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DOI: 10.1016/j.rauspm.2017.12.005
Original Article
Strategic configurations and performance: a study in micro and small business retailers
Configurações Estratégicas e Desempenho: um Estudo em Micro e Pequenas Empresas Varejistas
Elói Junior Damkea,, , Fernando Antonio Prado Gimenezb, Joice F. Wendling Damkec
a Universidade Estadual do Oeste do Paraná, Foz do Iguaçu, PR, Brazil
b Universidade Federal do Paraná, Curitiba, PR, Brazil
c Universidade Estadual do Oeste do Paraná, Foz do Iguaçu, PR, Brazil
Received 11 March 2016, Accepted 19 December 2016
Abstract

A significant number of studies advocate the interdependence and complementarity between environmental, structural, strategic and personal variables in strategy formation. There are rare surveys that link these variables with small businesses performance. Combining several dimensions of these variables, this study aimed to verify which strategy configurations composed by the strategy development process, strategy content, entrepreneurial attitude, administrative mode and perceived environmental uncertainty were associated with the performance of small-sized clothing retail businesses. Data collected by survey with 228 companies and investigated by cluster analysis technique revealed two groups/clusters of companies with different configurations and performance levels. The results indicate the relationship of interdependence among variables in explaining the heterogeneity of organizational performance.

Resumo

Um conjunto expressivo de estudos advogam a interdependência e complementariedade entre variáveis ambientais, estruturais, estratégicas e pessoais do estrategista na formação da estratégia. São raros os levantamentos que associam essas variáveis com desempenho de empresas de pequeno porte. Conjugando variáveis nessas dimensões, a pesquisa aqui apresentada objetivou verificar quais configurações estratégicas compostas pelo processo de desenvolvimento da estratégia, conteúdo da estratégia, atitude empreendedora, modo administrativo e incerteza ambiental percebida associaram-se ao desempenho de empresas de pequeno porte do varejo de vestuário. Dados levantados em survey com 228 empresas e investigados pela técnica de análise de clusters, revelaram dois grupos/clusters de empresas com configurações e níveis de desempenho distintos. Os resultados indicam a relação de interdependência de variáveis na explanação da heterogeneidade do desempenho organizacional.

Keywords
Strategy, Configurations, Performance, Small business
Palavras-chave
Estratégia, Configurações, Desempenho, Pequenas empresas
Introduction

Traditionally, investigations into organizational strategy have focused on organizations and their performance, especially those of large size. However, the studies that deal with the relationship between strategy and performance in small firms have intensified, due to the increasing awareness they have obtained in the national and international scenarios (Filion, 2004; Gimenez, Pelisson, Hayashi, & Krüger, 1999; Hervas-Oliver, Sempere-Ripoll, & Boronat-Moll, 2014; Lima, 2001b; Santos, Da, Alves, & Almeida, 2007).

The importance given to the studies of micro and small enterprises arises from the differentiations imputed to this organizational type for several reasons: the increase and representativeness of small enterprises, especially in Brazil, which represents a current research challenge, notably concerning the theoretical generalization of small entrepreneurial firms (Damke, 2012; Whelsh & White, 1981); the strategy is a complex and unique phenomenon throughout the organization (Mintzberg, Ahlstrand, & Lampel, 2000), especially in small firms (Cooper, 1981; Miller, 1987b); a considerable number of studies have shown that most of the theories elaborated for large organizations do not fully apply to small firms because they disregard the behavior of the leader (D’ambroise & Muldowney, 1988); thus, the strategy is influenced by the strategist's cognition, intuition, managerial style, beliefs and values (Jenkins & Ambrosini, 2002; Miller, 1986a; Miller, 1986a, 1986b; Mintzberg & Quinn, 2001; Vieira et al., 2015). From these conditions, it is possible to point out that new and small firms provide a distinct environment for the formulation and implementation of strategy.

The process of strategy formation in small firms, not unlike large ones, is complex (Gimenez, 2000; Jenkins & Ambrosini, 2002; Miller, 1987b; Wang & Shi, 2011). In small firms, it is up to the strategist to understand the formation of strategy as a system formed by several dimensions, such as environmental forces, organizational processes and managerial orientation (Cooper, 1981; Gimenez, 2000).

Considering the studies that highlight the formation and implementation of strategies as a complex and multifaceted process (Harms, Kraus, & Schwarz, 2009; Jenkins & Ambrosini, 2002; Kraus, Kauranen, & Reschke, 2011; Miller, 1987a; Miller, 2011; Mintzberg & Quinn, 2001), it is assumed that the strategy-performance relationship in small firms cannot be characterized by the combination of few attributes, but rather by arrangements of certain organizational characteristics that shape the strategy and produce superior results.

Aiming at a more comprehensive explanation about the strategy formation in small firms and its relationship with performance, it is proposed the configurations approach as a theoretical framework for this study. This approach suggests that organizations are better understood as clusters of variables interconnections, whose elements of environment, structure, leadership, and strategy can combine or interrelate in quantum states or configurations (Meyer, Tsui, & Hinings, 1993; Miller & Friesen, 1984; Miller, 2011), while performance is influenced by the interaction of these configurations (Anhaia, 2010; Bispo, 2013; Damke, 2012; Dess & Davis, 1984; Fiss, 2007; Hambrick, 1983; Miles & Snow, 1978; Miller & Friesen, 1984; Mugler, 2004).

Thus, the present research aims to investigate the presence of strategic configurations in small firms related to the aspects of strategy development, strategic content, adopted administrative mode, entrepreneurial attitude and perceived environmental uncertainty, and their association with performance.

The relationship of these five aspects to performance has not been explored as a whole (Damke & Gimenez, 2014; Damke, 2012; Fiss, 2007; Harlacher & Reihlen, 2014; Miller, 1987b; Miller, 2011; Mugler, 2004; Vieira et al., 2015), leading to incomplete explanations of strategic management. In this sense, it is hoped to contribute with the field of business strategy studies, seeking to explain the process of strategy formation through a combination of procedural, structural, strategic, and environmental aspects. In view of the above, this study seeks to answer the following research problem: Which strategic configurations were associated with the performance of micro and small firms in the clothing retail sector of Curitiba – PR?

Thus, to achieve this objective, the article is structured in five sections including this introduction. In the next section, we present a synthesis of the configurations approach, the central theoretical axis of this study. Next, the research procedures are presented, preceding the section that describes and analyses the results. Finally, the final section concludes the article with final considerations, contributions and suggestions for future research.

The strategic configurations approach

The configurations approach originated from the studies of Khandwalla (1977) and was further developed in more depth by Mintzberg (1979), Hambrick (1983), Miller and Friesen (1984), Miller (1987a), Miller (1987b), Tushman and Romanelli (1995) and Miller (2011). In this approach, understanding about how strategy, structure, leadership, and environment interact in producing results is paramount (Miller, 1987a, 1987b; Miller, 2011).

In this perspective, organizations are marked by a quantum change dynamics, alternating between periods of stability and periods of transformation. In periods of stability, patterns can be identified among common organizational attributes, composed of dimensions related to environment, structure, leadership, and strategy. These dimensions, called by Miller (1987a) as imperatives and widely accepted by the organizational theory, interact with each other to form gestalts (Miller & Mintzbeg, 1983; Miller, 1981), archetypes (Greenwood & Hinings, 1993) or configurations that influence performance (Delery & Doty, 1996; Dess & Davis, 1984; Fiss, 2007; Hambrick, 1983; Harlacher & Reihlen, 2014; Kraus et al., 2011; Miles & Snow, 1978; Miller & Friesen, 1984; Miller, 2011).

Consistent with the configurations approach, it is proposed to combine environmental, structural, procedural, strategic content and strategic aspects as imperatives for designing the strategic configurations of small companies. Thus, the following is a brief description of five theoretical constructs that address these different aspects chosen to guide this study.

Environmental uncertainty

The first dimension proposed for this study, derived from the environmental imperative, is called environmental uncertainty. The uncertainty, a central concept in organizational studies, explains the relationship between organizations and their environments, and therefore, is an intermediate variable in the link between environment, structure, strategy, and performance (Gardelin, Rossetto, & Verdinelli, 2011; Lawrence & Lorsch, 1967; Miles & Snow, 1978; Milliken, 1987). Thus, organizations integrating to a dynamic and highly complex environment, composed of a variety of factors – such as government actions, relations with suppliers, customers and competition (Miles & Snow, 1978) – that are sources of uncertainty, may vary in a continuum from high to low degree of unpredictability. For Hambrick (1983), environmental factors tend to influence organizations in differentiated directions and levels of performance, and each one of the environmental elements tends to influence organizations to certain directions, a perspective that is shared by other researchers (Bluedorn, Johnson, Cartwright, & Barringer, 1994; Gardelin et al., 2011; Gomes, Kato, Becker, & Tortato, 2011; Hambrick, 1983).

Administrative mode

The second imperative proposed for strategic configurations deals with the administrative mode, consistent with the structural dimension. In 1962, Chandler developed a survey of four large companies demonstrating that organizations need to maintain the adequacy between their strategies and structures under the risk that if this condition is not met, performance deterioration will occur. Another classic study that highlighted the connections between performance and structure was made by Burns and Stalker (1961). In a survey of 20 companies in the 1960s, the effects of the external environment on the management and economic performance of companies were evidenced, resulting in two opposite systems of management structure: the mechanical system and the organic system. For four decades after the study by Burns and Stalker (1961), several studies corroborated the results found by the researchers mentioned above: organizations operating in dynamic environments produce better results if their administrative mode is organic. On the other hand, in static environments, mechanical structures are more adequate and produce better performance (Aiken, Bacharach, & French, 1980; Covin & Slevin, 1989; Miller, 1987b; Miller, 2011).

The strategy development process

The third proposed imperative deals with the strategy development process. The strategy development process cannot always be characterized as intentional and planned (Bailey & Johnson, 1996; Damke, 2012; Rocha, Gimenez, & Gimenez, 2008; Vieira et al., 2015), since the strategy is commonly formed under different influences (Mintzberg et al., 2000; Santos, Vieira, & Borinelli, 2013; Walter, Rocha, Hokai, Vidal, & Gimenez, 2010; Whittington, 2002). Thus, for Bailey and Avery (1998), the strategy arises from different processes or dimensions, characterized by these authors as: planning, incremental, cultural, politics, command and forced choice. According to Bailey and Avery (1998), in the planning dimension, the strategy is the result of an analytical, intentional and sequential process. In the incremental dimension, the strategy is formed in an evolutionary and purposeful way, through a process of trial and error. In the cultural dimension, the strategy is formed through the influence of the cultural aspects of the organization, its history, shared assumptions and beliefs. In the political dimension, the strategy is developed through bargaining, negotiation and influences of interest groups internal to the organization. In the command dimension in turn, the strategy is defined and determined by a powerful individual in the organization. Finally, the last dimension is called “forced choice”. In this dimension the strategy is the result of external pressures that limit the organization's ability to choose its directions.

Strategic content

Strategic content is the fourth dimension of strategic configurations, adhering to the strategic imperative, and refers to the positioning of the company in terms of products and markets, specifically; defining the scope of the organization and the direction of competition in particular markets (Bulgacov, 1997; Chakravarthy & Doz, 1992; Gardelin et al., 2011; Vieira et al., 2015).

According to Miles and Snow (1978), companies develop long-term strategic behavior patterns by seeking to align with environmental conditions. Thus, the authors propose four types of generic strategies: defensive, prospective, analytical and reactive.

Gimenez (1998), seeking to synthesize these four types of generic strategies, observes that companies following a defensive strategy seek to maintain a line of products/services relatively stable. Their focus is on a more limited range of products/services than that of its competitors and they try to protect their domain by offering products with better quality, superior services and/or lower prices. On the other hand, companies that adopt prospector strategies seek continually to extend their lines of products/services. They emphasize the importance of offering new products/services in a relatively broader market area. They value being one of the first to offer new products, even if not all efforts are highly profitable. In the analytical strategic positioning, it is common for the company to try to maintain a relatively stable line of products/services while at the same time seeking to add one or more new products/services that have been successful in other companies of the same sector. Finally, the organization that adopts a reactive strategy exhibits a more inconsistent behavior than that of the other ones. It is a kind of “non-strategy,” as these organizations do not risk with new products/services unless they are threatened by competitors. Commonly, the behavior is to expect and respond only when forced by competitive pressures to avoid customer loss and/or profitability.

The model of Miles and Snow (1978) has been used to categorize the strategic content of small firms (Gardelin et al., 2011; Giglio & Onusic, 2013; Gimenez et al., 1999). For Gimenez (2000), the strength of the model lies in the fact that it specifies relationships between strategy, structure and processes in a way that allows the identification of organizations as integrated wholes in interaction with their environments.

Entrepreneurial attitude

The fifth dimension adopted in this study approaches the construct called entrepreneurial attitude, adhering to the leadership imperative proposed by Miller (1987a, 1987b) and which is pointed out by the relevant literature as underlying the performance of SMEs (Harms et al., 2009; Kraus et al., 2011; Miller, 2011; Naman & Slevin, 1993; Wiklund & Shepherd, 2005).

Carland, Carland, and Hoy (1992) proposed a scale called Carland Entrepreneurship Index – (CEI). This scale considers the entrepreneurial attitude as a continuum between values from 0 to 33 points, resulting in three levels: from micro-entrepreneur (0 to 15) to the macro-entrepreneur (26 to 33), passing the intermediate level entrepreneur (16 to 25). The same authors understand that a macro-entrepreneur views his(er) activity as a means of changing the business sector and becoming leader through the growth of the business. On the other hand, a micro-entrepreneur manages a business that should not grow, but that can become a reference in its business context. For this entrepreneur, the business is the source of family income that guarantees a standard of living that fits his(er) expectations. For the macro-entrepreneur, the business is the center of his(er) universe, but for the micro-entrepreneur, the activity is first and foremost a source of income, an important part of his life, but not the main one. According to Carland et al. (1992) and Inácio Junior and Gimenez (2004), many entrepreneurs rank somewhere between these two positions.

Having exposed the dimensions of strategic configurations, the next section seeks to articulate strategic configurations to performance.

Articulating performance through strategic configurations

In this instance, it is possible to promote the articulation between strategic configurations and organizational performance. This relationship, initially defended by Miller and Friesen (1978), Miller and Friesen (1984), was later empirically tested by several works that confirmed the relationship between configurations and performance (Baker & Cullen, 1993; Bispo, 2013; Damke, 2012; Davies & Walters, 2004; Dess, Lumpkin, & Covin, 1997; Fiss, 2007; Hambrick, 1983; Harlacher & Reihlen, 2014; Ketchen, Thomas, & Snow, 1993; Maciel, Reinert, & Camargo, 2008; Miller, 1987a, 1987b).

The relationship between environment, strategy structure and performance, for example, had already been explored by scholars in the area of strategy (Hambrick, 1983; Miles & Snow, 1978). Other studies demonstrating the relationship between firms with entrepreneurial orientation and performance have also been explored (Kraus et al., 2011; Morris & Sexton, 1996; Wiklund & Shepherd, 2005; Zahra & Covin, 2005).

Therefore, it is possible to assume that distinct strategic, environmental, structural and leadership behaviors have the potential to explain the heterogeneity of organizational performance. From this proposition, the present research hypothesis is derived and empirically tested in small organizations of the retail sector of Curitiba – PR: H1: Different configurations related to strategy, environment, structure and leadership are associated with the performance of micro and small firms belonging to the clothes retail sector.

Considering the aforementioned aspects, the dimensions present in the process of strategy formation and their relationship with the performance of the micro and small firms of the clothes retail sector of Curitiba – PR are represented in a schematic way, through Fig. 1.

Fig. 1.
(0.06MB).

Dimensions present in strategy process formation and its relations with organizational performance.

Source: Prepared by the authors.

Having explained the set of proposed constructs of this study, the next section presents the methodological procedures used to reach the problematic of this research.

Research procedures

This research adopted the procedures of a survey as a method to obtain the data. The surveying strategy was implemented with the population of micro and small companies in the clothing retail sector of the municipality of Curitiba, from January to December 2013. From a universe of 1.216 companies registered in the Parana Commerce Board, a sample of 228 micro and small organizations adhered to the study. Although not probabilistic, this sample provided adherence to the sampling criteria established by Hair, Anderson, Tatham, and Black (2005), in which the minimum number of observations per variable must be greater than five.

For the collection of primary data, a previously tested questionnaire was used. This questionnaire was composed of seven stages. In the first stage, the instrument was composed of questions that could characterize the sample: company name, company age, number of employees, position of the interviewee, work time in the company, gender, respondent's age and level of education. In the second stage, 10 of the 25 items originally proposed by Miles and Snow (1978) were used to measure the perceived environmental uncertainty. To measure the administrative mode (third stage of the questionnaire), a scale proposed by Davidson (2005) was used. In order to evaluate the entrepreneurial attitude – fourth stage of the questionnaire – the Carland Entrepreneurship Index (CEI) index was used in the Portuguese version (Inácio Junior & Gimenez, 2004). Then, to identify the content of the competitive strategy (fifth stage of the questionnaire), the typology adopted by Miles and Snow (1978) was applied, using the instrument developed by Conant, Mokwa, and Varadarajan (1990). To measure the strategy development process (sixth stage of the questionnaire), a scale called “Strategy Development Questionnaire – QDE”, proposed by Bailey and Avery (1998) was used.

For performance measurement, a scale presented by Maciel et al. (2008) was adopted. In a seminal study with 130 small companies in the clothes sector, which related strategic configurations to the performance of this segment, the authors developed a scale for performance evaluation of small companies using objective and subjective indicators (Barney, 1996; Canedo & Kruglianskas, 1999; Chakravarthy, 1986; Dess & Robinson, 1984; Gimenez, 2000; Menna & Rossi, 2001; Naman & Slevin, 1993; Venkatraman & Prescott, 1990). The authors, making use of extensive mass of the literature that deals with the measurement of the performance, proposed the following subjective items: (a) performance in relation to the competitors; (b) satisfaction with the investment; (c) sales growth; (d) growth/reduction of the organization's activities; (e) inverted indicator in relation to item d; (f) business success over competitors; (g) financial return; and (h) probability of long-term survival.

The questionnaires used in the survey, their theoretical origins, attributes and scales with statistical validations are represented in Chart 1:

Data analysis was based on univariate and multivariate statistical techniques. This began with the characterization of the final study sample. Next, the normality of the data was evaluated through the Kolmogorov–Smirnov test, visual inspection of histograms, kurtosis and asymmetry.

After analysing the normality of the data, the next step was to validate the measurement scales using Exploratory Factor Analysis techniques. For the validation of the exploratory factorial analysis, the Bartlet, Kaiser Meyer-Oklin (KMO) sphericity tests and the Cronbach's alpha coefficient were implemented in parallel. Once the data suitability tests were carried out, the Exploratory Factor Analysis was applied to evaluate the dimensionality of the interval scales used in the data collection: strategic process, performance and environmental uncertainty, using the method of extraction of the main components associated with the application of Varimax orthogonal rotation.

Then, the cluster analysis was done to allow the clustering of the cases using the non-hierarchical method, K-Means, to identify the clusters and the companies allocated in each one and its relationship with performance. Finally, to characterize the configurations found from the collected data, t and chi-square tests were performed. Specifically, the t-test was used to evaluate the difference of factor means for the clusters found in the study, seeking to identify the variables that were statistically significant or not significant between the factors and between the performances of the configurations found in the study. The chi-square test was used to evaluate the statistically significant differences in the proportions of strategic content categories for the two configurations.

It should be noted that configurations can originate empirically or conceptually (Duberley & Burns, 1993) and both are intended to describe “what” configurations are present in organizations (Fiss, 2007). Therefore, the configurations approach uses the identification of interpretive schemas and the “how” they relate to attributes and structural processes to reveal coherent patterns of organization (Greenwood & Hinings, 1993; Harlacher & Reihlen, 2014). Thus, relationships between variables are not necessarily symmetrical and have a tendency to “form a group” beyond the effects of bivariate interactions (Fiss, 2007). From the premise of equifinality (Miller, 1987a, 1987b), in which two or more organizational configurations can be equally effective in reaching different levels of performance, the clustering/cluster analysis approach is used as the research technique (Fiss, 2007). For this author, methods of regression, analysis of variance, discriminant and cross-sectional, cannot explain the equifinality, since they do not estimate the non-linear relationships, and this limitation made the use of cluster analysis broader for grouping and inter-distinction (Fiss, 2007). This is found in the most recent surveys carried out in Brazil by Anhaia (2010), which revealed configurations associated to the context of reference, content of strategy and performance of SMEs. Another recent study was that of Bispo (2013), which identified different configurations in PMES with greater and lesser dynamism.

After presenting the theoretical and methodological aspects that guided this study, in the following section the analyses and presentation of the results obtained in the research are carried out.

Description and analysis of results

In the first part of this section, the socio-demographic characteristics of the respondents who composed the sample of 228 valid cases are presented. There was a strong female presence as a leader, of the total sample, 169 were women.

As to the general characteristics of the surveyed firms, we sought to show, from the calculation of the averages, the time of existence, number of employees, working time and average age of the managers. Both, newly founded companies with one month of existence and companies over 60 years old were found. However, the majority of these companies were relatively new, with an average of 8.89 years of existence and an average of 5.10 employees per company. The time of experience of the managers, in turn, showed that on average the leaders had 7.36 years of work. Table 1 summarizes the sample characteristics.

Table 1.

General characteristics of the surveyed companies.

Variable  Minimun  Maximum  Average  Standard deviation 
Company years  0.10  60.60  8.89  9.25 
Number or employees  1.00  40.00  5.10  5.91 
Manager's working time  0.10  45.20  7.36  7.68 
Source: Prepared by the authors.

The profile of the sample was characterized, as pointed out in the previous section, and the Kolmogorov–Smirnov data analysis was performed in parallel with the descriptive statistics. In both tests, the study variables were normal presenting a p-value>0.05.

In order to validate the AFE for each of the constructs and to verify if the sample data were adequate to the purpose of the study, the Bartlett sphericity tests were used with significance at the 5% level and the Kaiser–Meyer–Oklin test (KMO), admitting in this instance values greater than 0.60. Furthermore, the Cronbach's alpha coefficient was used to evaluate the reliability of the scales used in the measurement of the constructs of this study. The suitability of the samples with the use of the KMO test was higher than 0.50, suggested by Hair et al. (2005), as well as Bartlet's sphericity tests. The results indicated that the use of the exploratory factorial analysis was adequate for the analysis of the correlated data of the scales.

The internal consistency of the extracted factors, based on the results of the Cronbach Alpha indicator, presented acceptable results for the standards recommended by Hair et al. (2005), since all were higher than 0.70.

After the validations and factorial analyses that identified the factors retained for the analysis, a cluster analysis was performed, in order to allow grouping of the cases. The cluster analysis was implemented in two instances: the first, a hierarchical cluster analysis with the purpose of evidencing the number of clusters; followed by non-hierarchical cluster analysis, by the K-Means method.

Two clusters with distinct configurations were identified: the first cluster, entitled “cluster with higher performance”, comprehended those companies with a superior performance level, totalling 58 observed cases; and the second cluster, this time entitled “cluster with lower performance”, in turn, integrates companies with lower performance level, totalling 170 cases.

As shown in Table 2, from the 58 companies identified with the highest performance, two competitive strategies in particular stood out, respectively in the order of percentage: 48.3% adopted defensive strategies and 43.1% were prospectors. On the other hand, from the 170 companies identified with lower levels of performance, three strategies were evidenced in percentage terms, respectively: 37.1% adopting defensive strategies, 34.1% analytical strategies and only 23.5%, prospective strategies.

Table 2.

Clusters and strategic content.

Cluster  Strategic contentTotal 
  Prospector  Defensive  Analytical  Reactive   
“Higher performance”25  28  58 
43.1%  48.3%  3.4%  5.2%  100.0% 
“Lower performance”40  63  58  170 
23.5%  37.1%  34.1%  5.3%  100.0% 
Source: Prepared by the authors.

After the identification of the two clusters, the test of difference of the means was implemented aiming at the verification of what is significant and not significant between the factors and between the performances of the two configurations. As shown in Table 3, the dimensions linked to the configurational imperatives that produced interactions with organizational performance were thus delineated: entrepreneurial attitude, perceived environmental uncertainty in relation to competitors, environmental uncertainty regarding clients, planning, culture, and forced choice, defensive, prospective and analytical strategies.

Table 3.

Characterization of configurations and their relationships with organizational performance.

Configuration 1 (superior performance)x¯  Configuration 2 (lower performance)x¯ 
Imperatives  Dimensions    Imperatives  Dimensions   
Leadership imperative  (+) Entrepreneurial attitude  26.55  Leadership imperative  (−) Entrepreneurial attitude  16.42 
Environmental imperative(+) Competitors uncertainty  5.32  Environmental imperative(−) Competitors uncertainty  4.82 
(+) Customer uncertainty  4.17  (−) Customer uncertainty  3.43 
Strategic imperative(−) Planning  3.02  Strategic imperative(+) Planning  3.83 
(−) Culture  3.14  (+) Culture  4.64 
(+) Enforced choice  3.93  (−) Enforced choice  3.56 
(+) Defensive  48.3%  (−) Defensive  37.1% 
(+) Prospector  43.1%  (−) Prospector  23.5% 
------------------------------    (+) Analytical  34.1% 
Higher cluster performance5.67  Lower cluster performance5.18 
Source: Prepared by the authors.
Chart 1.

Configurational dimensions and their theoretical bases.

Theoretical origins/illustrative types  Scales/statistics validations  Questionnaire attributes 
Environmental uncertainty – environmental imperative
Burns and Stalker (1961), Lawrence and Lorsch (1977), Hannan and Freeman (1977), Miles and Snow (1978), Miller & Friesen (1984), Milliken (1987)  Miles and Snow (1978)  Predictability degree in relation to suppliers, customers and competitors 
Administrative mode – structural imperative
Burns and Stalker (1961), Mitzberg (1979), Crozier (1964)  Davidson (2005)  Structural configurations: mechanical or organic 
Entrepreneurial attitude – leadership imperative
Kets De Vries and Miller (1984), Mintzberg (1979), Miller (2011), Kraus et al. (2011  Inácio Junior and Gimenez (2004)  Entrepreneurial attitude level: micro-entrepreneur, macro entrepreneur and intermediary entrepreneur 
Strategic content – strategic imperative
Miles and Snow (1978), Porter (1980), Miller and Friesen (1984)  Conant et al. (1990  Strategic content: defensive, prospector, analytical and reactive 
Strategy development process – strategic imperative
Miles and Snow (1978), Porter (1980), Miller and Friesen (1984)  Bailey and Avery (1998)  Strategic process dimensions: planning, incremental, cultural, command and enforced choice. 
SME'S performance
Barney (1996), Canedo and Kruglianskas (1999), Chakravarthy (1986), Dess and Robinson (1984), Gimenez (2000), Menna and Rossi (2001), Naman and Slevin (1993), Venkatraman and Prescott (1990)  Maciel et al. (2008)  Performance in relation of: competitors, investment satisfaction, growth and/or reduction of the organization's activities, business success in relation of the competitors, financial return and probability long-term survival 
Source: Prepared by the authors.

The first cluster identified, called ‘configuration 1 – superior performance’, as already mentioned, totalled 58 observed cases. In micro and small companies from the clothing retail sector, the biggest distinctive factor in configuration 1 – of superior performance – in terms of significant differences of means was the entrepreneurship dimension. The leaders of cluster 1 of higher performance were included in the range of macro-entrepreneurs, since the average score reached in this sample was of 26.55 points, in a scale ranging from 0 to 33 points. On the other hand, companies with a lower level of performance, in this study called ‘cluster 2 – inferior performance’ – presented a median entrepreneurial attitude of 16.42 points, i.e., in the middle range of entrepreneurial attitude proposed by Carland et al. (1992).

Another dimension that produced positive associations with organizational performance was the perceived environmental uncertainty dimension in relation to competitors and perceived environmental uncertainty in relation to the clients, both related to the perceived environmental uncertainty construct initially proposed for this study. In an interval scale ranging from 1 to 7 points (1 – for highly predictable and 7 – for highly unpredictable), as previously described in the methodology of this work, the averages reached in the configuration of higher performance were 5.32 points and 4.17 points, respectively. This particular result reveals that decision makers, in this case the leaders of small enterprises, have a high degree of unpredictability vis-à-vis their competitors and customers. In the lower performance configuration, the level of perceived environmental uncertainty was relatively lower compared to the higher performance configuration. There was less uncertainty about competitors as well as less uncertainty about customers. The values, respectively, were 4.82 points for uncertainty over competitors and 3.43 points for uncertainty over customers.

Another dimension that produced interaction with performance in terms of mean significance was the planning dimension. Relating the planning dimension to performance, the results showed a negative association between planning and performance, that is, less planning in the companies surveyed was associated with higher performance, with an average of 3.02 points. On the other hand, in the configuration with a higher level of planning, there was a lower level of performance, according to the result of 3.83 points.

These results, in particular, point to some relevant nuances in this instance of analysis: in environments with a high level of uncertainty (as evidenced in the results of the higher performance cluster), apparently, it does not make sense for organizations to adopt deliberate planning. The literature has pointed out that in uncertain environments, it is the environment that determines the direction of the company (Gardelin et al., 2011; Oliveira, Terence, & Escrivão Filho, 2008). On the other hand, the presence of the figure of the entrepreneur is greater where the formation of the strategy undergoes greater influence from the environment, and this result is in accordance with the findings of Miller (2011) and Kraus et al. (2011).

This statement is in line with another result found in the study: companies with a higher level of performance, in this case, of configuration 1, in terms of strategy formation process, suffer greater influence from the variable ‘forced choice’ with a score of 3.93 points in configuration 1 – top performance and 3.56 points in configuration 2 – bottom performance. In the condition of forced choice, the strategy is the result of external pressures that limit the organization's ability to choose its directions (Bailey & Avery, 1998; Gardelin et al., 2011; Hannan & Freeman, 1977). Given the above, it does not seem to make sense for small organizations to adopt formal planning processes. On the other hand, organizations with lower levels of perceived environmental uncertainty and, in this study, with lower levels of performance – configuration 2 – suffer less influence from forced choice and, therefore, adopt more formal planning processes.

This relationship between planning in small firms and lower performance levels, although inconclusive and not fully elucidated in field investigations, has been tested by other researchers (Oliveira et al., 2008; Perry, 2001; Rue & Ibrahim, 1998). In a study by Perry (2001) in 156 small American companies, for example, the relationship between formal planning and performance deterioration has been tested and proven. The results, in general terms, have shown that formal planning in these organizations has been inefficient and disrupted with the environmental reality, and have been plastering and shaping the destiny of organizations for directions that are not always compatible with the objectives outlined by the leaders. Similarly, study developed by Oliveira et al. (2008), with 57 small companies from three different economic sectors in Brazil, showed that the formalization of planning did not lead to better levels of performance, environmental turbulence being one of the factors that prevails in the success of these organizations.

Another variable that participated in the strategy formation process was the cultural dimension. In configuration 1, of superior performance, the culture reached a score of 3.14 points, not exerting a strong influence in the formation of the strategy or in the relationship with the performance. As mentioned earlier, the leader figure has established more relevant relationships with strategic direction and performance in this particular configuration. On the other hand, in the lower performance configuration 2, the influence of the manager did not prove to be so preponderant and the influence of the culture, in turn, exerted greater influence in the formation of the strategy. The score of 4.64 points demonstrates this result.

The results showed that for the higher performance configuration, the predominant dimension was the environmental dimension, called “forced choice”, with an average of 3.93 points, followed by the cultural dimension – 3.14 points and planning, with a mean of 3.02 points. On the other hand, in the configuration of lower performance, the predominant dimension in the strategy formation process was cultural, with 4.64 points, followed by the planning dimension – 3.83 points and the forced choice dimension, with 3.56 points.

Regarding the content of the competitive strategy adopted, as pointed out in Table 2, in configuration 1, of superior performance, two specific categories were evidenced. The defensive strategy, with a percentage of 48.3% and the prospective strategy, making a slightly lower percentage, of 43.1%. According to Gimenez (1998), the two most contrasting categories are the prospector strategy, characterized by a high market search and product and process innovation, and a defensive strategy characterized by narrow product/market domains and a very strong emphasis on efficiency. Thus, the result seems to point to a paradox as opposing strategies lead to better performance.

However, if we consider the combination of these two strategic behaviors connected to the figure of the entrepreneur, the results seem to make more sense. The approach that deals with the entrepreneurial construct, which in turn emphasizes entrepreneurial behavior, invariably connects the entrepreneur to innovation (Kraus et al., 2011; Schumpeter, 1934; Stopford & Baden-Fuller, 1994). Thus, prospector behaviors seem justifiable in small firms where the leader exerts a great influbehaviourence on their directions, since one of the central concepts of the entrepreneurship construct argues that one of the elements connected to the figure of the entrepreneur is innovation (Alvarez & Barney, 2007; Covin & Slevin, 1989; Kraus et al., 2011; Lyon, Lumpkin, & Dess, 2000; Miller, 2011).

Defensive behaviors are also justifiable as strategists, under the influence of external pressures, more specifically, in the condition of forced choice (where strategies are the result of external pressures that limit the organization's ability to choose its directions), choose to position their organizations in narrow domains of products/markets and focus on efficiency to their organizations. Complementarily, such behavior is also justified by the level of environmental uncertainty perceived in relation to competitors and customers, one of the evidences also found in the configuration of higher performance, a similar result to the findings of Milliken (1987) and Gomes et al. (2011).

Finally, in the worst-performing configuration 2, three categories of competitive strategy were revealed: defensive strategy, accounting for 37.1%, prospector with 23.5% and analytical, 34.1%. In this instance, organizations with inferior performances have been less prospective and defensive, and more analytical than organizations with superior performances. The participation of analytical strategies ranged from 3.4% in the first cluster to 34.1% in the second cluster. On the other hand, the prospector strategies reduced their proportion from 43.1% to 23.5% and the defensive strategies from 48.3% to 37.1%.

These results also seem to make sense as managers perceive lower levels of environmental uncertainty and lower perceptions of external pressures. Contrary to managers of the higher performance configuration, they do not consider as relevant the environmental variables and do adopt less defensive and less prospector strategic content. Thus, by considering the environment less uncertain and less turbulent, they are more analytical and tend to adopt more formal planning processes.

It should be noted in this instance that the relationship between structure (administrative mode), strategy and environment is not representative. According to the results obtained from the surveyed firms, there were no statistically significant differences in terms of averages in the administrative mode dimension. Although many researchers pointed out important connections between structure, environment and strategy (Aiken et al., 1980; Burns & Stalker, 1961; Miller, 1987b), the structures of the small firms in this study were simple and poorly elaborated, in agreement with Mintzberg (1988) and, therefore, were not associated to performance when combined with the other dimensions of the study.

The specific combinations of the variables that were part of the configurations and that related to the organizational performance in an integrated whole can be better appreciated in Figs. 2 and 3.

Fig. 2.
(0.17MB).

Configuration with higher performance.

Solid lines indicate positive relationships with performance. - - - - - - Dotted lines indicate minor relationships with performance.

Fig. 3.
(0.18MB).

Configuration with lower performance.

Solid lines indicate positive relationships with performance. - - - - - - Dotted lines indicate minor relationships with performance.

It can be seen from Fig. 2 that higher organizational performances are the result of complex interactions between environmental conditions, process, content and strategic behavior of managers. Through Fig. 3, it can be seen that organizations with lower organizational performances are also the result of a set of configurations involving environmental, process, content and strategic behavior of managers but with states that differed from those found in the cluster with the highest performance.

These results indicate that, unlike studies that sought to explain small-company performance based on a reduced number of variables (Damke & Gimenez, 2014; Fiss, 2007; Harlacher & Reihlen, 2014; Miller, 1987b; Miller, 2011; Mugler, 2004; Vieira et al., 2015), the configurations approach allows us to demonstrate that performance varies according to a set of dimensions. In this study, the configurations were based on characteristics of the strategist, strategy formation process, strategy content and environmental context, reinforcing the assumptions of the approach of the configurations.

Conclusions

The objective of this study was to verify the strategic configurations proposed by Miller (1987b), associated with the performance of the strategies, strategic content, entrepreneurial attitude, administrative mode and perceived environmental uncertainty in micro and small companies from the clothing retail sector.

In general, the results reinforced the assumptions of the theory of configurations, i.e., that interdependence relations of variables can operate multidimensionally with the potential to generate effects on the performance of small firms (Baker & Cullen, 1993, Dess et al., 1997, Davies & Walters, 2004, Fiss, 2007, Maciel et al., 2008, Kraus et al., 2011; Hambrick, 1983; Harlacher & Reihlen, 2014; Miller, 1987a, 1987b).

Specifically, the results showed that companies with superior performance had high levels of entrepreneurial attitude and their strategic content was implemented by defensive and prospector strategies. As for the strategy formation process, the strategies suffered a strong environmental presence, with very high levels of uncertainty, which justified the small presence of the formal planning practice in these organizations, as well as its small influence in the formation of the strategy.

On the other hand, companies with inferior performances had a considerably smaller entrepreneurial attitude and their strategic content was less defensive, less prospector and more analytical. As for the process of strategy formation, in this particular configuration, managers did not perceive high levels of uncertainty in relation to their environments and did not suffer from forced choice pressures. Thus, organizations have adopted more formal processes of planning and have suffered a strong cultural influence in the formation of strategies that are possibly disconnected from the environmental reality and, therefore, resulting in inferior performances.

Considering these results, it is worth emphasizing the contributions coming from this study. The first, of a theoretical nature, favors more comprehensive and integrative visions compared to the prescriptive currents, most of them being the base for a search for better performances under atomized perspectives. From the practical point of view, it is understood that the results may bring to the leaders of small companies the development of more effective strategic skills as they face a more comprehensive model of the formation of the strategy and consider several integrated dimensions. As can be observed in the study, the variable with the greatest weight in performance is the entrepreneur's attitude of the strategist. Considering that strategic management in small companies is highly dependent on a leading actor, it is believed that by broadening the knowledge of these actors, better results can be achieved.

Finally, the limitations of the study are listed. As the objective of the research was the search for the integration of most of the different theoretical approaches that relate strategy and performance, it is understood that the approach of the resources and dynamic capabilities could be incorporated to the presented model. During data collection, it was evident that, although small in size, organizations differed in terms of resources and capabilities. In addition, other characteristics of the strategist regarding management styles, cognition and gender, could contribute to better explain the heterogeneity of performance, and, thus, should be incorporated in future studies.

As for the method, new research could be carried out using multi-level quantitative techniques, such as the multilevel statistics used in the Fiss (2007) studies, as well as studies that use qualitative methods for the generation of taxonomies (Maciel, Damke, & Camargo, 2009). The measurement of a complex phenomenon such as the object of this study calls for further studies to reinforce the theoretical body of this approach. Longitudinal studies in turn could also be adopted as a research strategy in the search for stable predictive performance configurations. Such limitations may be considered relevant directions for future research on the relationship of multidimensionality between strategy and performance.

Conflicts of interest

The authors declare no conflicts of interest.

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Corresponding author at: Av. Tarquínio Joslin dos Santos, 1300 – Lote Universitário das Américas, CEP 85851-100, Foz do Iguaçu, PR, Brazil. (Elói Junior Damke eloi.damke@gmail.com)
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DOI: 10.1016/j.rauspm.2017.12.005