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The purpose of this study is to provide new insights into the link between market orientation (MO) and strategic performance by disaggregating the MO construct. With a focus on responsiveness, a crucial element of MO, this research explores antecedents as well as outcomes in the strategic business units (SBUs) of MNCs. The decision-making structure of the firm was modeled as a moderator of the link between responsiveness and performance.

Survey data from upper level managers employed by 126 MNC SBUs representing 23 industries were collected.

The key findings indicate that: responsiveness mediates the link between intelligence generation and strategic performance; responsiveness also mediates the link between resource flexibility and strategic performance; and the link between responsiveness and strategic performance is moderated by the SBU's decision-making structure (i.e. centralization).

This study contributes to the conceptual precision of the composite construct MO, and also illustrates an avenue to increase strategic performance. Managerially, it provides managers with prescriptive suggestions for leveraging the value of the elements of MO with respect to the firm's decision-making structure.

Today, long-term success requires firms to sense changes in their environments early and react efficiently to them. Increasing middle managers’ participation in decision-making about market-related and product-related questions has been suggested as one way of enhancing this strategic responsiveness; abandoning formal planning, such as annual budgets, has been another. Yet, empirical evidence on the matter is scarce and conflicting. Drawing on data from Denmark’s 500 largest firms, we show that participation of middle managers in decision-making about new products and markets to serve, in-deed, increases firms’ strategic responsiveness as assessed by a reduction in firms’ downside risk. However, this effect is not a direct one. Nor does it interact positively or negatively with the emphasis put on formal planning as submitted in literature. Our evidence suggests that emphasis on planning mediates the relation between stronger participation of middle managers in decision-making and the increase in firms’ strategic responsiveness. This has implications for ongoing theory building and practice.

The purpose of this paper is to answer the question, “How do international new ventures (INVs) from emerging economies become responsive to the demands of their international customers?”

The authors propose a model of international responsiveness that incorporates founding team experience, international firm experience, international strategic orientation, and investment in international supply chain and test the model using data from 293 INVs from three leading emerging economies: China, India, and South Africa.

Results show that for INVs from emerging economies international strategic orientation mediates the relationship between international firm experience, investment in international supply chain, and international responsiveness. In addition, the authors identify a significant difference in the effects of international strategic orientation on international responsiveness among subgroups of INVs.

Given the specific context of the sample, this study provides unique managerial insights for entrepreneurs planning to internationalize their new ventures from emerging economies.

The paper adds originality and value by extending research on international responsiveness, bridging two disciplines, and using a unique international, multi‐country sample.

The author introduces a strategic responsiveness model that reflects an organization’s ability to sense environmental changes and learn from emergent adaptive responses that attempt to realign organizational activities and gain a better fit with the changing conditions. The author shows in computational simulations how superior strategic adaptation is associated with higher average returns and lower performance risk among firms that compete in the same industry contexts and generate negatively skewed outcome distributions consistent with empirical observations. The model is refined to incorporate an interactive strategy-making process, where experiential insights from decentralized initiatives update forward-looking projections in central planning. The ensuing analysis demonstrates how this adaptive strategy-making approach further enhances the favorable risk-return outcomes. The author discusses these findings and the implications for the study of dynamic adaptive strategy-making processes.

This chapter explores other theoretical explanations to the commonly observed phenomenon of negatively skewed performance outcomes and inverse risk-return relationships in empirical firm data. The analysis conducted in many prior studies have implicated direct causal dependencies between performance and risk, or vice versa, with the possibility of simultaneous two-way relationships that are harder to discern. It is also shown how spurious artifacts deriving from the arithmetic links between mean and variance associate left-skewed distributions with negative mean variance correlations. However, the heterogeneous display of response capabilities among firms that compete in the same industry contexts may provide an alternative explanation for the observed performance characteristics. This is expressed as strategic responsiveness where performance outcomes with high negative skewness and excess kurtosis derive from heterogeneous adaptive processes among firms as they respond to a dynamic environment with different degrees of success. We test these results in different simulated competitive contexts disrupted by major unexpected events and find robust results across different environmental scenarios. The analysis looks at two different response processes, one modeled as conventional adaptive planning following an annual budget cycle, and another modeled as interactive updating where executives have frequent informative budget discussions with operating managers in the firm. The computational simulations show that interactive updating generates outcomes with higher returns and lower performance risk for moderate learning levels and restructuring costs. However, the resulting performance distributions are not as left-skewed as those observed in the empirical data that show higher resemblance to the adaptive planning outcomes.

As multinational corporations are becoming larger and more complex, it becomes increasingly difficult to balance between the need for overall standardization in the multinational corporation (MNC) and the need for local responsiveness. In order to allow subsidiaries to react on challenges and opportunities within their local markets, they should be granted with a certain level of decision-making autonomy. However, this freedom can facilitate a misalignment of activities among the headquarters and its subsidiaries.

This study suggests that subsidiaries should be granted with the autonomy to pursue own activities. There should, however, be limits to their independence, which should be aligned through a dialogue between the headquarters and the subsidiary. This study finds a positive correlation between strategic and operational autonomy and subsidiary performance when these are combined with a strong intra-organizational network relationship. Furthermore, the study argues that within operational autonomy it is important to distinguish between everyday activities that do not need approval from headquarters, and activities that should be decided in collaboration between the headquarters and the subsidiary. Subsidiaries that are operating in technological complex markets should be granted with the autonomy to take advantage of inter-organizational network relationships in order to exploit local knowledge and capabilities. However, this poses the risk of the subsidiaries losing connectivity to the MNC. In order to reduce this risk, the headquarters should combine such initiatives with a strong collaboration with its subsidiaries.

By establishing a strong intra-organizational network relationship, autonomy can have a positive effect on subsidiary performance.

The combined roles of strategic planning and decentralized strategy-making remain an essential issue in strategy research and its resolution has implications for management practice. To this end the current study considers the added effects of adopted leadership style and use of interactive controls and thereby uncovers new interesting insights about the combined strategy-making process. The authors use structural equation analyses to investigate these more fine-grained relationships based on an updated cross-sectional dataset from among the largest companies in Denmark. The analyses find that a participative leadership style drives the application of interactive controls, which in turn has a positive interaction effect on the relationship between strategic planning and corporate performance. A participative leadership style also exerts positive influence on autonomous strategic actions, which in turn has a negative direct relationship to performance, but a positive interaction effect on performance together with use of interactive controls. The authors discuss the theoretical foundation for these intricate relationships and consider opportunities to extract further research insights.

Speed is now a key competitive factor in industry. Responsiveness is a significant component, which can create speed in a system. In the author's previous research four groups of industries were identified with respect to responsiveness characteristics – off‐the‐shelf, safety stock, assembler and customizer. This paper focuses on one industrial sector within the off‐the‐shelf class – the food industry in Thailand – to study responsiveness in depth. A survey was conducted investigating critical areas for performance measurement with respect to responsiveness. A more precise set of critical areas for responsiveness were obtained. The results highlight the importance of planning, sourcing and inventory areas in this sector. Then an in‐depth interview was conducted in 11 case studies. Those three areas identified in the survey were investigated. It was found that there are three methods of creating responsiveness responding by production plan adjustment to customer; responding by production plan adjustment to raw material available level; and responding by providing raw material. Thus, according to the three responding methods, a framework for responsiveness assessment was developed. It also implies that nature of industry, types of stimuli and raw material significantly influence the areas for creating ability to respond.