Since the objective of this article is to compare the relations of vertical fit
mechanisms and firm productivity, we used several items in the questionnaire to assign
companies to one of the four considered firm categories. First, strategic planning efforts
are measured by a dummy variable, which is based on the question whether or not the
company develops a strategic plan that includes the future objectives of the company and
the way they try to achieve them. Firms who said that they do not do this were assigned
to the category of traditional planners. Second, to assign the other firms in our sample, we
performed a deductive two-step cluster analysis (Ketchen and Shook, 1996) based on two
variables indicating the level of top-down and bottom-up efforts during the strategic
planning process. Eight items in the questionnaire were used to construct an additive
index for both vertical alignment mechanisms. While the level of top-down efforts was
measured by the degree in which firm’s HR practices are determined by its competitive
position and previous strategic decisions (e.g. competitive strategy), the level of bottomup
efforts was measured by the degree in which the internal HR system (e.g. available
human capital, competencies and experience) influences the future strategic decisions.
Finally, the categorization procedure resulted in a subdivision of the sample in traditional
planners (n=237), moderate top-down planners (n=133), moderate bottom-up planners
(n=108) and advanced planners (n=80).