operationalized as an additive 4-items index grounded in work by Gerwin (1993). The
respondents were asked to assess the extent to which four structural firm characteristics
(financial resources, know-how, technical and managerial capacity) hinder short-term
adjustments to strategic choices.
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).
Analysis of covariance (ANCOVA) was conducted to determine whether the four
planning modes differed in terms of productivity, after the effect of the strategic planning
dummy and the effect of firm size (number of employees), capital intensity and industry
characteristics (munificence, dynamism and complexity) as covariates was removed.
Capital intensity was measured as the tangible fixed assets divided by the number of
employees, industry munificence and dynamism was calculated by the procedure
suggested by Keats and Hitt (1988) and industry complexity was calculated by using the
MINL formula (Schmalensee, 1977).