ABSTRACT
The three dimensions of environment, strategy and leadership are the basis of the dominant strategic management framework (Schendel and Hofer, 1978). Based on Andrews’s (1987) formalization of the concept of corporate strategy, the idea of strategic management emphasizes the process by which the interaction and fit between environment, the organization’s resources and choices, and the nature of leadership, in particular top management’s values, lead to higher performance. These dimensions may be seen as antecedents of performance. In the case of developing countries, can we expect the same relation? In their study of management theory and practice in developing countries, Kiggundu et al. (1983) suggested that those theories in which the organization can behave as a closed system should apply to developing countries. Where the organization cannot behave as a closed system, they found that there were significant differences from what happens in developed countries. As neither strategy nor leadership nor environment can strictly be considered internal to the firm, we should expect differences. In developed countries, much research has been devoted to the bilateral relationships between performance and each of the factors strategy, leadership and environment. Despite thorny methodological issues, related to our ability to build appropriate constructs and measure them properly (Prescott and Venkatraman, 1990), the contingency theory, in particular, which posits congruence between environment and structure as a determinant of performance, has been tested in a variety of situations and circumstances. The congruence of strategy, structure and environment has also received wide support in numerous circonstances (Rumelt, 1991; Venkatraman and Prescott, 1990; Venkatraman and Grant, 1986; among many). Finally, Porter’s early work (1980) has popularized a number of strategies that are supposed to improve performance, while Miller (1996) and Hrebeniak and Joyce (1985) have suggested the conditions of environmental determinism and of strategic choice in which these strategies provide the best performance. Linking leadership to performance has been more difficult to operationalize. Hambrick and Mason’s work (1984) has provided an important lead with the idea of relating demographic characteristics to performance,
and has been joined by numerous followers (Geletkanycz and Hambrick, 1997; Finkelstein and Hambrick, 1995; Westphal and Zajac, 1995; Daily and Dalton, 1992; Reuber et al., 1992). Other significant work has found a fit between strategic choices and leadership profiles (Golden and Zajac, 2001; Michel and Hambrick, 1992; Zajac and Shortell, 1989). Although the importance of each of these factors on firm performance is widely recognized, rarely have all of environment, strategy and leadership characteristics been related, in a large sample test, to performance, though the possibility has been discussed in case research (Andrews, 1987; Schendel and Hofer, 1978). Even more rarely has such research been performed in a developing country setting (Hafsi and Farashahi, 2005; Hoskisson et al., 2000; Sim and Teoh, 1997; Kiggundu et al., 1983). It is to fill such a gap that this research has been conducted and its results proposed here. In this chapter we use a unique set of microeconomic data on a relatively large sample of Cameroonian firms, gathered during the 1992-1995 period,1 to describe the nature of these firms’ institutional and competitive environment, their strategic responses and the characteristics of their top managers. Then we study the relationships that exist between the performance of these firms and three sets of variables describing environment, strategy and leadership characteristics. We show that there are clear firm behaviors that can be described by configurations of these variables, and such configurations explain their performance. In the first section of the chapter a theoretical review is proposed to highlight the strategic management conceptual framework to which we intend to contribute, and the specific contributions of our research. Then, in the second section, the nature of the context within which Cameroonian firms evolve, the generic strategies that they have developed to respond to such a context, and the demographic profiles of the managers who were responsible for their conduct are described. Finally, in the third section these dimensions of context, strategy and managerial characteristics are used to explain Cameroonian firms’ performance.
