Strategy, Environment and Performance

The central theoretical perspective of this book has been provided by the contingency theory developed by Miles and Snow. According to Miles and Snow, not only is it important to achieve alignment between the internal characteristics of organizations, but a fit between those characteristics and the environment is also critical to organizational success. Miles and Snow (1978, 3) note the demands that this places on organizations at the outset of the book: ‘For most organizations, the dynamic process of adjusting to environmental change and uncertainty — of maintaining an effective alignment with the environment while efficiently managing internal interdependencies — is enormously complex.’ In the introduction to the Classic Edition (as published in the 2003 reprint, xviii) they argue that they were ‘less certain about how consistency across strategy, structure and process contributed to firm success. Eventually, we decided that the concept of fit could be used to explain the dynamics of organizational adaptation and effectiveness.’ In view of the need for fit, in Chapters 4–6, we examined how strategy interacts with key internal characteristics to influence performance. In this chapter, we explore how strategy content, formulation and implementation interact with the technical and institutional environment confronted by public organizations to affect organizational outcomes.