Perceived environmental turbulence and corporate strategy: The case of the UK recession

The impact of the external environment on strategy is a long debate in the “traditional” strategic management theory. In contrast, future studies have a clearer view, having established that the environment is perceived and has a direct impact on how the future is anticipated. The same field has grown significantly, in the last two decades, with regard to how companies should foresight the future, looking into their external environment. However, we observe that there is a lack of retrospective research on how companies have embraced extreme environmental events, surprises, and wildcards which led to crisis with regard to their perception of the external environment and the strategies developed for the future. This study fills this gap with a multimethodological approach, combining survey and archival data, to examine the relationship between the perceived environmental turbulence and corporate strategy in some of the largest UK‐listed companies. We use the recession of the UK economy in 2008 as the key phenomenon to compare the relationship between perceptions of the environment and corporate strategy before the economic recession (2007) and after (2009). With our analysis, we provide evidence of how the environment influences corporate strategy and we show how a wildcard, like the recession, changed the perception of environmental turbulence, which resulted in greater adoption of the risk averse, retrenchment strategies.