e alw ay s present, ma king the rational mode particularly diffi-

cult in dynamic, rapidly changing environments. Indeed, the rational mode

appears to be particularly well suited to firms experiencing steady (as op-

posed to rapid) growth, where the benefits of formal planning and control

systems can be fully realized. Given the level of information processing

required, this mode should also be found more often in large organizations

rather than small, new ventures. Finally, given the time needed to execute

this mode, it should tend to characterize firms that are defending estab-

lished strategic positions (Miles Snow, 1978) rather than firms seeking to

innovate or change dramatically. Thus, the following proposition:

Proposition 2c: The rational mode will be most prevalent

amo ng larger steadily growing firms defend ing estab-

lished strategic positions in relatively stable environ-

ments. Furthermore the rational mode will be assoc iated

with higher performance in these situations.

Transactive Mode

The transactive mode is iterative and participative

in nature; in business environments characterized by high levels of com-

plexity and heterogeneity (Dess Beard, 1984), such an approach may be


18/26

344


Ap

cess and organizational learning, the transactive mode should be mos

common in large firms participating in mature industries. Furthermore

given the time-consuming and somewhat incremental nature of such

process, it should support most effectively an analyzer s trategy aimed

incremental product

or

service improvement (Imai,

1986;

Miles

Snow,

1978).

Thus, the following proposition:

Proposition

2d: The

transactive mod e will

be

most prev-

alent among large firms following analyzer strategies

in mature industries characterized

by

heterogeneity

and

complex interactions among suppliers, customers and

other stakeholders. Furtherm ore, the transactive mod e

will be associated with higher performance in these sit

uations.

Generative Mode

The generat ive m ode dep end s upon the innovative

activities

of

organizational members

to

produce

the

firm's strategy.

Th

biggest strength of this mod e may also be its greates t w eakness— top man

agement exercises very little strategic control over the organization, making

it difficult to e n g a g e in any large-scale de velopm ents that requ ire centra

coordination or synergy acro ss orga nizatio nal units. This m od e should

therefore be particularly well suited to firms m turbulent environments,

characterized by both dynamism and complexity simultaneously (Emery

Trist, 1965). Under such conditions, deliberate strategy making

of any

kind

may become difficult. Given its orientation tow ard d ecentralized entrepre-

neurship, the gen erativ e m ode should best support a prospector strategy i

complex and fragmented markets (Miles Snow, 1978). Thus, the followin

proposition:

Proposition 2e: The generative mode will be most preva-

lent among firms competing in turbulent (complex and

rapidly chang ing) business environments, where pros-

pecting is important to competitive success. Furtherm ore,

the generative mode will

be

associated with higher

per

formance

in

these situations.

Combinations

nd

Configurations

Although these p ropos i t ions p rov ide ins igh t in to the p r o ces s -

performance linkage, they are clearly incomplete: They have the advan-

tage of identifying the independent effects of each of the five strategy-

making modes, but do not indicate which combinations or packages o

modes work especially well (Hambrick, 1984). As the work of Miller an

Friesen (1984) suggests,

it may be

mo re valid

to

think

of

firms

as

possessing

combinations of styles and processes. Each of the five strategy-making


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1992

Hart

345

strategy-m aking process wh ere top m an ag em en t creates a vision or drea m ,

and middle management invents and implements concrete concepts to

transcend the contradictions arising from what exists now versus what top

m an ag em en t ho pes to crea te. This ap pro ach to strategy making, described

as

middle-up-down,

com bines elem ents of both the symbolic an d g en er a-

tive modes.

Chaffee (1985) went beyond this approach to suggest that there might

be a hie rarch y of strategy-m aking types, wh ereb y ea ch successive level of

strategy making incorporates those that are less complex. She suggested

that the linear (rational) mode constitutes the first level. The second level,

the adaptive (transactive) mode, incorporates the linear mode, and the most

complex level—the interpretive (symbolic) mode—combines all three to-

gether in the form of a gestalt.

Firms that a re ab le to com bine several mo des into a high process

capacity might be expected to perform well on mo re perform ance dimen-

sions than single-mode or less process-capable organizations. For example,

a firm that combines the elements of the symbolic and transactive modes

would blend dedication to a shared vision and mission (symbolic) with a

strong learning orientation (transactive). Such a firm should perform well in

terms of growth, quality, and future positioning. In contrast, a firm that is

restricted to the ratio nal m od e should show strong profitability, but might b e

weaker with respect to other performance criteria.

In short, any single mode by itself may suffer from limitations and bi-

ases;

com bining the different logics asso ciated with the five mod es m ay hold

the potential for fewer blind spots an d improved perform ance (Prah alad &

Bettis, 1986). In general then, the greater the firm's strategy-making capa-

bility within each mode, and the greater the number of strategy-making

modes it combines, the higher its performance, which suggests the follow-

ing proposition:

Proposition 3a: The more the firms are able to develop

capab ility in multiple strategy-making mod es high-

process capacity), the better their performance on all di-

mensions.

Not all combinations of modes, however, should yield comparable per-

formance. Indeed, the emerging paradox perspective on organizational

effectiveness (e.g.. Bourgeo is & Eisenhardt, 1988; O uin n, 1988; O uin n &

Ca m eron, 1988) sugg ests that high performance requ ires a bala nc ing an d

simultaneous mastery of seemingly contradictory or paradoxical organiza-

tional capabilities—decisiveness and reflectiveness, broad vision and at-

tention to detail, and bold moves and incremental adjustment. In a similar

vein, Pondy (1983) emphasized that executives are most effective when they


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346 Academy of Managem ent Review April

and generative modes) should tend to occur together in lower performing

firms, whereas distal modes (e.g., command and generative) should be

found together in higher performing firms. This notion leads to the following

propositions:

Proposition 3b: Higher performing firms will combine dis

tal modes of strategy making.

Proposition 3c: Low er performing firms will combine

proximal modes of strategy making.

SUMM RY ND CONCL USIONS

This article provides a framework for strategy-making processes that

integrates the fragmented literature on the topic. Indeed, much scholarly

attention has be en d evoted to the ph eno m eno n of strategy m aking over the

past 40 ye ars . M any classic works ha ve tackled th e question of w heth er

strategy making can (or should) be rational. Authors also have focused on

the themes of top-management vision and organizational member involve-

men t in strategy m aking . Thus, most prior literature ha s focused either on a

particular theme (e.g., rationality) or on one set of actors (e.g., top man-

agement) to the exclusion of others. Resulting typologies have therefore

tended to compete or overlap, but none captures the full range of associated

content.

The roles played by both top managers and organizat ional members

were selected as the organizing principle for the integrative framework.

Juxtaposing the se roles facilitated the identification of five ge ne ric m od es of

strategy making: command, symbolic, rational, transactive, and genera-

tive.

This framework of modes and roles was then used to identify several

research propositions that link the strategy-making process to firm perfor-

m a n c e .

Much work remains, however, to operationalize and apply the integra-

tive framework. Though the five modes appear to be the appropriate level

of aggregation for integrating and reconciling the literature, they still must

be grounded empirically. I t is therefore recommended that researchers be-

gin to attempt to develop valid and reliable measures of the five strategy-

making modes. Ideally, they should use data collected from both top man-

agers and organizational members in a broad sample of organizations.

Extent of agreement or consensus between the two organizational levels

with reg ard to strategy-m aking processes w ould b e a na tura l outgrowth of

this work (e.g ., W ooldrid ge Floyd, 1989, 1990).

Once measures of the five strategy-making modes have been estab-

lished, studies of the process-performance linkage could follow. Extensive


21/26

1992 Hart 347

establish the general relationships among strategy-making processes and

firm performance. Targeted studies of particular industries and firm types

are desirable to test the specific contingent propositions associated with the

framework. Assu min g that firms comb ine or blend multiple strategy-m aking

modes into different levels of process capacity, case-comparative (qualita-

tive) res ea rch would b e a useful a nd an important m ea ns for exploring mo re

deeply particular strategy-making configurations. Such work might un-

cover how firms combine or blend more than one mode of strategy making

and might clarify how high strategy-making process capacity is actually

embedded in organizations. Ultimately, longitudinal work should be con-

ducted to unravel how strategy-making processes evolve and to discover

how firms acquire capabilities in additional modes over time.

What is clear from the foregoing is that strategy making can no longer

be limited concep tually to the chief executive or the top -m ana gem ent team .

Rather, strategy making must be conceptualized as an organizationwide

phen om eno n. Specifying the comp lementary roles played by top m an ag ers

and organizational members serves to clarify how strategy actually gets

made in organizations.

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