The microfoundations of strategy: empirical explorations under conditions of environmental uncertainty

Abstract

Purpose

Strategy scholars have argued that microlevel behavioral decisions by firms play a disproportionate role in making a firm nimble. Central to this issue is the interplay among several factors, such as actions by individual actors, firm-level decisions and broader changes in the economic environment that lead to a firm being successful in a competitive environment. The purpose of this paper is to offer a theoretical exploration of microfoundations research and subject the idea to empirical analysis using the constructs of customer orientation, competitor orientation and technology orientation as microfoundations of strategy.

Design/methodology/approach

Data collected through a key informant survey of executives were tested through a hierarchical regression analysis.

Findings

The results of the study suggest that the microfoundations of strategy are located more in a firm’s customer and competitor focus, rather than a technological orientation. The findings also suggest that that customer orientation is a significant component of firm-level strategy and needs to be incorporated into decision-making in firms.

Originality/value

This study provides a framework that integrates the structural determinants of firm performance with microfoundations theory to refine our understanding of market knowledge capability.

Citation

Kashyap, R., Mir, R. and Betts, S.C. (2024), "The microfoundations of strategy: empirical explorations under conditions of environmental uncertainty", Management Research Review, Vol. 47 No. 12, pp. 1931-1948. https://doi.org/10.1108/MRR-08-2023-0589