ENVIRONMENTAL TURBULENCE

The research typology has depicted environments primarily as stable, uncertain, complex, static, dynamic, discontinuous, and turbulent25 and the variability is known as environmental turbulence. Furthermore, strategy is often determined as a result of environmental turbulence.26 We have summarized the levels of environmental turbulence based on the literature descriptions and typology of environmental conditions in Table 12.3.

Environmental turbulence was defined as the rate of change of the environment27 and degree of complexity.28 However, there is a lack of distinction in the literature of whether environmental-turbulence measurements are for business strategies and/or corporate strategies. Some environmental-turbulence measurement tools are future oriented,29 whereas others are past oriented,30 and a third group maintains no clear distinction.31 Typically, strategic management is associated with future developments and issues that may impact the firm,32 whereas competitive management33 is primarily involved with present- and near-future (depending on the industry) strategy. Therefore, a distinction is required when using instruments that measure environmental turbulence. Finally, several theoretical and empirical postulations have suggested that performance is optimized when organizations undertake a careful diagnosis of the environment to assess the levels of turbulence and then decide to respond with the appropriate mode of strategic behavior.34

STAKEHOLDER POWER

The nonmarket environment has an impact on managerial decisions; thus, unraveling the complexities and power exerted by diverse stakeholders has led management into an uncharted managerial landscape that requires a holistic conceptualization (at a meta-level) before generating an appropriate strategic approach. It is argued that the strategic behavior and strategic choices displayed by top management are an outcome of stakeholder power and environmental pressure; therefore, political strategy rests on management's capability to demonstrate effectively an understanding of stakeholder power. Society through stakeholders grants legitimacy to the business firm. Legitimacy and survival of an organization depend on the relationship of management with social and political stakeholders;35 thus, legitimacy grants social and political leverage for a firm when interacting with social and political institutions (i.e., government, NGOs, community-consumer groups, etc.). Therefore, effective and systematic stakeholder management enters the routine managerial domain. Moreover, legitimacy becomes a source of power.36 The power of various interest groups, through a sociopolitical bargaining process, will determine the firm's success in achieving the preferred sociopolitical strategy.37 The success of strategic programs depends on the managerial response to stakeholder demands and the relative power of stakeholders for changes in current actions taken by the firm.38 The relationships between the business institutions, governments, and society generate a corresponding system of stakeholders to whom managers are directly responsible. It is postulated that managerial effectiveness is largely based on the ability to recognize stakeholders, and formulate and implement thoughtful, cohesive strategies.39 Stakeholders are entities who are likely to be influenced by societal pressures as they relate to corporations, corporate decrees, or have a distinct contractual relationship with the corporation; therefore, they have a stake in the corpora-tion.40 Managers may be motivated by corporate self-interest, legal or public pressure, or a legitimate desire to benefit the lives of stakehold-ers.41 Others have suggested that only those who are directly affected by the actions of the firm can be considered as stakeholders of the corpora-tion.42 If a stakeholder has either "power" or "legitimacy," stakeholder management is crucial to the firm.43 Stakeholder management is a strategic tool44 and since government is the primary stakeholder in the regulatory and legislative process,45 success in the market place will largely depend on success in the social and political arena first.46

 
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