The moderating effects of size, manager tactics and involvement on strategy implementation in foodservice

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Hospitality Management 25 (2006) 373–397 www.elsevier.com/locate/ijhosman

The moderating effects of size, manager tactics and involvement on strategy implementation in foodservice Robert J. Harrington,1 School of Hospitality and Tourism Management, University of Guelph, Guelph, Ont., Canada N1G 2W1

Abstract This study examined the effects of firm size and involvement in the strategy implementation process on firm performance. A higher level in total organizational involvement during strategy implementation had positive effects on the level of implementation success, firm profits and overall firm success. High involvement tactics by managers in small and single unit firms were critical to achieving higher overall firm success. For large, multi-unit foodservice firms, higher levels of total organizational involvement positively impacted overall firm performance. This situation was particularly pronounced when foodservice firms used high involvement manager tactics and a high level of total organizational involvement. r 2005 Elsevier Ltd. All rights reserved. Keywords: Strategy implementation; Manager implementation tactics; Organizational involvement; Foodservice; Unit type

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E-mail address: [email protected]. Chef John Folse Culinary Institute, Nicholls State University, P.O. Box 2099, Thibodaux, LA 70310, USA. Tel.: (985) 449-7088, Fax: (985) 449-7089. E-mail: [email protected] (From February–April 25, 2005). 1

0278-4319/$ - see front matter r 2005 Elsevier Ltd. All rights reserved. doi:10.1016/j.ijhm.2005.02.004

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1. Introduction Strategic management has embraced the concept of strategic choice over a sustained period of time (Child, 1972; Okumus and Roper, 1999). Researchers in the hospitality and tourism literature have indicated a need to align internal processes based on the external and internal contexts (Okumus, 2001; Harrington, 2004). This co-alignment is thought to allow firms to more effectively allocate resources crucial to ultimate success and sustainability of the organization (Olsen et al., 1998). A more recent perspective is the creation of a strategic process that provides an appropriate level of control, adaptability to the levels and changes in the uncertainty of the environment, and creates a capability of creativity and innovation (Barringer and Bluedorn, 1999; Bradach, 1997; Dougherty, 1997; Stacey, 1995). An internal process that is presumed to have a significant impact on the ability to successfully implement strategies and ultimately achieve firm success is the strategy implementation process. While a wide variety of frameworks have been developed to specify and describe implementation factors, Okumus (2003) suggests that primary factors of strategy implementation include the external context, the internal context, strategy content, operational processes, and outcomes. Underlying assumptions indicated in all implementation frameworks are that (1) decision-makers should consider multiple factors simultaneously, and (2) successful strategy implementation requires a ‘‘fit’’ or ‘‘coherence’’ between implementation factors (context, content, processes and desired outcomes) with the implementation process (Okumus, 2003). Therefore, at the heart of the implementation problem is for managers to determine the appropriate combination of implementation factors in an organization as well as determining when and if this combination leads to positive outcomes. This study attempts to provide at least some resolution to this problem by assessing the moderating effects of size and involvement on the performance of foodservice firms during strategy implementation.

2. Literature review One way to view the strategy implementation process is an iterative view where the formulation and implementation of strategy occurs through a continuous system of information exchange, processing, and actions. In other words, organizational decision-makers create a process to continually obtain, interpret and act on information through a formal and informal process. This process may include a variety of organizational stakeholders as a top-down, bottom-up, or middle-updown process of implementation, as well as emergent change and readjustment leading through incremental and simultaneous steps of strategy implementation and formulation (Farjoun, 2002; Quinn, 1980). This iterative and holistic approach to the implementation process is used frequently in the hospitality and general business literature (e.g., Harrington, 2004; Mintzberg et al., 1998; Okumus, 2001, 2003). Hence, strategy implementation is defined as an iterative process of implementing strategies, policies, programs and action plans that allow a firm to utilize its

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resources to take advantage of opportunities in the competitive environment. This iterative process allows for the mission, goals and objectives to be fully defined and formulated in advance or to emerge and change during the process. Regardless of the approach used in describing the implementation process, a central theme in the discussion of strategy implementation is the question of who is involved in the process. This idea has been described as involvement (Nutt, 1989), participation (Papadakis et al., 1998), communication (Peng and Litteljohn, 2001), decentralization (Govindarajan, 1988) and coordination (Okumus, 2003). Involvement or participation in strategy implementation can be viewed from a variety of perspectives. One perspective is the need for and an assessment of managers’ involvement during strategy implementation. Nutt’s (1989) work provides a framework for describing manager involvement in the implementation process. He suggests four main types of implementation tactics are used by organizations; each has a varying degree of involvement by managers and other organizational members. Further, firms may utilize multiple tactics when implementing strategies depending on the internal context of the firm, the stakeholders involved, and time constraints at the time of implementation (e.g., Bradach, 1997; Nonaka, 1988). In general, Nutt (1989) found that managers preferred low-involvement tactics but, in most cases, a higher-involvement, intervention-managed process seemed highly desirable. When implementation tactics matched the internal context of the firm, implementation success increased significantly. The analysis illustrated that managers had a tendency to invest too little of their time and that 25% of the cases studied used inappropriate implementation tactics. Following Nutt’s (1989) definition, in this study, implementation success is defined as the level of success in implementing a given strategy, policy, program or action plan. In other words, during the implementation process— was the strategy fully implemented? Was it only partially achieved? Or, was the plan not achieved at all? A second issue of involvement is the depth across the organizational hierarchy. In this study, depth of involvement is defined as the extent to which organizational members from different hierarchical levels of a firm are involved in the strategy implementation process. Depth of involvement, total organizational involvement and average overall involvement will be used as synonymous terms throughout this discussion. Earlier research has indicated a variety of implications and impacts of organizational depth of involvement. For example, Barringer and Bluedorn (1999) found that higher involvement by organizational members from the middle management, lower management and rank-and-file levels of the firm led to greater risk-taking, innovative and entrepreneurial behaviors in organizations. In quick service restaurant chains, Bradach (1997) found that firms use multiple managerial arrangements to achieve divergent goals of control and adaptability. In his study, corporations used both corporate owned and franchise owned units for different purposes. Corporate units achieved a greater degree of control and standardization but lacked direct criticism from internal sources about implementation of new innovations. Franchise units provided a greater ability to serve as devil’s advocates, to provide a critical review of purposed organizational changes, and a flow of new

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ideas from geographically dispersed units. Because the implementation process involves a variety of facets, Schmelzer and Olsen (1994) suggest that involvement by organizational members facilitates gathering support, commitment, information, and increases the likelihood of properly allocating resources. In a recent study by Ritchie and Riley (2004), firms seemed to involve frontline employees and lower-level managers at the unit level to smooth issues related to implementation and to reduce uncertainty from flowing up to higher levels of the organization. Harrington (2004) found that firms achieved higher performance when matching the level of complexity in the external environment with the level and equality of involvement in all phases of the strategic process. As indicated above, involvement has been supported as an important characteristic in how firms deal with the uncertainty or complexity in the competitive environment. And, it appears that higher depth of organizational involvement is a significant factor in providing firms with the ability to facilitate adaptability, create innovations and smooth the implementation of strategic plans and objectives. Therefore, following earlier findings, involvement appears to be an important organizational process that should be in coherence with the internal and external context of a firm. These earlier studies and findings are designed and based on a strategic choice perspective, which remains the dominant perspective in the strategy literature and business school methodology (Okumus, 2003; Stacey, 1995). A more recent perspective is based on the science of complexity theory. The heart of this perspective is the assumption that the future is unknowable, the actions and reactions of individuals or organizations in a large network are not fully predictable, and the continuous reactions are more random in nature than assumed by the strategic choice perspective. Organizational changeability is believed to be based on an informal, internal network that consists ‘‘of self-organizing patterns of connections between people within and across its boundariesy’’ (Stacey, 1995, p. 489). This network is richly connected to allow firms to operate on the edge of complexity and to produce ever-changing patterns based on continuous actions and reactions. When tied to a strategy implementation process, this theory points to the importance of closely connected networks of individuals within and outside the firm to react to environmental change and allow firms to innovate outside of predefined norms. While this perspective questions the ability of management to correctly design or select the appropriate process (as assumed in the strategic choice perspective), it illustrates the importance of involvement by a variety of individuals in the implementation process. Additionally, an important internal consideration in the implementation process is the size of the firm. Size can be conceptualized in a variety of ways but in a foodservice setting an assessment of size is generally related to the number of employees and the number of organizational units. Because the number of employees should have a direct impact on information processing requirements of an organization, larger firms would seem by their very nature to require greater involvement to successfully implement strategy. Researchers have also suggested that firm size increases the level of heterogeneity in functional areas of the firm, increases

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the dispersion of specific knowledge across the firm, and creates increased vested interests by organizational stakeholders (Cloudhury and Sampler, 1997; Nutt, 1989). Schmelzer and Olsen (1994) indicate restaurant managers perceive larger firm size (both numbers of employees and units) as an environment of greater uncertainty. Managers’ perception of the environment had an impact on the process of implementation utilized by restaurant chains in this 3-case study. A second measure of size with implications on the internal process is the number of organizational units. In many cases, larger foodservice firms are composed of multiple, geographically dispersed business units. Each geographically dispersed unit operates in a different competitive environment. These units may be corporate owned, franchised or some other ownership structure. This network of dispersed firms creates a separation of connectivity across time and space, which has implications on organizational and manager involvement in the implementation process. Therefore, as a second measure of size, larger foodservice firms can be made up of multiple, geographically dispersed units with a variety of stakeholders retaining diverse and, in many cases, conflicting vested interested (Bradach, 1997; Parsa, 1999). Ashmos et al. (2002) argue that for implementation to be successful in today’s complex, business environment, participation and involvement are required throughout the organization. They propose ‘‘complexifying’’ internal processes as a managerial rule-of-thumb to match an increasingly complex business environment. Harrington (2004) and others (Okumus, 2004; Olsen et al., 1998) have indicated that the foodservice industry is both complex and dynamic. Because a major objective of strategic management is to increase firm performance, this situation suggests that managers in the foodservice industry need to consider the internal context to compete in the current uncertain external environment. Thus, based on earlier research, this study contends that the size of the organization, the level of manager implementation involvement, and total organizational member involvement during implementation are important potential interacting factors impacting coherence and, ultimately, organizational success.

3. Hypotheses 3.1. The influence of size on performance The basis for introducing the structural factor of firm size as a direct predictor of performance is derived from earlier research spanning more than 3 decades (Blau, 1970; Pugh et al., 1969). While a variety of longstanding theories suggest varying implications of size (Blau, 1970; Hannan and Freeman, 1984; Rumelt, 1974), a consistent assumption is that larger firms increase market share and achieve economies of scale, thus, achieving increased market power, slack resources, and performance (Bourgeois, 1980; Keats and Hitt, 1988). More recently, Harrington (2004) found that larger firm size (measured as the number of full time equivalent employees) was the most significant predictor of firm performance across 18

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industries (including foodservice firms). Therefore, in general, it is hypothesized that larger size will have a positive relationship with firm profits and firm success. H1a: larger (smaller) foodservice firms will achieve higher (lower) firm performance. Earlier research also indicates that larger firms will increase the level of specialization across the firm and, as size in foodservice is many times derived through operating autonomy of geographically dispersed units, larger firms will create greater problems of inertia due to greater difficulty in communicating across space, time and diversity in stakeholder interests (Cloudhury and Sampler, 1997; Keats and Hitt, 1988). Because the nature of larger, more dispersed foodservice firms creates an internal environment that is more difficult to communicate and create involvement across the firm, firms with more employees and more units are likely to be less successful in fully implementing strategy. This contention is supported in earlier research investigating the structure and actions of small and large competitors (Chen and Hambrick, 1995). Hence, it is hypothesized that firm size will have a negative relationship with the ability to successfully implement strategies. Formally stated: H1b: larger (smaller) foodservice firms will achieve less (greater) success in fully implementing strategies. 3.2. The influence of manager involvement and depth of involvement on performance The concept of manager involvement in the implementation process is not a new one. Nutt (1989) indicated that four main tactics are used in strategy implementation, which varies by manager involvement level and who else is brought into the process. The lowest-level involvement tactic is characterized as ‘‘Edict’’ can be described as a traditional top-down approach where managers issue directives for plan adoption with a minimal amount of involvement. The directive can take the form of a memorandum utilizing position power or inducements to ensure execution of requirements. While still requiring a low level of involvement, a second tactic ‘‘Persuasion’’ utilizes an approach with the delegation of the development of ideas to technical staff or consultants who use strategic directives to guide the planning and ultimately sell the plan. This tactic is used when an idea needs to be ‘‘sold’’ to internal stakeholders. The most desirable tactic in Nutt’s (1989) study was ‘‘Intervention’’. In this high involvement tactic, authority to make strategic changes is delegated to managers who convey the importance of the change and identify plausible causes of deficiencies to other organizational members. Managers remain in control of implementation but they may utilize committees for sounding boards during the process. The fourth and highest level of involvement tactic is ‘‘Participation’’. Managers stipulate the strategic needs of the firm but delegate the development of action options to the organizational group. This approach is deemed appropriate when implementation requires utilizing specific knowledge across the firm, satisfying vested interests, or ensuring commitment by a variety of organizational stakeholders. Nutt’s (1989) work indicates that higher involvement

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by managers is highly desirable. Given the nature and structure of firms in the foodservice industry, this study hypothesizes that firms using higher involvement manager tactics will achieve higher performance. H2a: foodservice firms utilizing higher manager involvement tactics will achieve higher firm performance. Other researchers have suggested that the uncertainty and complexity of the external context is a primary driver of the desirability for greater involvement by both managers and other organizational members throughout strategy implementation (Ashmos et al., 2002; Ritchie and Riley, 2004; Harrington, 2004; Schmelzer and Olsen, 1994). The foodservice environment has been characterized as uncertain, complex and dynamic, and therefore it seems that it would be desirable to increase total organizational involvement in strategy implementation. Hence, it is hypothesized that there will be a positive relationship between total organizational involvement and firm performance. Additionally, following the logic in the above research and arguments, it is hypothesized that foodservice firms using both high manager involvement tactics and high depth of involvement will achieve higher performance. H2b: foodservice firms utilizing higher total organizational involvement in strategy implementation will achieve higher firm performance. H2c: foodservice firms utilizing both higher total organizational involvement and higher involvement manager tactics in strategy implementation will achieve higher firm performance. 3.3. The moderating influence of size and involvement on performance Nutt (1989) suggested that higher involvement by managers in implementation was desirable at least 75% of the time but high involvement tactics were used only 25% of the time by managers in his study. Nutt’s (1989) findings parallel the ideas of Nonaka (1988), which suggest managers need to be more involved and ‘‘champion’’ ideas throughout the process to increase the successful completion of projects and objectives. Therefore, given the complex nature of the foodservice industry, size should not have a moderating effect on the relationship between higher involvement by managers in foodservice firms and higher firm performance. In other words, the 2way interaction between firm size and manager tactics will be non-significant. H3a: foodservice firms that utilize higher involvement manager tactics in strategy implementation will achieve higher performance regardless of firm size. Because higher total organizational involvement requires getting everyone from top management to frontline employees involved in strategy implementation, it is hypothesized that there will be a significant moderating relationship between firm size and total organizational involvement on performance. Greater involvement is

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projected to better utilize specific knowledge across the firm, satisfy vested interests, and ensure commitment by a variety of organizational stakeholders. The need to address these issues is likely to be magnified in larger organizations, and therefore, this situation indicates that larger firms who have higher levels of total involvement are likely to achieve higher performance. Formally stated: H3b: larger foodservice firms that use higher total organizational involvement will achieve higher firm performance.

4. Methods 4.1. Sample and procedures The sample was randomly selected from the 2003 members of the Louisiana Restaurant Association (LRA). Members in this sample were mailed a pre-tested, survey instrument that was administered following a Dillman (2000) procedure. The initial mailing went out to 1600 LRA members, which included a cross section of restaurant industry segments. Comparable to other surveys of this population (Dev and Olsen, 1989; Jogaratnam, 2002), this procedure resulted in 424 responses (26.5% response rate). Due to missing responses in the returned surveys, 33 surveys were removed from the analysis resulting in a useable response rate of 24.4% (391 surveys). 4.1.1. Survey instrument The majority of the items on the survey instrument contained intact scales used in previous studies (Barringer and Bluedorn, 1999; Brews and Hunt, 1999; Harrington, 2004). The newly created items were those related to Nutt’s (1989) work describing the four management implementation tactics. To assess the impact of these new items, two pretests using foodservice industry executives were performed. The final instrument received minor changes based on the feedback from these pretests. A copy of the final instrument is provided in the appendix. 4.1.2. Profile of respondents The survey allowed respondents to indicate 1 of 8 categories that best describe the firm’s primary food service segment. Of the 391 reporting complete information, 18.1% indicated quick service, 18.5% casual dining, 12.6% mid-scale, 14.1% fine dining, 6.3% food or foodservice purveyor, 5.2% retail food business, 2.6% on-site foodservice, and 22.6% other. Descriptions of firms in the other category indicated a wide range of business types supporting the foodservice industry including accounting firms, law offices, landscaping firms, educational facilities, foodservice related associations, etc. The size of responding firms ranged from 1 employee to 50,000 employees in the organization. The mean was 554 employees with a standard deviation of 3732. Single unit firms made up 60% of respondents and 40% were multi-unit company or franchise operated firms. The type of firm ownership for the respondents were 19.6%

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sole proprietorship, 14.7% partnerships, 56.6% private corporations, and 9.1% public corporations. Respondents were asked to indicate their highest level of formal education. Nine percent had a high school education, 22.9% had completed some college, 3.7% had graduated from a technical program, 2.6% had an associate’s degree, 44.6% had a bachelor’s degree, 13.3% had master’s degrees, and 4.1% indicated other. Descriptions in the other category included Ph.D., doctorate, or juris doctorate. Finally, respondents were instructed to indicate their current official title. Of the 391 responses, 23% indicated owner or partner, 29.5% CEO or president, 16% senior executive (VP, COO or CFO), 20.5% general manager or director, 5% sales or marketing, 3% food and beverage area, and 3% controller. 4.2. Involvement measures Self-report measures were used to assess involvement in strategy implementation. For this study, involvement was assessed as manager implementation tactic, and average total organizational involvement. Manager implementation tactics were described following Nutt (1989) ranging from Edict, Persuasion, Intervention and Participation. These descriptions ranged from lowest manager involvement to highest manager involvement and were coded using an ordinal scale of 1–4 (with ‘‘4’’ representing the highest involvement tactic). The description of each tactic is provided in question 2 of the survey instrument in the appendix. The second measure of involvement was based on the work of Barringer and Bluedorn (1999) and assessed level of involvement in the implementation of strategy across five organizational levels: chief executive officer, top management, middle management, lower-level management, and frontline employees. Respondents rated involvement at each organizational-level using a 10-point scale. The calculated level of involvement used in this study was the average score across these 5 levels of the organization. Cronbach’s alpha indicated a reliability of .67 for this 5-item scale. 4.3. Performance measures Performance was assessed using three separate items in the instrument. First, respondents were asked to rate how successful they perceived the most recent strategy implementation process using a 10-point scale (1 ¼ not at all successful and 10 ¼ very successful). Second, respondents ranked their firm relative to peers on profitability. And third, respondents ranked their firm relative to peers on overall performance/ success. Firm rankings of profits and overall firm performance were completed using a 5-point scale (1 ¼ lowest 20%, 3 ¼ middle 20%, and 5 ¼ top 20% compared to peers in your primary foodservice segment) (e.g., Brews and Hunt, 1999). 4.4. Other measures 4.4.1. LN FTEs Size has been conceptualized in a variety of ways in the literature: total sales, total assets, number of employees and operational units (Bradach, 1997; Harrington,

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2004; Keats and Hitt, 1988). Because the number of employees should have a direct impact on information processing requirements (which is central to the involvement arguments in this study), one measure of size was operationalized as the natural log of total employment for each firm. The natural log of total employment was used to constrain the range for consistent and meaningful statistical analysis (Hart and Banbury, 1994). 4.4.2. Unit type Organizations were categorized as single unit or multiple unit firms as a second measure of firm size. These choices were coded for hypothesis testing as 1 for single unit firms and 2 for multi-unit firms. 4.5. Data analysis SPSS was used to run statistical tests using linear regression. The correlation between variables and descriptive statistics are presented in Table 1. Two-way interactions were plotted using mean values for each group. Based in the natural log of FTEs, firms were divided at the mean with small firms grouped as those below the mean and large firms as those at or above the mean. Firms were also divided into two groups by units (single unit firms or multiple unit firms), low/high involvement manager tactics, and low/high average depth of involvement. Firms in the low manager involvement group used either the Edict or Persuasion tactic, and firms in the high manager involvement group used either the Intervention or Participation tactic. Firms in the low overall involvement group had an average level of involvement below the total mean; firms in the high overall involvement group had an average level of involvement at or above the total mean.

5. Results Tests of hypotheses were run using a 2-step process of moderated regression. The restricted model (step 1) was completed first to assess the direct effects of the natural log of FTE employees, single or multi-unit firms, manager implementation tactic, and average level of involvement across the firm. The full model (step 2) included 2way interactions of predictor variables based on hypothesized relationships. Separate tests were run using three measures of performance: level of implementation success, firm profits compared to peers, and overall firm success compared to peers. Results of all tests are provided in Table 2 along with the change in F and change in R2 to evaluate any significant predictive ability with the addition of the 2-way interactions. Tests supported hypothesis 1a. In step 1, the coefficient for firm size, assessed as the natural log of employees, had a positive relationship with firm profits (X ¼ :23; po:001) and overall firm success (X ¼ :20; po:001). Hypothesis 1b received marginal support. The step 1 coefficient was non-significant but the step 2 coefficient provided a negative relationship between firm size and level of implementation success at the po:10 level (X ¼
:58).

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Table 1 Correlationsa and descriptive statistics Variable

Mn

SD

1

2

Natural log of employees Units Average Perceived Volatility Average Perceived Complexity Manager Tactic Average Overall Involvement Implement success

3.65 1.39 5.78

1.72 .49 2.38

.46** .08

.01

4.89

1.72

.18**

.03

.41**

2.81

1.20

.07

.13*


.01

.01

7.35

1.93

.11*

.05

.08

.08


.06

7.15

1.85

.11*

.09

.04

.05


.01

.36**

3.55

1.18

.30**

.22**


.02


.01

.10

.18**

.33**

3.80

1.07

.27**

.22**


.03

.01

.09

.11*

.27**

Profitability Overall perf/ success a

3

4

5

6

7

8

.64**

Level of significance as follows: **po.01, *po.05 (2-tailed).

Hypothesis 2a received partial support. Manager implementation tactic had no direct, significant relationship with level of implementation success. In step 2, manager implementation tactic had a significant positive relationship with firm profits (X ¼ :48; po:05) and overall firm success (X ¼ :51; po:05). This indicates as foodservice firms utilize tactics with increasing manager involvement—firm profits and overall success increase as well. In step 1, foodservice firms that utilized higher average involvement in strategy implementation achieved higher implementation success (X ¼ :36; po:001), profits (X ¼ :15; po:01), and overall success (X ¼ :09; po:10). This finding provided strong support for hypothesis 2b. The results in step 2, which tested the hypothesized interaction between manager tactics and level of overall involvement, indicate significant relationships with firm profits (X ¼
:39; po:10) and overall firm success (X ¼
:42; po:05). It is not clear from the direction of this interaction whether or not the hypothesized relationship in hypothesis 2c is supported. The level of significance was higher for the interaction between high or low manager tactics and high or low overall involvement on overall firm success (po:05); therefore, this interaction was plotted to determine whether or not the relationship in hypothesis 2c was supported. The plotted interaction is shown in Fig. 1. Fig. 1 indicates that when managers utilize implementation tactics with low involvement, overall firm success is lower regardless of high (mean performance

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Table 2 The impact of involvement during strategy implementation on performance

Variable Constant LN FTE employees Units (single or multiple) Mgr tactic Level of involvement LN FTE  unit LN FTE  Mgr tactic LN FTE  level Unit  Mgr tactic Unit  level Mgr tactic  level F R2 DF DR2 df ***

po:001;

**

DV: Implementation success

Profits

Step 1

Step 2

Step 1

Step 2

Step 1

Step 2

.05 .05 .01 .36***


.58+ .03 .07 .45** .55+
.03 .30 .05
.31
.08 5.99*** .15 .91 .01 10, 332

.23*** .10 .08 .15**

.37 .04 .48* .08
.37 .26
.07
.32 .53
.39+ 5.27*** .15 1.12 .02 10, 311

.20*** .11+ .08 .09+

.20 .24 .51*
.09
.66* .65**
.02
.65** .73*
.42* 4.91*** .14 2.42* .04 10, 312

13.62*** .14

4338

po:01; *po:05;

11.49*** .13

4317

Overall success

8.43*** .10

4318

+

po:10 (2-tailed). All betas are standardized.

¼ 3.66) or low (mean performance ¼ 3.75) average organizational involvement. Under the conditions of high average involvement and manager tactics that utilize high involvement (mean performance ¼ 3.96), foodservice firms increase overall firm success. From this analysis, it can be concluded that hypothesis 2c was partially supported. As discussed in the section above on tests of hypothesis 1a, significant direct effects provide some support for hypotheses 3a and 3b. Additionally, significant interaction relationships are indicated in step 2 with overall firm success as a dependent variable: LN total employees  mgr tactic (X ¼ :65; po:01), unit type  mgr tactic (X ¼
:65; po:01), and unit type  level of involvement (X ¼ :73; po:05). To assess whether the direction of these interactions supports hypotheses 3a and 3b, interactions are plotted in Figs. 2, 3 and 4. As shown in Fig. 2, smaller firms that utilize high involvement manager tactics achieve higher overall firm success (mean performance ¼ 3.79 compared to 3.49 for small firms with low involvement tactics). Large firms achieve higher overall firm success regardless of low or high involvement manager tactics (mean ¼ 4.08 and 4.03, respectively). Not surprisingly, these relationships were consistent when comparing overall firm success for single unit or multi-unit firms and low or high involvement tactics (Fig. 3). These findings provide support for hypothesis 3a. In Fig. 4, the relationship between unit type (single or multi-unit) and low or high average involvement on overall firm success is provided. The plot of this interaction

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4.80

Overall Firm Performance/ Success

4.60

4.40 High Average Involvement 4.20

4.00 3.80 3.60

Low Average Involvement

3.40 3.20

Low

High Manager Implementation Tactics (Low or High Involvement)

Fig. 1. Manager implementation tactics and average involvement on overall firm performance.

indicates that single unit firms achieve the same average level of overall firm success regardless of whether the implementation process is either low or high organizational involvement. But, multi-unit firms achieve higher overall firm success when a high level of average involvement is used in the implementation process. This interaction supports hypothesis 3b, which indicated that larger firms utilizing higher involvement should achieve higher firm performance. 6. Discussion While basic approaches to strategy implementation have been proposed for more than 20 years (i.e. Bourgeois and Brodwin, 1984), the strategy implementation literature in both general business and hospitality has been criticized for progressing little beyond basic theoretical models with very few quantitative studies assessing the relationships proposed in earlier implementation models (Harrington, 2004;

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4.80

4.60

Overall Firm Performance/ Success

4.40

High Involvement Manager Tactics

4.20 4.00

3.80 3.60 Low Involvement Manager Tactics 3.40 3.20

Small

Large LN FTE of Firm Employees

Fig. 2. The number of firm employees and manager implementation tactics on overall firm performance.

Okumus, 2003; Parsa, 1999). Earlier implementation frameworks have been devised with the assumption of the need for coherence between the external context and internal context as well as coherence between organizational processes involving planning, resource allocation, communication, organizational members and controls. This study examined the effects of firm size and involvement in the strategy implementation process on firm performance. The results suggest that size and involvement matter. Larger foodservice firms achieved higher firm performance on average. This relationship supports an underlying assumption in the general strategic management model of a linkage between firm size and performance (Keats and Hitt, 1988) as well as recent research in hospitality (Harrington, 2004). While firm size had a positive impact on profits and overall firm success, it had a negative impact on the level of success in implementing strategies across the foodservice firm. This finding

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4.80

4.60

Overall Firm Performance/ Success

4.40

High Involvement Manager Tactics

4.20 4.00 3.80 3.60 Low Involvement Manager Tactics 3.40 3.20

Single

Multi-unit Number of Units in Firm

Fig. 3. The number of units and manager implementation tactics on overall firm performance.

supports the inertial model, which suggests that organizational structure and size work to constrain the ability of firms to adapt and change (Keats and Hitt, 1988). The findings in this study support the idea that organizations use a variety of manager tactics in the implementation process. Further, it supports Nutt’s (1989) finding that higher involvement manager tactics allow firms to achieve higher performance. Foodservice firms using higher involvement manager tactics achieved higher firm profits and overall firm success. But, contrary to Nutt’s (1989) contention, higher involvement manager tactics did not have a direct impact on the level of successful implementation of strategies across firms. High involvement tactics by managers in small and single unit firms were critical to achieving higher overall firm success. This finding supports contentions by Nonaka (1988) and others (Mintzberg, 1973; Nutt, 1989) that assert organizational leaders and entrepreneurs can have a profound impact on firm success serving as champions of change. This process may be accomplished through a traditional

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4.80

4.60

Overall Firm Performance/ Success

4.40

High Average Involvement

4.20 4.00 3.80

3.60 3.40

Low Average Involvement

3.20

Single

Multi-units Number of Units in Firm

Fig. 4. The number of units and average involvement on overall firm performance.

top-down management style achieved from substantial position power held by the organizational leader or through a process of selling the idea and/or need for change based on past deficiencies or changes in the competitive environment. A higher level in total organizational involvement during strategy implementation had positive effects on the level of successful strategy implementation, firm profits and overall firm success. This finding supports Ashmos et al.’s (2002) contention that firms should increase involvement in organizational processes to achieve success in today’s complex business environment. Foodservice firms that ensured more organizational levels were more fully involved during implementation achieved greater all around success. This situation was particularly pronounced when foodservice firms used high involvement manager tactics combined with a high level of total organizational involvement. These findings also support Okumus’ (2003) suggestion that firms should develop an implementation process that includes diverse

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cultures, work groups and networks. This more diverse inclusion is implied in a process of higher total organizational involvement. The analysis of the level of organizational involvement and manager tactics in this study is based on managers’ perception of the process used in the organization. The amount of organizational and manager involvement in this process can be both formal and informal in nature. The formal process allows firms to operate efficiently while the informal process allows for potential innovation and change based on the complex interaction of the internal and external environment (Stacey, 1995). Therefore, a by-product of this higher involvement process may be an increase in fundamental creative systems across the firm. The creative process is tacit or subconscious in nature and may allow firms to informally deal with uncertainty, surprise or create the continuous ability to innovate (Dougherty, 1997). A higher depth of involvement and high involvement by management appears likely to create an internal environment where these issues are brought into the process and are perceived as being valued by the organization. This high involvement process allows for the utilization of diverse opinions, specific knowledge and breaks down barriers created due to divergent objectives or self-interest. For large, multi-unit foodservice firms, higher levels of organizational involvement positively impacted overall firm success. But, high involvement manager tactics alone did not have an impact on overall firm success for large, multi-unit firms. The opposite situation was shown for small or single unit firms. High involvement by managers positively impacted firm success; whereas, high depth of involvement had no real effect on firm success in small or single unit firms. These relationships provide support for the idea that there is no one best way to implement strategy and that the most appropriate process depends on the situation. While Harrington (2004) found that firms matched the level of environmental complexity with the level of involvement in the strategic process, the relationships in this study point to the need to match who is engaged in the implementation process with the internal context. Specifically, a match depends on the size and number of units in the foodservice firm. A key contribution of this study is providing evidence of the relationship between foodservice firm size and involvement in implementation by managers and other members in the organization along with their moderating impacts on firm performance. The findings in this study support the need for coherence between these variables and that greater firm success is dependent on the internal context of the foodservice firm. The implementation process can be greatly enhanced through a process of higher involvement but who and how this process takes place depends on the size of the firm. The selection of an appropriate involvement tactic or depth based on firm size may allow these firms to make the best use of time and other scarce resources. 6.1. Study limitations In considering these findings and their implications, it is important to recognize several potential limitations. The first limitation is whether the findings are

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generalizable to foodservice firms outside of Louisiana or to other types of organizations. It seems reasonable to assume that the issues that concern foodservice firms in Louisiana are not very different from other foodservice firms or similar issues in other types of hospitality organizations. A second limitation in this study is the potential for social desirability response bias. Given the overwhelming support for teambuilding and cross-functional team involvement in organizational problem-solving as a management technique over the past 15–20 years, it is not out of the realm of possibility that responding managers would have a tendency to present themselves or organization in a favorable, ‘‘teamoriented’’ light. As with most studies testing hypotheses based on collected data, these findings as based on ‘‘what people say they do’’ and ‘‘people frequently say one thing and do another’’ (Stacey, 1995, p. 492). Although this bias issue has received considerable attention over the past 25 years, researchers have questioned this biasing effect and suggest that ‘‘social desirability is not a source of y bias in the measurement y of perceptions of organizations’’ (Spector, 1987, p. 441). Further, because the purpose here is to assess relative differences between large and small firms rather than population parameters, the impact of any potential bias will either create enough ‘‘noise’’ to eliminate significant differences or be fairly consistent across respondents and not impact reported relationships. A third and related limitation is the measure of performance used in this study. The sample of foodservice firms used in this study is a mix of private and public firms operating in Louisiana. Because of this, secondary data was not available for the entire sample, and all performance measures are self-reported. Given the large percentage of independent foodservice firms operating in Louisiana, the exclusion of all privately held firms would not be representative of the population of firms in Louisiana and would eliminate the possibility of generalizing these findings to any foodservice population. Researchers have supported the use of self-reported performance measures and indicate that informed managers provide a reliable view of organizational processes and the firm task environment including perceptions of firm performance (Brews and Hunt, 1999; Powell, 1992). Finally, respondents to this study were asked to choose the implementation tactic that was used during the most recent strategic process in their organization. Thus, responses to this study may represent the most recent tactic but this does not rule out the use of multiple tactics, which may depend on the timing or nature of the strategic action plan. Further research should assess the frequency of manager tactic by type and the possible use of multiple tactics simultaneously.

7. Conclusion For managers, the heart of the strategy implementation problem is to determine the appropriate combination of factors that will lead to successful firm outcomes. This study is an attempt to provide empirical evidence in this regard as well as to provide a step beyond largely theoretical approaches to strategy implementation by considering the direct and moderating effects of firm size, total organizational

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involvement and manager implementation tactics on firm performance. The findings in this study provide support for arguments of the need to consider organizational structure and organizational processes to achieve higher performance. In general, when the number of firm members or the number of dispersed units increases, it becomes increasingly difficult to successfully implement strategies, policies, programs and action plans. As foodservice firms bring more individuals into the implementation process, the potential for success in implementing strategy increases as well. Higher involvement by managers in the implementation process has a positive relationship with firm profits and the overall success of the firm. This higher general involvement by managers or other organizational members may simultaneously reduce uncertainty as suggested by the strategic choice perspective (Govindarajan, 1988) and create a network of connectivity to provide innovation and adaptability capabilities as suggested by the complexity theory perspective (Stacey, 1995). In any case, the interaction of size with both measures of involvement has interesting implications for industry professionals and future research. It is crucial that foodservice executives and managers have experience and understanding in how implementation factors interact. This study is an empirical step forward in this regard. Firm size (measured either as the number of employees or units) interacted with manager tactics and total organizational involvement to impact the overall success of the firm. The findings indicate that small foodservice firms reap benefits when using Intervention and Participation manager tactics during strategy implementation. This finding illustrates the importance of the selection of managers. Managers of small firms who are motivated and have the capacity to take on a high involvement role when implementing strategies, policies and programs are more likely to have a significant impact on the success of the firm. The motivation and capacity of being highly involved in strategy implementation may be tied to a strong internal locus of control. Managers with a strong internal locus of control actively seek task-related information, see a relationship between their actions and outcomes, and expect rewards to be a function of their own efforts (Govindarajan, 1988). These attributes may motivate managers to ensure a high level of personal involvement in strategy implementation, and this motivation appears particularly important to firm success in small foodservice organizations. For large foodservice firms, greater total organizational involvement provides substantial benefits but Intervention or Participation manager tactics combined with higher total organizational involvement provide the greatest benefits. Because larger foodservice firms are either geographically dispersed with multiple units or dispersed in terms of a greater diversity in specific knowledge areas across the firm, it stands to reason that higher total organizational involvement will create a connected network that smoothes the implementation process and provides for input and change to address greater uncertainty. It also appears likely to increase the ability to successfully implement the correct strategy, policy or program in the right way, at the right time and in the right place. We can speculate that higher manager involvement combined with greater total organizational involvement may increase the success of the firm for at least two reasons, and the implication of the findings

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from this study can be synthesized with the concepts of complexity theory and innovation literatures. First, as Stacey (1995) suggests, greater total organizational involvement addresses a need for networks of connectivity by individuals with a resulting system of creativity and innovation. And secondly as Dougherty (1997) suggests, greater involvement by managers addresses a need for a culture of and commitment to the innovation process by organization managers. Therefore, total organizational involvement provides a system or process for increasing the likelihood of adaptability and creativity (Barringer and Bluedorn, 1999), and higher involvement tactics used by management could instill a commitment to the process of innovation and the value of tacit knowledge by the organization. While these concepts are only implicit in the findings in this study, these conclusions are grounded in previous theory (Dougherty, 1997; Nonaka, 1988; Stacey, 1995). Future research should provide additional evidence of how and when implementation factors interact to benefit or detract from firm performance. Simultaneous testing of implementation factor variables using structural equation modeling could provide significant empirical evidence of direct, intervening and interacting relationships. A profiling approach to an analysis of the implementation process could be useful and provide important information on whether the process is predominately top-down, bottom-up or a middle-up-down type of process. In addition, while the issues in Louisiana foodservice firms are not expected to be different from other areas in North America, a larger and more diverse sample in other areas of the US or the globe would allow these findings to have more external validity. Finally, a longitudinal approach could provide substantial information on how the implementation process changes and is adapted over time.

Appendix Organization-level strategic process Please check the item that best represents your organization’s behavior. Thank you. 1. During the past year, have you been involved in any part of what could be termed the strategic process? Yes _____ No ____ 2. Place an X by the description that most closely represents processes used by manager (or team) in implementation of strategy during the most recent strategic process in your organization. a.____ Manager used directives issued to operations people calling for plan adoption. b.____ Manager delegated implementation of strategic plan to ‘‘technical’’ staff or ‘‘consultant.’’

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c.____ Manager initiated the planning by stipulating strategic needs and the area of action; then, delegated development of the option to a group of sub-managers to implement. d.____ Manager delegated authority to address strategic needs and decisions on specific areas of action to a group of sub-managers to implement, then monitored the process. e.____ Other (Briefly Describe): __________________________________________ 3. How successful do you perceive this strategy IMPLEMENTATION process to have been? Not at all successful 1 2 3 4 5 6 7 8 9 10 Very successful (circle one number) 4. Using the scale provided below, please circle a number that indicates to what extent each of the following categories of employees were involved in the strategy implementation. No involvement Full Involvement a. Chief Executive Officer 1 2 3 4 5 6 7 8 9 10 b. Top Management 1 2 3 4 5 6 7 8 9 10 c. Middle Management 1 2 3 4 5 6 7 8 9 10 d. Lower-level Management 1 2 3 4 5 6 7 8 9 10 e. Frontline Employees 1 2 3 4 5 6 7 8 9 10 5. Check a category that best describes your organization’s primary food service segment. a.____ Quick Service Restaurant b.____ Casual Dining Restaurant c.____ Mid-scale Restaurant d.____ Fine-dining Restaurant e.____ Food or Equipment Purveyor to Food Service Firms f.____ Grocery/Retail Food Business g.____ On-site Foodservice (Management contract or self-operated) h.____ Other (describe):______________________________________ Food Service Segment Environmental Impacts: Please rate your firm’s primary food service segment according to the environmental factors listed. 6. Volatility in sales, on an annual basis

No volatility 1 2 3 4 5 6 7 8 9 10 High volatility

7. Volatility in earnings, on an annual basis.

No volatility 1 2 3 4 5 6 7 8 9 10 High volatility

8. Rate of change in technology. Low rate 1 2 3 4 5 6 7 8 9 10 High rate

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9. Rate of change in government Low rate 1 2 3 4 5 6 7 8 9 10 High rate regulation. 10. Rate of product/service obsolescence.

Low rate 1 2 3 4 5 6 7 8 9 10 High rate

11. Degree of pressure to research and develop new products/services, applications, etc.

Low pressure 1 2 3 4 5 6 7 8 9 10 High pressure

12. Degree of difficulty in forecasting industry trends/ developments/changes.

Little difficulty 1 2 3 4 5 6 7 8 9 10 Very difficult

13. Degree of technological complexity.

Low complexity 1 2 3 4 5 6 7 8 9 10 High complexity

14. Degree of complexity in the general business environment

Low complexity 1 2 3 4 5 6 7 8 9 10 High complexity

15. Degree that your actions directly affect your competitors

Low degree 1 2 3 4 5 6 7 8 9 10 High degree

16. The competitors in your market compared to other industries.

Relatively low 1 2 3 4 5 6 7 8 9 10 Relatively high

17. Firm Performance Measures: Please circle a number in each line, which best indicates how your organization currently compares to peers in your primary food service segment. Characteristic a. Overall profitability/ financial performance b. Stock price performance c. Overall firm performance/success

NA

Lowest 20%

Next 20%

Middle 20%

Next 20%

Top 20%

1

2

3

4

5

1 1

2 2

3 3

4 4

5 5

18. Approximately how many employees (in full time equivalents) does your organization have? ______________(total employees in the organization) 19. What is your current ‘‘official’’ title in your organization? ___________________________

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20. Check the category below that most closely describes your organization structure. a.____ Single Unit – Independent b.____ Multi-unit – Company Operated c.____ Multi-unit – Franchise Operated 21. Check the category that best describes the type of ownership of your firm. a.____ Sole Proprietorship b.____ Partnership c.____ Private Corporation d.____ Public Corporation 22. What is your highest formal education level? a.____ High School b.____ Some College c.____ Graduate of a technical or apprenticeship program d.____ Associate’s Degree (Major):________________________ e.____ Bachelor’s Degree (Major):_________________________ f.____ Master’s Degree (Major):__________________________ g.____ Other (describe):_________________________________

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