A causal model of linkages among strategy, structure, and performance using directed acyclic graphs: A manufacturing subset of Fortune 500 industrials 1990-1998

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Title: A causal model of linkages among strategy, structure, and performance using directed acyclic graphs: A manufacturing subset of Fortune 500 industrials 1990-1998
Author: Chong, Hogun
Abstract: This research explored the causal relationships among strategies , corporate structure , and performance of the largest U .S . non -financial firms using Directed Acyclic Graphs (DAGs ) . Corporate strategies and structure have been analyzed as major variables to influence corporate performance in management and organizational studies . However , their causal relationships in terms of which variables are leaders and followers , as well as the choices of variables to configure them , are controversial . Finding of causal relationships among strategic variables , structural variables , and corporate performance is beneficial to researchers as well as corporate mangers . It provides guidance to researchers how to build a model in order to measure influences from one variable to the other , lowering the risk of drawing spurious conclusions . It also provides managers a prospect of how certain important variables would change by making a certain strategic decision . Literatures from agency theory , transactional cost economics , and traditional strategic management perspective are used to suggest variables essential to analyze corporate performance . This study includes size and multi -organizational ownership hierarchy as variables to configure corporate structure . The variables to configure corporate strategies are unrelated and related diversification , ownership by institutional investors , debt , investment in R &D , and investment in advertisement . The study finds that most of the variables classified as corporate strategy and corporate structure variables are either direct or indirect causes of corporate accounting performance . Generally , results supports the relational model : corporate structure ? corporate strategy ? corporate performance . Ownership hierarchy structure , unrelated diversification , advertising expenses , and R &D intensity have direct causal influences on corporate accounting performance . Size and related diversification affected corporate accounting performance indirectly , both through ownership hierarchy structure . Theoretical causal relationships from agency theory are less supported than those from transaction cost economics and traditional strategic management perspective . Further my study suggests that , in general , good corporate performance in 1990s was mainly achieved by internal expansion through investment in R &D and advertisement , rather than external expansion of firms through unrelated diversification , related diversification , and expansion of ownership hierarchy .
URI: http : / /hdl .handle .net /1969 .1 /58
Date: 2004-09-30

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A causal model of linkages among strategy, structure, and performance using directed acyclic graphs: A manufacturing subset of Fortune 500 industrials 1990-1998. Available electronically from http : / /hdl .handle .net /1969 .1 /58 .

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