Business environment, operations strategy, and performance: An empirical study of Singapore manufacturers☆

Abstract Consideration of the task environment, those forces which are out of the short-run control of management, has been relatively neglected in operations strategy research. The neglect of environmental factors in operations strategy research is surprising when one considers that the fit between environment and organizational capabilities and resources is a central tenet of major stretegic management paradigms. We use a path analytic framework to study the effects of environment on operations strategy selection and performance (self-reported change in profits) for a sample of Singapore manufacturers. We identify strong relationships between environmental factors such as labor availability, competitive hostility, and market dynamism and the operations strategy choices encompassed by competitive priorities. The data also indicate that, when faced with the same environmental stimuli, high performers choose to emphasize different competitive priorities than low performers. In addition to exploring substantive questions about the importance of the environment in explaining operations strategy, this research also demonstrates that environmental variables can provide effective controls for industry effects in multiple industry empirical studies in operations strategy.

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