Tuesday, October 2, 2012

GALUNIC D. Charles, HERMRECK Immanuel
Embedding Strategy
INSEAD Working Paper 2012/88/OB

Listed on SSRN's Top Ten download list for: PRN: Applied Ethics (Topic). You may view the abstract and download statistics at: http://ssrn.com/abstract=2155700.  

Business leaders naturally desire company strategy to be understood and accepted by employees, in order to help ensure that the ongoing decisions and behaviours of employees are well aligned with competitive intentions and each other. Yet we know very little about why some members understand and accept the company strategy and others do not, what we call strategic embeddedness. This study uses data from a large sample (60,000-plus) employee survey in a global corporation with over 300 operating companies to explore this question. As part of this survey, employees are asked to confidentially indicate to what extent they understand and accept their company’s strategy. We explore three levels of possible influence: local job conditions (task, teamwork, and education/development conditions), supervisor engagement, and senior management engagement. We examine their independent effects while also examining mediation effects and their relative influence. We find that a) positive and supportive local job conditions, which are more likely when aligned with the strategy, are associated with greater strategic embeddedness, b) supervisors have indirect influence on strategic embeddedness, fully mediated by their influence on local job conditions, and c) senior managers have a disproportionately important role to play when it comes to strategic embeddedness. We question the popular “cascading” model of strategy implementation, where senior management mostly cascades the strategy down the chain of command. We argue that senior management needs to actively push and take responsibility for the dissemination of company strategy, taking their message as directly as possible to employees.