2.1. Strategy formulation capacity
Strategy formulation capacity is organizational ability to determine short-term and long-term
objectives, and evaluating the internal and external environments of t
he organization (Watson
and Wooldridge, 2005). Strategy formulation capacity is an information
intensive action, in
which data concerning the organization and its internal and external envi
ronments are
collected as a means to confront the risk and uncertainty present i
n the marketplace (Makadok
and Barney, 2001). Developing this capacity will require more li
kely a high level OLOP as
they are more interested and have a better understanding than low
level OLOP type
organizations in making choices about what information to collect in or
der to assess
effectively their competitive position in the marketplace (Sa
ntos-Vijande et al., 2012).
Specifically, a high level OLOP is more likely to be good at
disseminating and interpreting
information in terms of their implications for setting objective
s and evaluating its
environments (internal and external) (Makadok and Barney, 2001). High le
vel OLOP type
organizations will also be good at storing and retrieving informati
on when required (Cross
and Baird, 2000). As a result, high level OLOPs are expected to d
etermine better-informed
objectives and having better knowledge of their internal and exter
nal environments than low
level OLOPs. Therefore,
H1: Organizations with a high level OLOP will have superior
strategy formulation capacity compared to organizations with a low level OLO
P.