EFFECT OF FIRM LEVEL FACTORS, FIRM STRATEGY, BUSINESS ENVIRONMENT ON FIRM PERFORMANCE

Abstract

Organization operates in an open system. The environment is turbulent and ever changing. Organization is environmental dependent and environment serving. They depend on the environment for resources input and produce goods or service for the consumption by the environment. An organization has to develop competitive strategy to out compete the competitors. Strategy link organization to the environment. To achieve its objective the organization chooses strategies that align them properly with environment. This is aimed at avoiding any mismatch between the organization and the environment. This in turn leads to effect on the performance of the organization. The choice of strategies to employ at a given time is informed by different factors within and without the organization. Different firm’s strategies differ from organization to another which is influenced by the external and internal factors. Major factors include firm and industry factors. There have been conflicting views on which factors are more important than the other in influencing strategy .The firm characteristics view which is supported by resource based view of strategy has dominated in theoretical and empirical literature. The choice of strategy is an important step in the strategy development process. The difference in factors involved in various firms explains the difference in strategy chosen which eventually is reflected by the organization performance which can be measured using different methods.