Planned patterns of strategic behavior and their relationship to business‐unit performance

Abstract This study examined the moderating role of planning sophistication on the strategy‐performance relationship in 97 manufacturing firms representing 60 different industries. Cluster analysis was used to group the firms according to their strategic orientation. Five groups emerged. Significant differences in performance across selected groups were found establishing a ‘baseline’ strategy‐performance relationship. Strategic orientations emphasizing product innovation or those incorporating ‘efficiency’ and ‘differentiation’ patterns of strategic behavior were associated with significantly higher performance levels than two other groups. The nature of each firm's planning process was then introduced via a two‐way ANOVA procedure to determine if ‘process sophistication’ moderated the strategy‐performance ‘baseline’. Level of planning sophistication was found to significantly moderate the previously established strategy‐performance baseline.