Strategy making and environment: an organizational life cycle perspective

Abstract An organizational life cycle model assumes that organizations go through predictable stages of growth such as inception, growth, maturity and decline. Using a three-stage organizational life cycle model of inception, high growth and maturity, this study investigates the extent to which changes in environmental challenges can be associated with changes in strategy making. Environmental challenges were operationalized using three constructs, namely dynamism, hostility and heterogeneity. The strategy-making process was operationalized using two constructs, namely analysis and innovation. The data were collected from 105 chief executive officers of Canadian companies. Three hypotheses were tested. The results show that organizations tend to perform more analysis and innovation when faced with higher degrees of environmental dynamism, hostility and heterogeneity. It has also been demonstrated that organizations in the high growth stage of their organizational life cycle perform significantly more analysis and innovation when faced with environmental challenges than those in their maturity stages.

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