Functional importance and company performance: Moderating effects of grand strategy and industry type

Abstract

The literature suggests that the appropriate combinations of functional importance (i.e., through resource allocations, type of activities) for high levels of company performance are affected by the type of grand strategy pursued by the firm and the firm's industry type. These relationships were examined for 93 industrial firms. Data on functional importance, grand strategy, and industry type were obtained from top executives while financial data were collected from the Compustat data files. The results showed that both grand strategy and industry type moderated the relationship between functional importance and company performance. These relationships were also examined for each grand strategy by industry type cell to provide data for further research.