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Journal of Business Research 55 (2002) 301 310

The strategic implementation process


Evoking strategic consensus through communication
Molly Inhofe Raperta,*, Anne Velliquetteb,1, Judith A. Garretsonc
a
Department of Marketing and Transportation, Walton College of Business Administration, University of Arkansas, 302 Business Administration
Building, Fayetteville, AR 72701, USA
b
Department of Marketing, David Eccles School of Business, University of Utah, Salt Lake City, UT 84112, USA
c
Department of Marketing, E.J. Ourso College of Business Administration, Louisiana State University, Baton Rouge, LA 70803, USA

Accepted 1 March 2000

Abstract

Effective strategy implementation is predicated on the assumption that functional areas within the firm have a basic understanding of the
strategy. Termed strategic consensus, this concept refers to the extent to which intraorganizational perceptions converge on shared
understandings of strategic priorities. The present study provides an initial exploration of consensus, supporting the viability of frequent
vertical communication as a means by which strategic consensus may be enhanced. The performance implications of vertical communication
and consensus reaffirm the important roles that frequent communication and shared understandings play in the implementation process.
Specifically, when vertical communication is frequent, strategic consensus is enhanced and organizational performance improves, as
evidenced by higher levels of net operating income, gross revenues, and growth in net revenues. And, in firms where the marketing
executives interpretation of strategy aligns with the chief executive officers (CEO) perspective (i.e., strategic consensus), organizations are
rewarded with higher levels of both marketing and organizational performance. D 2001 Elsevier Science Inc. All rights reserved.

Keywords: Strategy implementation; Communication; Consensus; Marketing

It is often assumed that a firms corporate strategy is strategic implementation (Noble, 1999). Termed strategic
clearly mandated, accurately understood, and immediately consensus, this concept specifically refers to the shared
accepted by organizational members (Mintzberg and understanding among members of an organization about
Waters, 1985; Guth and Macmillan, 1986). Yet, the actuality strategic priorities (Bowman and Ambrosini, 1997).
is that strategies consist of ongoing, ephemeral decisions Three themes guide the present research. First, renewed
that may be interpreted in a diverse set of ways. A key task interest in the process by which firms formulate, dissemi-
for top management is to consistently and accurately com- nate, and implement strategic decisions reaffirms the impor-
municate the strategic priority of the organization to func- tance of assessing the degree to which intraorganizational
tional-level members for implementation. However, the strategic perceptions are congruent (Schwenk, 1995; Noble,
process often breaks down, resulting in a lack of alignment 1999). Second, marketing serves as a critical element in the
between the top executives view of the strategy and the strategic implementation process via the inherent boundary-
views of other organizational members (Hambrick, 1981). spanning, coordinating roles emphasized within the market-
Organizational members who do not have a clear, common ing domain. Effective strategy implementation may be
understanding of strategic issues create a major barrier to predicated on the assumption that the marketing department
has a basic understanding of the strategy (Bonoma, 1984;
Vandenbosch and Weinberg, 1994). Third, extant theory in
communication may provide insight into the mechanisms by
* Corresponding author. Tel.: +1-501-575-7707; fax: +1-501-575-8407.
E-mail address: mrapert@comp.uark.edu (M.I. Rapert). which shared understanding is increased. Research suggests
1
Tel.: +1-801-581-7714. that frequent interaction/communication linkages lead to
2
Tel.: +1-225-388-8684. shared intraorganizational perceptions, values, and beliefs,

0148-2963/02/$ see front matter D 2001 Elsevier Science Inc. All rights reserved.
PII: S 0 1 4 8 - 2 9 6 3 ( 0 0 ) 0 0 1 5 7 - 0
302 M.I. Rapert et al. / Journal of Business Research 55 (2002) 301310

Fig. 1. Communication, strategic consensus, marketing performance, and organizational performance.

as well as higher levels of performance (Johnson, 1992; (Dess, 1987; Dess and Priem, 1995; Homburg et al., 1999;
Chattopadhyay et al., 1999; Rapert and Wren, 1998). Knight et al., 1999), consensus as shared perspectives (Dess
Accordingly, we will explore vertical communication lin- and Origer, 1987; Bourgeois, 1980), and more. Despite
kages as a means by which strategic consensus and perfor- these variations, researchers are resolute in their belief that
mance are enhanced. Performance implications are assessed understanding consensus and the consensus-performance
at both the functional and organizational levels. These link is critical in the area of strategy implementation (Priem,
relationships are depicted in Fig. 1. 1990; Homburg et al., 1999; Noble, 1999).
We argue that a salient limitation of previous research is
the tendency to disregard the heterogeneity in definitions of
1. Understanding strategic consensus consensus. The results of many studies are not directly
comparable due to ambiguities and variations in defining
Although researchers may disagree on a single definition and operationalizing this construct. At this period in the
of consensus, general agreement does exist as to the evolution of consensus research, finer distinctions in the
importance of consensus in the strategic implementation operationalization of consensus are necessary when hypoth-
domain (Dess, 1987; Wooldridge and Floyd, 1989; Noble, eses are generated in which consensus affects performance
1999). Consensus is considered to be critical in resolving (Dess and Origer, 1987). Dess (1987) concurs that future
differences, promoting a unified direction for the firm, research should delimit the variables and contexts surround-
increasing strategic commitment, and enhancing the suc- ing the consensus domain.
cessful implementation of a given strategy (Dess and Priem, Accordingly, we explicitly define consensus as shared
1995). Further, several researchers propose that greater understanding about strategic priorities. This does not imply
levels of consensus are directly related to higher perfor- any personal agreement or commitment to these priorities.
mance (Bourgeois, 1980, 1985; Dess and Origer, 1987; This definition is not only grounded in prior research efforts
Wooldridge and Floyd, 1989, 1990; Noble, 1999). More (Bowman and Ambrosini, 1997), but allows for direct
recently, consensus has been designated as a critical variable comparisons of the results with other research efforts that
in understanding effective strategic management and orga- depict consensus in a similar manner. Shared understanding
nizational performance (Dess and Priem, 1995; Phelps et al., is viewed as a key dimension of consensus by Dess (1987),
1996; Bowman and Ambrosini, 1997; Iaquinto and Freder- Wooldridge and Floyd (1989, 1990), and Noble (1999). It is
ickson, 1997; Knight et al., 1999; Noble, 1999). also similar in nature to the concept of consensus as shared
Ironically, no consensus has clearly emerged as to how perspectives (Dess and Origer, 1987; Bourgeois, 1980).
consensus should be defined, examined, and incorporated The trend in researching consensus has been to move
into strategic theory. Prior research has looked at several away from single-link research and toward multiple-link
different characteristics and contexts of consensus including research (Dess and Origer, 1987; Dess and Priem, 1995;
the degree or level of consensus (Bourgeois, 1980, 1985; Bowman and Ambrosini, 1997; Iaquinto and Frederickson,
Dess, 1987; Wooldridge and Floyd, 1989), the scope of 1997). Given the diversity and ambiguity of prior research,
consensus (Wooldridge and Floyd, 1989), the content of the purpose of moving toward multiple-link research is to
consensus (Wooldridge and Floyd, 1989; Dess and Priem, provide a more parsimonious and generalizable framework
1995), consensus as a process (Amason, 1996; Marino, (Dess and Origer, 1987). Prior research generally focused on
1996; Knight et al., 1999), consensus as an outcome (Dess the relationship between consensus and performance via
and Origer, 1987; Dess, 1987; Wooldridge and Floyd, 1989; two-variable, correlational studies (Dess and Priem, 1995).
Dess and Priem, 1995), consensus as shared understanding Recent research suggests a more complex relationship,
and commitment (Dess, 1987; Wooldridge and Floyd, 1989, requiring examination of additional variables in order to
1990; Noble, 1999), consensus as shared understanding further specify the factors, which may be related to con-
(Bowman and Ambrosini, 1997), consensus as agreement sensus (Bowman and Ambrosini, 1997). These additional
M.I. Rapert et al. / Journal of Business Research 55 (2002) 301310 303

variables may be important in understanding the conflicting Organizations should not be viewed as objective, a priori
results of previous research in this area, ultimately providing structures which merely contain communication networks.
richer theoretical models and more robust empirical results Instead, organizations are social collectivities, which are
(Dess and Priem, 1995). Given the call for multiple-link constituted by the communicative actions of organizational
research, the present study examines vertical communication members. As an interpretative system, an organization is a
as a means by which strategic consensus may be evoked. network of intersubjectively shared meanings sustained
through social interactions. It is this social structuring of
the organization which produces and conditions the stock of
2. The role of communication in the strategic organizational knowledge among members (Ritti, 1986;
implementation process Walsh and Ungson, 1991). Kersten (1986, p. 141) maintains
that organizations consist most fundamentally of a body of
It has been argued that most research in the strategy knowledge, a culture, a normative reality, which is created
domain has placed too much emphasis on the formulation of through the day-to-day interaction among organizational
strategy when the real challenge lies in implementation members. This symbolic reality suggests which beliefs,
(Wooldridge and Floyd, 1989; MacMillan and Guth, 1985; goals, and attitudes are desirable, appropriate, and accepta-
Noble, 1999). As Noble (1999) notes, even the best-for- ble as truth.
mulated strategies can fail to produce superior performance Individuals engage in communicative interactions to
for the firm if they are not successfully implemented. develop a meaning for the environment in which they
Further, examination of implementation should not be operate (Smircich and Calas, 1987). The interaction pro-
limited to the perspective of the chief executive officer vides a crystallization of the realities of the organizational
(CEO). Indeed, previous research proposes the perceptions process, ultimately allowing for a socially constructed view
of solely the CEO are not the best link to understanding of the organization which is shared among the communicat-
strategic implementation (Wooldridge and Floyd, 1989, ing members. It is through these interactions that the
1990; Bowman and Ambrosini, 1997; McDermott and continual creation and reaffirmation of interpretations
Boyer, 1999). The shared understanding of middle manage- emerge (Brown, 1986; Putnam, 1986). This communication
ment and those at the operational level to the top manage- provides top managers with a mechanism for transmitting
ment teams strategic goals is of critical importance to new ideas and values. Although the flow of information
effective implementation (MacMillan and Guth, 1985; from the corporate to the functional level is a continuous
McDermott and Boyer, 1999). Top management is often and difficult activity, it is also a vital instrument for estab-
dependent on their functional management teams for tech- lishing identification with the mission and goals of the
nical knowledge and functional skills. It is imperative, then, organization (Pace and Faules, 1989). A clear articulation
that shared understanding be achieved not only at the top of corporate strategy serves as a boost to employee cohe-
management level, but at the functional level as well. siveness through a better understanding of priorities and
Adequate communication with functional managers about strategic objectives (Higgins and Diffenbach, 1989).
the reasons for the selected or sponsored strategy is key to
gaining this shared understanding (MacMillan and Guth,
1985; McDermott and Boyer, 1999). 3. Reviewing the model: communication, consensus, and
Strategy changes in most companies do not come performance
about as unified or organized as most would expect.
Strategy often evolves incrementally in response to inter- The intraorganizational communication among top and
nal and external pressures (Quinn, 1981). Top executives functional area managers is perhaps the most significant
therefore, must actively manage the incremental processes informal process within an organization that determines the
within the organization to create underlying bases for success or failure of the firms implementation efforts
consensus. Building understanding requires frequent and (Noble, 1999). Within an organization, the marketing func-
constant communication when strategic change evolves tional area is networked with other parts of the organization
one step at a time. Many times, elaborate strategies never via communication linkages. It is through these commu-
get implemented because managers rely on the rationality nication channels that the marketing function learns of the
of their formally derived strategies and their inherently strategic orientation of the firm. Communication, then,
powerful positions to cause the rest of the organization to becomes a vital part of strategy implementation in that
respond. Conversely, it has been argued that successful parties who are linked through frequent communication
managers work hard to build the seeds of understanding, are involved in a process through which they come to
identity, and commitment through constant integration of converge on commonly shared meanings, attitudes, and
strategy formulation, dissemination, and implementation beliefs (Monge and Eisenberg, 1987; McDermott and
(Quinn, 1981). We argue that an important key to build- Boyer, 1999).
ing these seeds is communication between and among top Interpersonal research also confirms that ongoing com-
and functional-level management. munication between parties generates a web of shared
304 M.I. Rapert et al. / Journal of Business Research 55 (2002) 301310

awareness (Stephen, 1986). Awareness will be strongest relationships then serve as mechanisms for developing,
when the organizational members are connected by direct organizing, and disseminating knowledge. Performance is
interaction, resulting in a crystallization of beliefs (Friedkin, enhanced when organizational mechanisms ensure that there
1984). Furthermore, frequent communication is likely to is a continual, free exchange of information between firm
result in a common set of understandings about the organi- members (Rapert and Wren, 1998). Thus, we hypothesize:
zation and its environment, which also increases the knowl-
Hypothesis 2a: Frequent communication between mar-
edge of the strategic orientation (Pfeffer, 1981). If strong
keting and top management will have a positive impact
communication networks are developed such that interac- on functional performance.
tion across organizational levels is frequent, these linkages
have a direct impact on strategic perceptions developed Hypothesis 2b: Frequent communication between mar-
keting and top management will have a positive impact
within the organization.
on organizational performance.
While strategic consensus has received only minimal
attention from the functional perspective, research in inter- Much of the strategic consensus literature supports the
nal marketing provides a relevant rationale for examining value of a collective mindset during implementation efforts
strategic consensus. The importance of internal marketing (Noble, 1999). The most common assumption of this
arises from the realization that in order for a firm to be research is that strategic consensus should be necessary
successful, the organization must educate its own employees for maximized organizational performance (Noble, 1999).
before turning to the customers (Gronroos, 1985; George, Organizational learning continuously takes place, centering
1990). One of the most fundamental issues, which should be on the core ideas of how the company can best be
marketed to employees, is the organizations strategic prio- described, the direction it is headed, and its distinguishing
rities. Following the dissemination of strategic information, competitive advantages (Lukas et al., 1996). When top
organizational members engage in tactical support of the management clearly articulates these strategic issues, the
strategy. The perception of the functional manager is impor- internal crystallization of the basic identity of the organiza-
tant in that how a strategic issue is intrepreted affects a wide tion carries positive performance implications at both the
range of daily decisions in an organization, including the functional and organizational levels of the firm (Downey,
general allocation of resources to particular activities (Dut- 1987; Noble, 1999).
ton and Duncan, 1987; Thomas and McDaniel, 1990). The Both levels of performance should be enhanced when
organizational learning literature provides a parallel indica- employees attain a common understanding of the means
tion of the impact of strategic consensus by recognizing that by which strategies may be achieved (Bourgeois, 1980;
organizations progress through the sharing of knowledge, Dess, 1987; Noble, 1999). This common awareness
beliefs, or assumptions (Shrivastava, 1983). This learning results in the reduction of uncertainty through a shared
covers many domains, including knowledge of the strategic view of the expectations and perceptions of organizational
core of the organization. Accordingly, we hypothesize that: pursuits (Hrebiniak and Snow, 1982). A thorough under-
Hypothesis 1: Frequent communication linkages be- standing of strategic priorities is essential to a groups
tween the marketing functional area and top management willingness to assume responsibility for actions contribut-
will have a positive impact on strategic consensus. ing to the strategy. By inducing a cohesiveness among
organizational members, consensus strengthens the
Of course, communications impact within the firm is not emphasis on an overriding strategy and enhances perfor-
limited to its influence on strategic consensus. Communica- mance (Hrebiniak and Snow, 1982; Diamond, 1988).
tion occupies a pervasive, important role within organiza- Without a shared awareness and common perception of
tional life. Indeed, communication forms the basis for what the meaning of a strategy, there is the potential that
the organization is and determining how members should individual managers might put forth efforts that are not
behave (Putnam, 1986). Not only is vertical communication in harmony. Thus, behavior in the organization would be
among top and functional-level managers perhaps the most unfocused, resulting in lower performance (Noble 1999).
significant key factor in determining the success or failure of Accordingly, we hypothesize that:
the firms implementation efforts (Noble, 1999), it also may
play a direct role in overall firm performance (Rapert and Hypothesis 3a: Strategic consensus will have a positive
Wren, 1998). Without ongoing communication within the impact on functional performance.
firm, behavior would be random and disorganized, resulting Hypothesis 3b: Strategic consensus will have a positive
in poor performance (Skivington and Daft, 1991). Organi- impact on organizational performance.
zations where employees have easy access to management
through open and supportive communication climates tend As mentioned above, the positive benefits to be gained
to outperform those with more restrictive communication via enhanced strategic consensus are not limited to
environments (Rapert and Wren, 1998). As Duncan and improved functional performance. A primary role of the
Moriarty (1988) note, communication networks link indivi- marketing function is to provide tactical support for the
duals together, creating organizational relationships. These organizational strategy (Webster, 1992). As a critical ele-
M.I. Rapert et al. / Journal of Business Research 55 (2002) 301310 305

ment in the organization, marketing has been tightly linked care industry. A single, relatively homogeneous industry
with the performance of the firm. Researchers have explored was chosen in light of recent concerns raised regarding the
marketings role in the organization from numerous per- vulnerability of the strategic process to environmental
spectives including marketing planning styles (McKee et al., impacts (Rajagopalan et al., 1993). Given the exploratory
1990; Piercy and Morgan, 1994), strategy-related tactics nature of this research endeavor, efforts were made to
(McDaniel and Kolari, 1987), environmental adaptations control environmental influences through initial examina-
(McKee et al., 1989), strategic formulations (Frankwick et tion of hypotheses within this one industry.
al., 1994a,b), frameworks provided by functional structure Preliminary survey instruments were evaluated by health
(Ruekert et al., 1985; Walker and Ruekert, 1987), and care administrators and academic researchers to assess the
tactical support of business and corporate strategies (Var- relevancy, accuracy, and legibility of the measures. A pretest
adarajan and Clark, 1994). Both anecdotal and empirical of hospital CEOs provided support for the reliability and
evidence suggest that outcomes of marketing behaviors validity of the communication, strategic consensus, market-
have a critical impact on organizational performance. ing performance, and organizational performance assess-
Accordingly, we hypothesize that: ments. Survey instruments were mailed to a nationwide
sample of 1000 CEOs of general service hospitals, which
Hypothesis 4: Functional-level performance will have a
are members of the American Hospital Association (AHA).
positive impact on organizational performance.
The CEO of each organization received two separate sur-
These posited relationships are depicted in Fig. 1, reflect- veys with a request to forward the functional level survey to
ing a positive flow of benefits, beginning with the influence the chief marketing executive. The sampling frame was
of vertical communication on the awareness of strategic stratified according to size of hospital (based on bed
priorities and enhanced performance, at both the functional capacity) and profit status (for-profit vs. non-profit). Within
and organizational levels. Next, convergent strategic con- each stratified cell, hospitals were randomly selected to
sensus impacts positively on functional and organizational ensure a representative sample.
performance. And finally, improved functional performance This survey approach yielded 322 responses, resulting in
should also result in increased organizational performance. a response rate of 32%. The response rate for matched pairs
(both CEO and marketing executive from the same organi-
zation) was 29%. Several independent checks were con-
4. Methodology and results ducted to ensure that the sampling process occurred as
designed. First, data was obtained from the AHA on a
The conceptual model and associated hypotheses are sample of non-responding and responding organizations.
examined within the general services market of the health Comparisons of profit status and size revealed that the

Table 1
Overview of the multi-item measures
Multi-item
scale measures No. of items Instructions and response format Items
Vertical 4 Please indicate how frequently the Written letters/memos/reports, personal/face-to-face
communication marketing department has communicated discussions, telephone calls, group or
with the top management team through committee meetings
each of the following ways during the
past 6 months. (Less than once a
week/many times daily)
Strategic 15 (transformed Listed below are several competitive Developing new services, offering a broad range of
consensus to an absolute methods that might be important to your services, upgrading or refining existing services,
value of 1) hospital. Please indicate the extent to offering specialty services, emphasizing services for
which your hospital emphasizes each high-price market segments, high quality standards,
activity compared to your hospitals operating efficiency, customer service, competitive
competitors. (Much less/much more) pricing, developing identification with hospital,
innovation in marketing techniques, effective control
of channels of distribution, advertising and promotion,
forecasting market growth in sales
Functional 10 For each activity, please indicate your Public relations, external communications,
performance perceptions of how well this activity is advertising, product/service development, internal
completed by the marketing functional communications, pricing, sales, marketing research,
area. (Poor/excellent) planning, government relations
Organizational 3 Please check the category that best Net operating income, gross patient revenues,
performance approximates how your hospital has growth in net revenues
compared with your primary competitors
over the past year. (Bottom 10%/top 10%)
306 M.I. Rapert et al. / Journal of Business Research 55 (2002) 301310

Table 2 strategies, providing dimensions that adequately represent


Standardized measurement coefficients and t values resulting from
both low cost and differentiation strategies. Several items
confirmatory factor analysisa
from the original scale were dropped based on low factor
Construct
loadings, resulting in a 15-item measure. Following Wool-
Vertical Functional Organizational dridge and Floyds (1990) operationalization of shared
Item abbreviation communication performance performance
understanding, strategic consensus is calculated as the
VC1 0.41 (7.08)a absolute value of the difference between each pair of
VC2 0.86 (17.97)
responses to each of the 15 items. A summated scale was
VC3 0.71 (13.61)
VC4 0.67 (12.49) then formed, combining the 15 items into one global
FP1 0.66 (12.39) assessment. Hence, smaller values for the strategic consen-
FP2 0.69 (13.27) sus construct represent an alignment of perceptions whereas
FP3 0.67 (12.66) larger values represent greater diversity of perceptions
FP4 0.67 (12.70)
between marketing and the CEO.
FP5 0.48 (8.52)
FP6 0.48 (6.87) The CEO provided evaluations of both functional and
FP7 0.63 (11.82) organizational performance. Building on discussions with
FP8 0.60 (11.17) health care executives, combined with descriptions in the
FP9 0.65 (12.32) academic literature, 10 key functional activities were iden-
FP10 0.45 (7.88)
tified: planning, marketing research, public relations, inter-
OP1 0.91 (20.10)
OP2 0.78 (16.00) nal communications, sales, product/service development,
OP3 0.88 (18.86) advertising, external communications, pricing, and govern-
c2 6.42 8.02 8.41 ment relations (Naidu and Narayana, 1991; Zalloco and
GFI 0.99 0.97 0.98 Joseph, 1991). Accordingly, a 10-item scale encompassing
RMSR 0.05 0.07 0.07
these activities was developed, anchored by 1 (poor) and
a 0.80 0.78 0.90
a
5 (excellent). This scale was completed by the CEO who
The t values are shown in parentheses. All are significant ( P < .01).
also evaluated organizational performance with respect to
net operating income, gross patient revenues, and growth in
two groups were comparable in nature. Second, in-depth net revenues.
interviews were conducted with both chief executives and
marketing executives of 30 randomly selected responding 4.2. Data analysis and results
organizations. Without exception, the discussions validated
that the appropriate key informants responded to the survey The three multiple-item scales (communication, market-
and the sampling process was carried out as expected. ing functional performance, and organizational perfor-
mance) were first subjected to psychometric evaluations,
4.1. Measurement including examination of confirmatory measurement models
and reliability assessments. While the strategy scales were
Each of the specific scales utilized is presented in Table also included in this process during the development of the
1. Assessment of the vertical communication network strategic consensus measure, the final calculation is a single-
linking the marketing functional area and top management item measure and, hence, is not evaluated at this stage. As
is provided by the marketing executive officer. Commu-
nication is measured via a four-item scale developed by
Ruekert and Walker (1987). Operationalized in terms of Table 3
the amount of interaction that occurs between groups, the Principal components analysis: discriminant validity of functional and
organizational performance measures
scale assesses the frequency of contact via written com-
Functional Organizational
munications, face-to-face discussions, telephone calls, and
Item abbreviation performance performance
group meetings. Each of these four mediums is measured
FP1 0.623
on a scale ranging from 1 (less than once a week), to
FP2 0.678
7 (many times daily). Marketing executives responded FP3 0.658
to the scale with regard to how often their functional area FP4 0.736
communicated with top management concerning strategy- FP5 0.500
specific issues. FP6 0.370
FP7 0.615
Strategic consensus is assessed by evaluating the differ-
FP8 0.690
ence in perceptions of strategy between the CEO and the FP9 0.703
head of the marketing functional area. To begin, both CEOs FP10 0.477
and marketing executives completed a battery of strategy OP1 0.664
items developed by Dess and Davis (1984). This strategic OP2 0.626
OP3 0.658
taxonomy is an operationalization of Porters (1980) generic
M.I. Rapert et al. / Journal of Business Research 55 (2002) 301310 307

Table 4
Model fit and tests of proposed relationships in strategic implementation process model
Model fit statistics:
Structural relationships c2 = 785.79 df = 130 GFI = 0.83 RMSR = 0.073
Hypothesized paths Proposed relationship Completely standardized coefficients t value
a
VC ! SC negative  0.54 5.63b
VC ! MP positive  0.17  2.91
VC ! OP positive 0.27 2.97
SC ! MP negative  0.37  8.42
SC ! OP negative  0.35  5.33
MP ! OP positive 0.99 7.56
VC = Vertical Communication, SC = Strategic Consensus, MP = Marketing Performance, OP = Organizational Performance.
a
Strategic consensus is calculated such that smaller values represent higher degrees of consensus; hence, negative estimates were hypothesized for
VC ! SC, SC ! MP, and SC ! OP.
b
All paths significant at P < .01.

seen in Table 2, coefficient alphas are reported for commu- Hypotheses 2a and 2b were only partially supported as
nication (0.80), functional performance (0.78), and organi- shown by the expected relationship between communica-
zational performance (0.90). All coefficient alphas exceed tion and organizational performance ( P < .01). Contrary to
the 0.70 level for each construct, indicating significant expectations, a negative relationship was identified
reliability levels. Table 2 also summarizes the estimates between vertical communication and marketing perfor-
for the confirmatory measurement models, relating the mance. Hypotheses 3a and 3b were fully supported given
indicators to their posited underlying constructs. A confir- that congruent interpretations were found to have a
matory factor analysis indicates that, for each construct, a positive impact on functional performance ( P < .01) as
single dimension provided adequate fit with significant well as organizational performance ( P < .01). Finally,
loadings for all three scales. Evidence of discriminant enhanced functional performance results in heightened
validity for the performance measures is provided via a organizational performance ( P < .01), providing support
principal components analysis. Exhibited in Table 3, the for Hypothesis 4. In summary, path estimates provide
component matrix reveals relatively high and consistent evidence in support of 1, 2b, 3a, 3b, and 4 as described
factor loadings for functional performance (eigenva- in Table 4.
lue = 4.882) and organizational performance (eigenva-
lue = 1.982). The only exception is found with pricing,
which exhibited similar loadings across both functional 5. Conclusions and implications
and organizational factors.
Further validity of the performance data is provided Strategic decisions are often formulated in the upper
through the aforementioned in-depth interviews with key echelons of the firm and then administratively imposed on
informants. While organizations would not provide exten- organizational members with little consideration of the
sive objective performance data with which to validate the resulting functional level perceptions (Hrebiniak and Joyce,
subjective performance assessments, they provided data 1984; Nutt, 1987). However, research suggests that percep-
sufficient to allow comparisons with both the AHA data tions of organizational strengths and weaknesses vary
and the overall performance position in their respective according to management level (Ireland et al., 1987). One
markets. Again, in all cases, the subjective performance explanation for the varying perceptions and beliefs among
assessments paralleled the objective performance data pro- managers operating at different levels in the firm is func-
vided by the organizations. tional conditioning (Chattopadhyay et al., 1999). That is,
The initial structural model depicted in Fig. 1 provided managers in a particular functional area are likely to be
acceptable goodness-of-fit indices, although the chi-square influenced by information that is most relevant to their
value was significant. Other measures of fit, however, functional area goals and hence, develop beliefs and percep-
indicate that the overall structural model is acceptable. tions that are most consistent with their functional roles
These values and the structural estimates are reported in (Chattopadhyay et al., 1999). Thus, consensus of funda-
Table 4. The estimated structural relations are all signifi- mental strategies may differ across levels, making it impera-
cantly different from zero (t values > 2). It should be tive that researchers examine this phenomenon in more
noted that, based on the absolute value measurement of detail. If members of the organization are not aware of the
strategic consensus, small values for strategic consensus same information, or if information must pass through
indicate a congruency of perspectives. Hence, the negative several layers in the organization, a lower level of consensus
loading between communication and strategic consensus may result. Ultimately, this lack of shared understanding
reflects that increased communication results in congruent creates barriers to successful strategy implementation (Dess
interpretations ( P < .01), consistent with Hypothesis 1. and Origer, 1987; Noble, 1999).
308 M.I. Rapert et al. / Journal of Business Research 55 (2002) 301310

Given the potential impact of strategic consensus, it is is a structural mechanism that should be used to control and
critical to identify factors which evoke a shared under- coordinate behaviors in the firm, and hence, future research
standing of strategic orientation. Previous research suggests should address the development of strong communication
that shared meaning is impacted by belief systems and networks within organizations, identifying factors which
knowledge structures, factors that are rather difficult to might enhance or constrain certain types of information.
control. The present research identifies an additional critical For instance, the relationship between vertical communica-
antecedent to strategic consensus in the form of commu- tion and marketing performance could be further explored by
nication networks. This is an important contribution in that examining factors such as functional conditioning, broader
strong communication networks may be developed through influences of communication, and/or any other factors that
formal and informal mechanisms within the firm, making have received recent attention in strategic literature.
communication a more controllable antecedent. Results For example, in our study, we embrace Bowman and
indicate that firms, which are able to evoke strong commu- Ambrosinis (1997) definition concerning strategic consen-
nication linkages, will benefit from enhanced strategic sus as shared understanding of strategic priorities. At the
consensus. Further, when intraorganizational perceptions same time, several conceptualizations of the consensus
of strategy converge, the organization benefits through domain suggest that strategic commitment is an influential
enhanced functional and organizational performance. construct, which should be investigated. Indeed, some
Two primary limitations to the present study should be researchers view commitment and shared understandings
noted. The study was conducted in the health care as two dimensions of consensus. Whether commitment is
industry, raising two subsequent issues. First, further viewed as an element of strategic consensus or a separate
research must be undertaken to validate the generaliz- construct, commitment to strategic endeavors likely plays a
ability of the results across multiple settings. Second, the prominent role in the implementation process. Previous
nature of the health care industry is such that the studies concerning commitment suggest that commitment
collection of objective performance data was not viable. positively contributes to a firms performance as well (Bow-
Given the increasingly competitive nature of the industry, man and Ambrosini, 1997; Dess and Priem, 1995). Such
this situation is only expected to worsen. Fortunately, we replications and extensions to the present model would
were able to provide some validation of our subjective, enrich current knowledge concerning the understanding of
self-report measures via comparisons with AHA data and the strategic implementation process.
information obtained through in-depth interviews. Another In conclusion, the present study provides an initial
primary limitation occurred with respect to the key exploration, reaffirming the important role that strategic
informants. It is important to note that we obtained consensus plays in the implementation process. Frequent
information from two levels of management working in communication between marketing and top management
two separate arenas. However, the inherent nature of the serves to enhance strategic consensus through the fostering
consensus construct is one which lends itself to the of shared attitudes, understandings, and values. In firms
exploration of multiple perspectives within each firm. where the marketing executives interpretation of strategy
Hence, a comprehensive examination of numerous infor- aligns with the CEOs perspective, organizations are
mants within each firm should provide insightful informa- rewarded with higher levels of marketing and organizational
tion into the means by which consensus is enhanced. performance. Overall, the organization benefits from
Following the suggestion of Blair and Boal (1991), increased vertical communication, shared understanding of
strategy researchers must focus on the process by which strategies (i.e., consensus), and improved marketing perfor-
strategies are formulated, internalized, accepted, and acted mance, as evidenced by higher levels of net operating
upon. To begin, numerous contributions may be gained income, gross revenues, and growth in net revenues. These
through increased exploration of communication networks. initial findings validate the importance of examining both
In this study, the unhypothesized relationship between ver- communication and strategic consensus in greater detail to
tical communication and marketing performance warrants more fully understand their roles in the strategic implemen-
further investigation. It is plausible that the negative relation- tation process. Such examinations of organizational
ship could have occurred due to either measurement or dynamics should aid in our understanding of why some
model issues. First, a specific, initial perspective of commu- strategic endeavors fail while others succeed.
nication was utilized in this study, focusing primarily on the
intensity of the communication linkages between the market-
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