Relating Porter's Business Strategies to Environment and Structure: Analysis and Performance Implications

Abstract

This study investigated the relationships of Porter's business strategies to the structures and environments of undiversified firms. It was shown that strategies must be matched with complementary environments and structures to promote success. The strategy of innovative differentiation is most likely to be pursued in uncertain environments and correlates with the use of technocrats and liaison devices. The strategy of cost leadership is associated with stable and predictable environments and correlates with the use of controls. Unfocused strategies make much use of liaison devices. These relationships were more likely to be significant in groups of high-performing firms than in groups of poor performers.