Strategic Management as Multi-Contextual Sensemaking in Intermediate Organizations

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Scand. J. Mgmt. 18 (2002) 233}248

Strategic management as multi-contextual sensemaking in intermediate organizations Runolfur Smari Steinthorsson *, Anders Soderholm K
University of Iceland, Faculty of Economics and Business Administration, Oddi v/ Sturlugata, IS-101 Reykjavik, Iceland Umeas School of Business and Economics, SE-901 87 Umeas , Sweden Received 1 June 1997; accepted 1 July 1999

Abstract Traditional strategic theory often provides limited means for dealing with the strategic management problems of organizations operating between societal sectors. This article thus uses the case of three industrial development organizations in developing an understanding of strategic management in organizations that operate under multi-contextual conditions. It is concluded that such organizations lack any clear mandate to act, any sound resource base, or any domain of their own, and that all these have to be created as part of the organizations' strategic management process. The implications of this line of reasoning for the general strategic management process are discussed in the closing section of the article. 2002 Elsevier Science Ltd. All rights reserved. Keywords: Intermediate organizations; Strategic management; Multi-contextual sensemaking

1. Introduction The combination of environmental assessment and goal-oriented implementation is a classical topic of strategic management studies. Normally, the focus is on the assessment of the opportunities and threats that confront an organization, and on the evaluation of strengths and weaknesses in relation to the perceived strategic options. The aim is to pro"t from the opportunities while avoiding the threats. This conception of the strategic management process can thus be described as an externally constrained rational and sequential process of formulation and implementation. * Corresponding author. #354-5254557; fax: #354-5526806. E-mail addresses: rsmari@hi.is (R.S. Steinthorsson), anders.soderholm@hhu.umu.se (A. Soderholm). K 0956-5221/02/$ - see front matter 2002 Elsevier Science Ltd. All rights reserved. PII: S 0 9 5 6 - 5 2 2 1 ( 0 0 ) 0 0 0 3 9 - 7

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R.S. Steinthorsson, A. Soderholm / Scand. J. Mgmt. 18 (2002) 233}248 (

More recently, strategic management has been rede"ned to include an understanding of cognitive, social, cultural and economic rent-seeking aspects. Hence, the theoretical focus has evolved from planning and adaptation to embrace a greater emphasis on the organizational resource situation and other contextually dependent aspects. Strategic management may also include human-based perspectives on the strategic capacity of an organization. Conceptions of external relations have also been subject to theoretical elaboration. Strategic concepts (e.g. goals, environment, markets, technical competence, organizational size) constantly need to be re-conceptualized due to technological development, changes in infrastructure, and organizational disintegration. Increasing organizational collaboration, internationalization and rapid technological development further underline the importance of acquiring a deeper understanding of the scope and depth of organizational and environmental relations. This development has heightened our awareness of the contextual aspects of organizations and accordingly, of their embeddedness. To say that an organization is embedded means that it is regarded as being constructed on multiple levels, ranging from the individual to society at large. That is to say, the organization exists within permeable webs of social, political, cultural and economic conditions. The purpose of this article is to explore and re#ect upon the implications of this organizational embeddedness for the strategic management of organizations. The main issue addressed is how contextual dependency and interrelatedness a!ects the strategic management process in the organization. The discussion is limited to what are known as intermediate...
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