The link between organizational strategy and performance management system design
has been examined in numerous studies. Invariably, strategy is conceptualized using
archetypes developed in the 1970s and 1980s. Scholars have increasingly questioned the
wisdom of relying on strategic archetypes that are plainly dated and conspicuously
disconnected from the possibility of firms competing head-to-head, not out of choice but
out of necessity. Cooper (1995) calls such a situation the undertaking of a confrontation
strategy. Using an exploratory research design, this paper draws on nine qualitative case
studies to examine how performance management systems are designed to meet and
support the implementation of a confrontation strategy. Initially six firms, spanning
a variety of what were expected to be mature, highly competitive industries likely to
feature confrontation strategies, were recruited for participation. This initial study was
then followed by a more concentrated examination of one particular industry: the banking
industry. Findings from the total case study sample of nine firms lead to the presentation
of an original table contrasting the unique performance management system designs
associated with the three distinct strategies of cost leadership, differentiation, and
confrontation. In particular, and in contrast to firms pursuing cost leadership or differentiation
strategies, firms with confrontation strategies are likely to feature collaborative
organizational cultures, lean organizational structures, and training and development
programs that focus on developing empowered, multi-skilled teams of self-governing and
coordinating employees. The exploratory intent of the paper, and thus its reliance on
a small sample size of nine organizations, may limit the generalizability of the paper’s
findings. In spite of this limitation, the findings offer opportunities for researchers to move
beyond the exploratory approach presently adopted and empirically test the confrontation
strategy and performance management system linkages proposed. Additionally, practitioners
are likely to benefit from a clearer understanding of the type of performance
management system design needed to support confrontation strategies.
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