Strategy Creation in the Periphery: Inductive vs. Deductive Strategy Making

Journal of Management Studies 4 0; 1 J anuary 2003

0022-2380

Strategy Creation in the Periphery:
Inductive Versus Deductive Strategy Making*

Patrick Regner
Institute of International Business, Stockholm School of Economics

ABSTRACT Although Strategy process research has provided careful and in-depth descriptions and examinations of strategy, micro-level processes and activities have been less commonly evaluated, especially as regards strategy creation and development. This paper examines how managers create and develop strategy in practice, A dual longitudinal case methodology, including a single in-depth study combined with a multiple retrospective study is used, involving four multinational companies. T he findings show a twofold character of strategy creation, including fundamental different strategy activities in the periphery and centre, reflecting their diverse location and social embeddedness. Strategy making in the periphery was inductive, including externally oriented and exploratory strategy activities like trial and error, informal noticing, experiments and the use of heuristics. In contrast, strategy making in the centre was more deductive involving an industry and exploitation focus, and activities like planning, analysis, formal intelligence and the use of standard routines. INTRODUCTION
How do managers create and develop strategy? This simple question seems to be fundamental for strategic management, but there are still surprisingly few answers in strategy research. Strategy process research (e.g. Johnson, 1987; Johnson and Huff, 1988; Mintzberg, 1978; Mintzberg and Waters, 1985; Pettigrew, 1985;
Quinn, 1980) has provided rich and systematic descriptions showing that strategy making comprises a variety of actors and contextual influences. However, it seems as if we still have an imperfect understanding of the particulars of these since less attention has been devoted to the micro-level, including the actual

References: Andrews, K. R. (1980). The Concept of Corporate Strategy. H omewood, IL: Irwin. Baden-Fuller, C. and Stopford, J. M. (1992). Rguvenating the Mature Business: The Competitive Challenge. Baden-Fuller, C. and Stopford, J. M. (1994). 'Creating corporate entrepreneurship '. Strategic Management Journal, 1 5, 7, 521-36. Barney, J. (1986). 'Strategic factor markets: expectations, luck, and business strategy '. Management Science, 3 2, 10, 1231-41. Barney, J. B. (1994). 'Bringing managers back in: a resource-based analysis of the role of managers in creating and sustaining competitive advantages for firms ' Bower, J. L. (1970). Managing the Resource Allocation process: A Study of Corporate Planning and Investment. Brown, J. S. and Duguid, P. (1991). 'Organizational learning and communities of practice: toward a unified view of working, learning and innovation ' Brown, J. S. and Duguid, P. (2001). 'Knowledge and organization: a social-practice perspective '. Organization Science, 1 2, 2. Burgelman, R. A. (1983). 'A process model of internal corporate venturing in the diversified major firm ' 81 Burgelman, R, A, and Sayles, L, R, (1986), Inside Corporate Innovation: Strategy, Structure and Managerial Policy: Text and Cases, 5th ed. Homewood, IL: Irwin, Daft, R, L, and Weiek, K, E, (1984), 'Toward a model of organizations as interpretation systems '. Dougherty, D, (1992), 'A practice-centered model of organizational renewal through product innovation '. Strategic Management Journal, 13, 77-92, Dutton, J, E, and Ashford, S, J, (1993) Review, 18, 397^28, Eisenhardt, K, M, (1989a), 'Making fast strategie decisions in high-velocity environments ' of Management Journal, 3 2, 543—76, Eisenhardt, K, M, (1989b), 'Building theories from case study research ' 14, 4, 532-50, Eisenhardt, K, M, and Martin, J, A, (2000), 'Dynamic capabilities: what are they? ' Ericson, T, Melander, A, and Melin, L, (2001), 'The role of the strategist '. In Volberda, H. V , and V Elfring, T. (Eds), Rethinking Strategy. London: Sage, Fredrickson, J, M, (1983), 'Strategic process research: questions and recommendations ' Management Review, 8, 4, 565-75, Fulop, L, (1991), 'Middle managers: victims or vanguards of the entrepreneurial movement ', JbwrHfl/ of Management Studies, 2 8, 25-44, Glaser, B, and Strauss, A, (1967), The Discovery of Grounded Theory - Strategies for Qualitative Research. Hart, S, L, (1992), 'An integrative framework for strategy-making processes '. Academy of Management Review, 1 7,2,803-13. Hendry, J, (2000), 'Strategic decision making, discourse, and strategy as social practice '. Journal of Aianagement Studies, 3 7, 7, 955—77, HufT, A, S, (1982), 'Industry influence on strategy reformulation ', Strate^c Management Journal, 4, 3, 119-31, HufT, A, S, and HufT, J, O, (2000), When Firms Change Direction. New York: O.xford University Press, Jarzabkowski, P, and Wilson, D, C, (2002), 'Top teams and strategy in a UK university ' Management Studies, 3 9, 3, 3 55-81, Johnson, G, (1987), Strategic Change and the Management Process Johnson, G, and HufT, A, S, (1998), 'Everyday innovation everyday strategy '. In Hamel, G,, Prahalad, G, K., Thomas, H, and O 'Neal, D, O, (Eds), Strategic Elexibility: Managing in a Turbulent Environment. New York: John Wiley & Sons, 13—27, King, G,, Keohane, R, O, and Verba, S, (1994) Cambridge University Press, Leonard-Barton, D, (1990), 'A dual methodology for case studies: synergistic use of a longitudinal single site with replicated multiple sites '. Organization Science, 1, 3, 248-66, Lyles, M, A, and Schwenk, G, R, (1992), 'Top management, strateg) ' and organizational knowledge structures '. Journal of Managenwit Studies, 2 9, 2, 155-74, March, J, G, (1991) I, 71-87, Miles, M, B, and Huberman, A, M, (1994), Qualitative Data Analysis Mintzberg, H, (1975), 'The manager 's j ob: folklore and fact '. Harvard Business Review, 5 3, 4 9-61, Mintzberg, H, (1978), 'Patterns in strategy formation ' Mintzberg, H, (1989), Mintzberg on Management - Inside Our Strange World of Organizations. New York: Free Press, Mintzberg, H, and Waters,J, A, (1985), 'Of strategies, deliberate and emergent '. Strategic Management Journal, 6, 257-72, Mintzberg, H,, Raisinghani, D, and Theoret, A, (1976), 'The structure of "unstructured" decision processes ' Moran, P. and Ghoshal, S. (1999). 'Markets, firms and the process of economic development '. Nutt, P. C. (1987). 'Identifying and appraising how managers install strategy '. Strate^c Management Journal, 8 , 1-14. Pettigrew, A. M. (1977). 'Strategy formulation as a political process '. Journal of Intei national Management Studies, 8 , 78-87.