Strategic Orientation of Small to Medium-sized Firms: The Effects of Manager Values on Strategy and Performance Antii Haahti

This paper presents the results of an exploratory study of strategic decision making by small to medium sized firms in Belgium, Finland, and Switzerland. Chief executive officers in clothing, food, and electronics industries were surveyed to test a model wherein business performance (i.e., actual return on earnings; subjective assessments) was shown to be a direct function of both corporate strategy (i.e., scope of operation; distinctive competencies) and business strategy (i.e., actions with regard to product, market, subcontracting, short term and long term financial choices) and an indirect function of contextual constraints (i.e., intensity of competition; stability of task environment) and manager values. Particular emphasis was placed on manager values, a little studied area in strategic decision making but particularly relevant to small to medium sized firms where entrepreneurs have primary influence over decision-making. Hypotheses were tested with a system of simultaneous equations, where distinctive competencies were modelled as a latent variable and all other variables were treated as composites of manifest variables.