Corporate foresight and its effect on

innovation, strategic decision making and

organizational performance (case study:
Iranian banking industry)
Mahdi Joneidi Jafari and Seyed Akbar NiliPourTabataba’i

Abstract Mahdi Joneidi Jafari and

Purpose – This paper aims to examine the capability of corporate foresight in the organizations and its Seyed Akbar
impacts on innovation, quality of managers’ strategic decision-making and organizational performance NiliPourTabataba’i are
in the banking industry of Iran. both based at Shahkes
Design/methodology/approach – In the first part, upon introducing corporate foresight from the two Pajouh Research
process and content perspectives, influential elements in this construct are discussed. Then, corporate Institute, University of
foresight’s relationship with innovation and strategic decision-making is examined and its effect on Isfahan, Isfahan, Iran.
organizational performance is analyzed within a structural model. Using interview and questionnaire,
the data research were collected from the banking industry of Iran including 30 banks
(state-commercial banks, specialist-state banks, interest-free loan funds and private banks). Through
descriptive, inferential statistical analyses and structural equation modeling using SPSS and Smart PLS
software, reliability of the measurement model with 576 samples was confirmed.
Findings – The results show that the corporate foresight playing three roles of initiator, strategist, and
opponent affects the innovation. Moreover, the research results suggest that using the data from the
foresight and identifying the weak signals, we can reduce the uncertainty and issue prior warnings in order
to enhance the quality of manager’s strategic decision making and promote the organizational performance.
Originality/value – This paper is one of the articles from the sources of the doctoral thesis of Futures
Studies as “The relationship between knowledge absorption capacity, corporate foresight and its effect
on the performance of the banking industry in Iran”.
Keywords Innovation, Corporate foresight, Organizational performance, Strategic decision making Received 24 July 2017
Revised 3 September 2017
Paper type Research paper Accepted 6 September 2017

Expression of Concern: The

publisher of the journal
1. Introduction Foresight is issuing an
Expression of Concern
for the following article
The contemporary world is the arena of tremendous changes and accelerating dynamics. Joneidi Jafari, M. and
The changes are so fast and unexpected that ignoring them will lead to strategic shock in NiliPourTabataba’i, S. (2017),
“Corporate foresight and its
all the political, economic, social and even cultural arenas. In this ever-changing uncertain effect on innovation, strategic
environment, the only approach and policy which most likely will lead to more success is decision making and
organizational performance
future formation. Although future formation has always been together with many risks, (case study: Iranian banking
accepting these risks is far more wise than just watching the future changes (Khazaei, industry)”, Foresight, Vol. 19
No. 6, pp. 559-576, to inform
2010). The necessity to understand the organization’s environment, the driving forces readers that credible concerns
behind environmental changes and developments in the future builds the conceptual have been raised regarding
the originality of this article. An
anchor of futures studies within strategic management (Aslan, 2008; Becker, 2003; Mackay investigation is ongoing and is
and Mckiernan, 2004a; Pina E Cunha et al., 2006; Wack, 1985b). CF makes it possible to currently unresolved. Further
information will be provided by
identify future changes in the organizations. Then, in the long run, the organizations can Foresight as it becomes
develop appropriate innovative responses in order to protect themselves against the available.

DOI 10.1108/FS-07-2017-0035 VOL. 19 NO. 6 2017, pp. 559-576, © Emerald Publishing Limited, ISSN 1463-6689 Foresight PAGE 559
 consequences of such changes and survive. CF aims to create a long-term view of the
future, to identify opportunities and risky developments as well as to enable strategic
decision-makers to consequently adapt to these challenges (Coates, 1985; Becker, 2003).
CF has its roots in the term strategic management, and it is defined as searching for weak
(Ansoff, 1980) with the aim of early detection of the changes in the environment (Rohrbeck
et al., 2009). It should be noted that simply detection of weak signals and future changes
does not guarantee the company’s survival in the future, but taking some measures based
on such information is the key major characteristic of CF. Some scholars have defined CF
as a process (Becker, 2003; Horton, 1999; Müller, 2008; Müller-Stewens and Müller, 2009)
and others have defined it as an ability (Slaughter, 1998; Müller-Stewens and Müller, 2009;
Tsoukas and Shepherd, 2004).
Research to date on the criteria according to which strategic decision-makers integrate
foresight information has been limited and lacks a profound theoretical background. One of the
few publications addressing this problem is that of Rollwagen et al. (2006). The authors argue
that foresight information is most likely to be integrated into strategic decisions.
It is given that the strategic decisions made by the managers of banking industry are of
prime importance due to their unrivaled role in the economy of countries; the results of their
decisions have a significant effect on the financial market and economic system of the
countries. Although Hofmann et al. (2007) argue that foresight will lead to making strategic
decisions (Hofmann et al., 2007), and the study done by Rollwagwn et al. (2008) also
provides an insight into the relationship between foresight information and the decisions’
quality (Rollwagwn et al., 2008), the main question is that whether the top managers in
Iran’s banking system exploit the mechanism of foresight in their strategic macro decisions
and also whether foresight has any impact on the quality of their decisions.
Although there are various forms of competitive advantage, the most important advantage for
success of the organizations is innovation (Barney, 1991). One of the important industries in the
services sector is the banking industry. The banks need creative and innovative solutions in
order to provide desired services for the customers. Furthermore, due to some facts such as
external evolution caused by international sanctions, internal super-competition, overcoming
the internal and external turbulence and also achieving an efficient and effective performance,
Iranian banks need to create competitive advantage based on the products and innovate
services; they should also foresight and take strategic decisions.
Research has shown that there is not necessarily a specific corporate foresight department
or unit in the corporate landscape (Becker, 2003). Indeed, the strategic management or
innovation management often takes over the role of scanning for discontinuous change for
the entire company (Daheim and Uerz, 2006).
The same diversity of responsibility in the corporate landscape can be observed in the
research landscape of corporate foresight. There are three primary perspectives from
which research on corporate foresight has been conducted. The strategic management
perspective, which includes research on corporate change, ambidexterity (i.e. the ability of
companies to excel in both exploitation of current products and markets and exploration of
new products and markets), environmental scanning, and decision making. The innovation
management perspective, in which findings important to corporate foresight have been
produced in the research streams on radical innovations and (technological) disruptions.
And the future research perspective, which can be divided into the research stream aiming
at studying public foresight activities for national or supranational organizations (macro
level) and in the research stream dealing with corporate foresight practices (micro level).
In this paper we seek to first examine dimensions of CF capability regarding the profound
effects of foresight capability in identifying weak signals, enhancing strategic flexibility (De
Toni and Tonchia, 2005; Nadkarni and Narayanani, 2007; Hitt et al., 1998), increasing
absorptive capacity (Matthyssens et al., 2005; Zahra and George, 2002), strategic decision

PAGE 560 Foresight VOL. 19 NO. 6 2017

making (Chermack and Nimon, 2008), strategy and organizational performance (Schwartz,
1991; Ringland, 2002; Aslan, 2008; Rohrbeck and Gemünden, 2008), and then by
proposing a model, investigate the relationship between CF, strategic decision making,
innovation and organizational performance.

2. Review of literature
2.1 Corporate foresight (CF)
Research on CF has typically been followed by management science scholars from different
research disciplines, including strategic management, technology management, and
innovation management. That might be a consequence of the cross-functional character of
foresight in the corporate context. Responsibilities for foresighting rest in departments such as
strategic management, corporate development, marketing, R&D, innovation management,
and controlling (Slaughter, 1998; Müller, 2008).The wide range of different definitions and
overlapping perspectives show just how difficult it is to find a clear delineation between CF and
its conceptual cousins, namely strategic and organizational foresight and interchangeable use
of terms can be observed in the literature. CF and strategic foresight could be used
interchangeably, due to the fact that they both cover the same conceptual categories
(Rohrbeck et al., 2007). Other authors, however, particularly emphasize the specific objective
of strategic foresight, namely its sole integration into strategic processes within an organization,
whereas CF primarily focuses on futures studies within an organizational reality in a dispersed
fashion. Moreover, a third foresight concept – namely “organizational foresight” generally
considers foresight to be an organizational ability, rather than a specific foresight process
within organizational boundaries (Becker, 2003; Karp, 2004; Daheim and Uerz, 2006; Ruff,
2006; Aslan, 2008; Müller, 2008). Based on the aforementioned arguments, the following
argumentation will presume that the relationship between the three concepts is a continuous
one in which the boundaries are overlapping and not clear-cut. This implies that strategic
foresight deals with the implementation of foresight procedures within organizations, while
organizational foresight addresses the general philosophy, characteristics and ability of
organizations to foresee. In other words, the former concept concerns foresight in a narrower
sense, while the latter concerns foresight in a broader and more open way. The researcher
therefore defines CF as a concept situated between the strategic and the organizational
foresight concepts (cf. Figure 1).
In the literature, CF is mostly viewed from a process perspective rather than the content
prospective i.e. as an ability or capacity. In this research, we follow the understanding of CF
as an ability and assume the following: “CF is an ability that includes any structural or
cultural element that enables the company to detect discontinuous change early, interpret
the consequences for the company, and formulate effective responses to ensure the

Figure 1 Continuum of foresight concepts based on their research scope

VOL. 19 NO. 6 2017 Foresight PAGE 561

 long-term survival and success of the company” (Rohrbeck, 2011). An overview of foresight
processes (process perspective) is presented in Table I:
Rohrbeck is one of the authors who has examined the foresight in terms of ability and
capability. He presents a model reflecting five individual capabilities. These capabilities are
the main dimensions of CF (Rohrbeck and Gemünden, 2008; Rohrbeck et al., 2009;
Rohrbeck, 2011). The comprehensive framework of CF is derived from the qualitative
studies on the companies’ foresight activities, and it has been used in subsequent studies
as well (Rohrbeck, 2011; Rohrbeck et al., 2009). The dimensions used in this framework to
define CF capability include: information usage, method sophistication, people and
networks, organization, culture. Information usage describes the extent to which an
organization possess a wide range of future-related information. As Day and Schoemaker
(2005) have claimed the companies tend to focus their information research on specific
fields, ignoring the search for the weak signals. Accordingly, Winter (2004) indicates that
the companies often make use of sensing systems derived from the past achievements.
Time horizons concerning CF activities are very different and have short, medium, and
long-term focus. Thus, various information is needed (Becker, 2003; Rohrbeck et al., 2009).
Moreover, various types of information sources including the formal and informal sources
of information could be used in the research process (Rohrbeck et al., 2009). Additionally,
the nature of information sources also can be considered individually as the personal,
limited and public sources (Becker, 2003). Method sophistication describes the ability of a
company to gather future-oriented information, and its ability to systematically interpret
information. Method sophistication describes the extent to which the organizations apply
structured ways (i.e. the methods) in processing the future-related information (Rohrbeck
et al., 2009). Capability of the people and networks examines special characteristics of the
employees involved in CF activities; the kind of characteristics which are useful for CF
capability (Rohrbeck et al., 2009). This dimension represents the human aspect of CF,
which has been emphasized by the authors (Rohrbeck, 2011; Slaughter, 1997; Tsoukas
and Shepherd, 2004). It is argued that the foresighters with a wide knowledge in a number
of fields, add to the value of the process of anticipation, because they are able to probe
beyond their knowledge range. Organization describes the extent to which a company
adopts a formal or informal approach to management of the future-related information
(Rohrbeck et al., 2009). Companies have various organizational structures for foresight
management (Becker, 2003; Daheim and Uerz, 2006; Rohrbeck et al., 2009). When the top
management is committed and convinced of the added value of the CF activities, then
transmission of information and implementation of results are facilitated (Rohrbeck and
Schwarz, 2013). Culture describes the extent to which the organizational culture supports
the foresight activities, since a corporate culture can both support and limit the foresight
capabilities (Rohrbeck et al., 2009). Unwillingness to diffuse future-oriented information and

Table I Summary of foresight processes and phases from selected publications

Source Phase one Phase two Phase three Phase four Phase five

Horton (1999) Collection, Collation, Translation, Assimilation, Commitment

Summarization Interpretation
Irvine and Martin Pre Foresight Foresight Design and implementation
(1995)
Blackman and Open process of Process of Process of transmission (Knowledge feedback)
Henderson acquisition interpretation
(2001, 2004)
Voros (2003) Inputs (Strategic Foresight (Analysis, Outputs (Expanded perceptions Strategy making (Strategy
intelligence) Interpretation, of strategic options) development &
Prospection) planning)
Popper (2008) Pre-Foresight Recruitment Generation Action Renewal
Source: Joneidi Jafari (2016)

PAGE 562 Foresight VOL. 19 NO. 6 2017

future insights throughout the organization is a major hindrance to the way of timely
detection of changes (Lucas and Goh, 2009). Therefore, the first characteristic of a
supporting culture is its willingness to free diffusion of future-oriented information and future
insights at the functional and hierarchical levels (Day and Schoemaker, 2005). Within a CF
system, the existence of a supporting culture which encourages the employees to be open
to external sources is a necessity (Rohrbeck et al., 2007; Rohrbeck and Gemünden, 2008)

2.2 Strategic decision making (SDM)

Dean and Sharfman (1996) describe strategic decisions as: “committing substantial
resources, setting precedents, and creating waves of lesser decisions; as ill-structured,
non-routine and complex; and as substantial, unusual and all pervading”. They are political
and carry high levels of uncertainty; they rarely have one best solution and, once a decision
is made, it is difficult to reverse (Wilson, 2003). Two basic types of models pervade the
literature on the strategic decision-making process (SDMP), i.e. the synoptic formalism
model and the political incrementalism model (Goll and Rasheed, 1997; Johnson, 1988).
Synoptic formalism is considered an extension of the traditional rational model; and
analysis is its basic feature. In contrast to synoptic formalism are incrementalism (Lindblom,
1959), logical incrementalism (Quinn, 1980)or political incrementalism, as Mueller (1998)
calls it; this clarifies the way in which organizations actually make strategic decisions.
Researchers have discussed many dimensions of the SDMP in the bulky intellectual
literature of strategic decision-making. The rationality of decision-making processes has
received a central place in strategic decisionmaking theory and practice (Papadakis and
Barwise, 1997). Political behaviour among decision-makers has long been recognized as
an aspect of decision-making (Child and Tsai, 2005; Wilson, 2003) and has received a
great deal of attention from researchers (Schwenk, 1995). Although there is little empirical
research on intuition in strategic decision literature, making decisions by intuition is
increasingly viewed as a viable approach in the SDMP (Miller and Ireland, 2005;
Sadler-Smith and Shefy, 2004). Eisenhardt and Zbaracki (1992) point out that studying
intuition is one way to create a more realistic view of the SDM. Bourgeois and Eisenhardt
(1988) find a positive relationship between rationality and performance for firms in a
high-velocity environment. Further empirical support for this position is provided by Goll
and Rasheed (1997), Judge and Miller (1991), Judge and Miller (1991), Miller and Friesen
(1983) and Priem et al. (1995). Since, strategic decisions are made among people by
people for people they are a welter of action, interaction, and counteraction’ (Hickson et al.,
1986). The interaction of interests, conflict and power means that the SDMP can be
characterized as political in nature (Wilson, 2003). Political behaviour as a part of human
behaviour in decision-making seeks to “get others to do what we want, when they might not
elect to do so” (MacMillan and Jones, 1986). Parikh (1994) observes that intuition could be
a form of intelligence which decision-makers can use when they cannot access rational
processes (Parikh, 1994). Sadler-Smith and Shefy (2004, p. 76) argue that intuition can now
be understood as “a composite phenomenon involving interplay between knowing
(intuition-as-expertise) and sensing (intuition-as-feeling)” (Sadler-Smith and Shefy, 2004).
Similarly, in their review of intuition in strategic decision making, Miller and Ireland (2005)
mention that intuition can be conceptualized as automated expertise and as holistic hunch.
(Miller and Ireland, 2005) Khatri and Ng (2000) suggest that intuition is: subconscious;
complex; quick; a component of all decisions; not emotional; and not essentially biased.
Moreover, they propose three indicators of intuition, namely, reliance on judgment, reliance
on experience and the use of gut feeling (Khatri and Ng, 2000).
Research to date on the criteria according to which strategic decision-makers integrate
foresight information has been limited and lacks a profound theoretical background. One
of the few publications addressing this problem is that of Rollwagen et al. (2006).The
authors argue that foresight information is most likely to be integrated into strategic

VOL. 19 NO. 6 2017 Foresight PAGE 563

 decisions. More specifically, foresight information finds favour with decision makers
whenever the following criteria are considered:
 Plausibility: This point refers to a critical analysis of identified alternative futures by
triangulating different means– such as qualitative and quantitative data – to assess the
outcomes. According to the authors, foresight information containing extreme
messages decreases the foresight information’s level of plausibility for
decision-makers.
 Convenience/usability of results: Convenience and usability refers to a translation of the
outcomes of foresight information into the cultural language of the organization. This
means that foresight information has to be adapted according to the terminologies
usually used in the organization.
 Inspiration: Decision-makers expect foresight to provide new insights and ideas. In this
respect, it is important that foresight information delivers a message which
decision-makers did not consider beforehand.
 Appropriate temporal perspective: Foresight information has to address the time
horizon according to the time horizon of the audience’s task responsibilities.
While some decision-makers might deal with shorter time horizons within the scope of their
decisions, others require long-term foresight information to improve decision-making
(Rollwagen et al., 2006). Overall, the study by Rollwagen et al. (2006) provides a preliminary
yet useful insight into the relationship between foresight information and decision-makers’
expectations. In addition to the provided framework, other authors have highlighted this
point of intersection by calling it “the fit of foresight information”. Essentially this means that
foresight information is more likely to be accepted and integrated whenever new
information “fits” the decision-makers’ goals and expectations (Feldman and March, 1981;
Lawless, 1997; Reading, 2004).

2.3 Innovation
In recent years, various studies have shown that organizational innovation is essential for
both organizational survival (Han et al., 1998; Hurley and Hult, 1998)and organizational
performance (Brett and Okumura, 1998; Smith et al., 2005). The set of competencies that
each organization possesses plays a key role in the evelopment of organizational
innovation, since without these competencies the organization could not innovate in
response to the rapid technological changes (Ahuja, 2000). We are witnessing increasingly
dynamic and competitive environments, in which organizational innovation constitutes the
basis for sustaining competitive advantages (Damanpour and Evan, 1984; Hurley and Hult,
1998), as well as the key organizational survival (Nonaka, 2007). Many studies in the
literature have shown the existence of a positive relationship between organizational
innovation and organizational performance (Schulz and Jobe, 2001; Weerawardena et al.,
2006) or between certain characteristics or aspects of innovation (e.g. design, speed and
flexibility) and organizational performance (Danneels and Kleinschmidt, 2001; García
Morales et al., 2007b). Garcı=a Morales et al. (2007) believe that innovation and the ability
to innovate not only affects the big organizations but also the small and medium-sized ones
so as to improve organizational performance (Garcı=a Morales et al., 2007a). Finally they
conclude that the organizations that are constantly exposed to dynamic environments
innovate in order to enhance the performance; and thus the ground is paved for
establishment of a positive relationship between the organizational innovation and
organizational performance (Aragó n Correa et al., 2007; Damanpour et al., 2009; Hurley
and Hult, 1998; Thornhill, 2006). Paliokaite and Pacesa (2014) have examined 230
manufacturing companies in Lithuania in their study. They have confirmed the relationship
between organizational foresight and explorative innovations. They also found that
foresight can have an impact on organizational productivity (Paliokaite and Pacesa, 2015).

PAGE 564 Foresight VOL. 19 NO. 6 2017

Vishnevskiy et al. (2015) have done their research with the objective of integrating CF with
roadmapping important instruments for innovation management in major Russian
companies in the oil & gas, energy, and aviation sectors. They found that CF and integrated
roadmap are closely interlinked and show reasonable potential to maintain the current level
of organizational innovation culture and also enable future improvements (Vishnevskiy
et al., 2015). Andersen et al. (2014) in their research done in Nordic countries have
examined the impact of foresight methods on creation of innovation. They found that three
elements of the innovation system literature are of particular interest for the practice of
foresight:

1. Innovation systems and context dependency;

2. learning and user–producer interactions; and
3. the role of knowledge and knowledge production (Andersen et al., 2014).
The tendency to challenge basic assumptions and double loop questioning plays an
important role in CF. Not only the assumptions but also the basic conceptual models that
always create expectations from the future, should be challenged. When radical changes
and interruptions occur, it is expected that the firms which have observed and recognized
a trend earlier than the others, will gain competitive advantage. Having knowledge about
emerging trends, makes it possible for the company to take timely actions and show the
appropriate reaction. This reaction may be related to the innovation management in the
company. CF plays three roles in enhancing the innovation capacity: As an initiator, CF
leads to innovation by identifying new needs of the customers, novel technologies, and new
concepts of the competitors. As a strategist, CF develops an outlook, provides strategic
instructions, integrates the views, evaluates and rearranges the innovation portfolio, and
identifies the new business models of the competitors, thus guides the innovation activities.
As an opponent, CF challenges the innovators to create better, more successful
innovations by questioning the assumptions, challenging the state of the art development
and research projects and scanning the breakdowns which will threaten the current and
prospect innovation. Conceptual framework and research hypotheses are given in
Figure 2.

3. Research methodology
As regards the objective, this research is an applied one, in terms of the method it is
descriptive and concerning the time it is a cross-sectional study. The secondary data
collection was done by library research methods and primary data collection was based on
interview (with academic experts and industry experts), and questionnaire. Statistical
population of this research include all the banks licensed by the Central Bank (30 banks);
according to the Central Bank, these banks have a total staff of 23,317. In this research the
sampling was done by Stratified Sampling method and based on the Cochran’s Formula
(1)[1]. The number of required sample was determined to be 384 samples (Table II). With

Figure 2 Conceptual model framework

VOL. 19 NO. 6 2017 Foresight PAGE 565

 regard to the limitations and in order to enhance the data quality, in a time period of 60 days
the questionnaires were distributed and collected in cooperation with the banks’ education
and research commissions and four M.A. students_ who were informed and justified about
the nature of the research and content of the questionnaire,_ then, 576 questionnaire were
analyzed.
Demographic results of the research are shown in Table III.

4. Research findings
In the first phase of this research the reliability, convergent validity, divergent validity,
reliability of the model and questionnaire were analyzed. The second phase required
confirmation of all the research hypotheses through carrying out some tests using the
software. In this research, SMART PLS 2 æ SPSS software were employed for data analysis.
Table IV shows the constructs and variables in the questionnaire. Since the appropriate
values for the Cronbach’s Alpha is 0.7, for Composite Reliability is 0.7, and for Average
Variance extracted (AVE) is 0.5 (Davari and Rezazadeh, 2016) and according to the
findings shown in Table IV that all these criteria have appropriate value, thus reliability and
convergent validity of this research can be confirmed.

Table II Statistical population and samples

Bank type Population Share (%) Sample

Commercial Government 56615 25 97

Specialized Government 35536 16 61
Gharzolhasaneh 5884 3 10
Non-Government 125282 56 215
Total 223317 100 384

Table III Demographic characteristics of the respondents

Description Frequency (%)

Gender
Female 197 34
Male 379 66
Education
Diploma 50 9
Associate’s degree 30 5
B.A. 194 34
Master’s degree and above 302 52
Work experience
Under 10 years 62 11
Between 10 and 20 years 229 40
20 years and above 285 49
Place of Work in the Bank
Line 227 39
Staff 349 61
Position
Managerial 338 59
Specialized 198 34
Executive 40 7
Bank type
Commercial Government 61 10.6
Specialized Government 94 16.3
Gharzolhasaneh 32 5.6
Non-Government 389 67.5
Total 576 100

PAGE 566 Foresight VOL. 19 NO. 6 2017

Table IV Constructs and variables of the questionnaire
No. of Cronbach’s Composite Average Variance
Construct Index Questions alpha Reliability (CR) Extracted (AVE) Source

CF Information usage 4 0.903 0.92 0.721 Rohrbeck and

Method 4 Gemünden (2008),
sophistication Reger (2001b),
People and 4 Becker (2003),
networks Jain (1984), Wolff
Organization 4 (1992), Gomez
Culture 4 et al. (2013),
Rollwagwn et al.
(20080, Day and
Schoemaker
(2005)
SDM Rationalism 4 0.82 0.89 0.741 Elbanna, (2010),
Intuition 3 Elbanna, and
Political behavior 7 Child (2007b),
Elbanna and
Fadol (2016),
Elbanna and
Naguib (2009)
Organizational performance Return on Assets 1 0.90 0.93 0.726 Murray and
(ROA) Kotabe (1999)
Return on Equity 1
(ROE)
Return on Sales 1
(ROS)
Market share in the 1
main product and
market
Sales growth in the 1
main product and
market
Innovation 7 0.89 0.91 0.721 Hughes et al.
(2005)

To evaluate the differential validity of the constructs with reflective indices, the average
variance extracted (AVE) should be greater than inter-construct correlations and other
constructs which form the model (Davari and Rezazadeh, 2016). Since the constructs meet
this provision, divergent validity is acceptable (Table V).
Upon explaining the validity and reliability of the measurement model, the conceptual
model of the research was tested using the path coefficients (or standard regression
weights) and the explained variance (R2) of the endogenous variables (dependent). If a
variable doesn’t met the minimum threshold proposed by Davari and Rezazadeh (2016),
i.e. 0.1 for the explained variable, this implies that the variable is limited to other factors not
included in this study. Table VI indicates that all three endogenous variables (dependent)
have gained the least required amount.
The most basic criterion for measuring the relationship between the constructs in the
model (structural part) is the significant figures. If this amount is greater than 1.96, 2.57,

Table V Divergent validity for measurement model

Construct CF Innovation Organizational performance SDM

CF 0.849
Innovation 0.75 0.84
Organizational performance 0.59 0.605 0.852
SDM 0.747 0.758 0.570 0.86

VOL. 19 NO. 6 2017 Foresight PAGE 567

 Table VI Explained variance for dependent variables
Latent variable R2

Innovation 0.566
SDM 0.558
Organizational performance 0.417

3.27, it implies that the relationships between the constructs are true. As a result, the
research hypotheses are confirmed at the confidence levels of 95, 99, and 99.9 per
cent. To test the fact that whether CF can have impact on innovation, strategic decision
making and organizational performance or not, the proposed hypotheses were
examined using the coefficient significance test. The results of the test are shown in
Table VII and Figure 3.
To measure the overall model fit, GOF (Goodness of Fit) index was employed; Davari and
Rezazadeh (2016) have introduced three values of 0.01, 0.25, and 0.36 respectively as the
weak, moderate and strong amounts for GOF (Davari and Rezazadeh, 95, p. 141).
Computation relation for GOF is Formula (2)[2]. Therefore, according to the relation (2), the
value of GOF equals GOF ⫽ 兹0.701⫻0.513 ⫽ 0.599 implying that the models’ GOF is very
appropriate.

Table VII Summary of the test results

Hypotheses Relationships Path coefficient ␤ t-value Results

1 CF ¡ Innovation 0.567 33.922 Confirmed

2 CF ¡ SDM 0.559 28.24 Confirmed
3 CF ¡ Organizational 0.417 4.213 Confirmed
Performance
4 Innovation ¡ Organizational 0.298 5.495 Confirmed
Performance
5 SDM ¡ Organizational 0.161 2.478 Confirmed
Performance

Figure 3 Research model in significant state

PAGE 568 Foresight VOL. 19 NO. 6 2017

5. Conclusion
Results of the research indicate that CF can play a role in innovation management, strategic
decision making, and organizational performance enhancement. So, the following
suggestions will lead to some developments and improvements in the organizations.
The researches done in the area of CF lack sufficient insights on effectiveness and creation
of value. The results of the researches show that there may be several internal beneficiaries
who will benefit from CF, especially in terms of strategic decision-making enhancement
(Rohrbeck, 2011), market research (Slaughter, 1997), new products and services (Becker,
2003; Andriopoulos and Gotsi, 2006). Benefitting from the information will decrease
uncertainty, and also it will lead to early warning or pre-warning by identification of weak
signals of radical changes.
The companies usually focus on certain types of information and ignore other types in the
adjacent areas (Day and Schoemaker, 2004); Winter (2004) calls this phenomenon, the logical
consequence of the companies’ success, and concludes that Sensing System are more
suitable for identifying the changes in the existing business environment, than its outside
environment. Therefore sensors for adjacent businesses and empty spaces will be less
developed, while all CF systems should aim to extend the scope of information usage. Thus, the
companies should establish units whose aim is constant scanning of the weak signals in the
environment.
To gain insight about the future _ the product of data interpretation_, and guaranteeing it
depends on the organization’s ability in these two facts:

1. Effective transference of the information from the organization to the managers who can
make suitable decisions and attempts; and
2. Informing the relevant internal beneficiaries and ensuring their support during the
process of organizational change.
The projects of CF will be successful if they pave the ground for involvement of the
beneficiaries in the development process. Selection of qualified people for foresight
activities is of prime importance.
Foresight activities are also linked to the relevant market sectors so that their current
businesses could be validated and some orientations be proposed for the future.
Generally, these kind of links are not established through the processes, but formal
communication channels for dissemination of insights. These communication channels
include irregular participation in the boards such as monthly technological loops or
foresight reports. As regards the companies with successful experience, it is expected that
the formal communications include the push-pull mechanism and integration of the
foresight with decision making processes.
Information technology tools (such as news feed, document management platforms,
Labeling platforms, Wikies, blogs [. . .]) have the ability to increase the efficiency and
productivity of the CF process. These tools help to concentrate the data collection and
interpretation, especially through integrating various foresihgters and internal beneficiaries
into the process of interpretation. Information technology tools can act as effective
channels for communication; consequently, they will provide the possibility of more
individual involvement; and this can have a positive impact on the performance and
success of CF and more information is transferred to the domestic customers.
The companies interested in creating or enhancing their foresight ability, should at first
evaluate the strengths of their organizational culture and then design their foresight system
based on it. The companies with a kind of organizational culture according to which they
pay attention to innovative programs of the individuals and authorize their staff, should
develop their foresight system based on the cultural components; while the companies

VOL. 19 NO. 6 2017 Foresight PAGE 569

 whose organizational culture is designed mostly based on the implementation of
closely-designed processes, should employ the structural elements of the CF.
It can be concluded that a supporting organizational culture that improves communication
within the company is very valuable for the companies willing to increase their own foresight
ability. Even if the company has decided to create its foresight ability based on the
structural approach and using the clear and defined processes, better communications
may increase the value creation power of the foresight insights.
High involvement and support of decision-makers in foresight activities is very essential,
otherwise, the insights from the foresight activities will never lead to taking required
measures. Involvement will accelerate the rate of decision making, it will open a
constructive negotiation for future planning; moreover it will enhance the probability that the
foresight outcomes result in taking required measures, because foresight is a learning
process for the top management, in particular, during which the decisions for taking
required measures should be taken over time. Having knowledge on possible breakdowns
and transmission of this information is itself very valuable. Companies that have
experienced discrete changes in their industries seek for the ways to enhance their ability
in showing proactive reactions, preventing the threats, and using the opportunities.
Concerning CF capability, the initial measures taken by the information resources is
regarded as the most important value which is expected from a CF system.
Enhanced CF capability will lead to setting up new research and development projects to
have impacts on the processes and identify the customers’ needs and preferences, and
also to reorganize the products and services. Another organizational characteristic is
responsiveness to detection of weak signals and motivation for rewarding broader
perspectives. Responsiveness and motivation should also include in addition to the related
foresight units all other employees. Responsiveness of all the employees and existence of
incentive plans is extremely important for detection of weak signals in sophisticated
high-speed environments. Successful interpretation of weak signals often may occur
through cooperation. As a result, the companies that are willing to enhance capability of the
culture in CF, should build a culture of trust and motivation for continuous sharing of
information at different levels. Readiness to hear the words of the watchers and foreign
sources is an important precondition for using the information coming from the foresight,
lack of which is a major hindrance to CF.
There are several ways for integrating CF into strategic decision making processes. None of
them could be considered as the best one, rather the results show that the companies often
moderated the strategic decisions for themselves; consequently they match the foresight input
with their needs, and in most companies strategic decision making is still to a large extent
dependent on internal data. As a result, there is a gap to be filled by CF. Many of the executives
in the organizations prefer to make decision based on the data and realities, even if this
information is not complete; and having access to the CF input is often considered as a
hindrance to the act of taking a decision. As a result, CF will be applied at strategic level
inclusively only when the mindset of the top management in the organization is changed.

Notes
1.
z2pq 1.962 ⫻ 0.5 ⫻ 0.5
d2 0.052
n⫽ ⫽ ⫽ 383.50
1⫹
1 z2pq
N d2 共
⫺ 1 1 ⫹ 兲
1
223317 0.052 共
1.962 ⫻ 0.5 ⫻ 0.5
⫺ 1 兲
2.

GOF ⫽ 兹Communality ⫻ R៮ 2

PAGE 570 Foresight VOL. 19 NO. 6 2017

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Appendix

Table AI Measures
Constructs and questions Loading t-value

Corporate foresight (AVE:0.721; CR:0.92)

Information usage
Our organization performs environmental scanning also outside our current business 0.659 26.075
Our organization performs environmental scanning proactively in both time horizons, long and short term 0.725 33.410
Our organization performs environmental scanning by using a large variety of information sources 0.726 33.844
Our organization performs environmental scanning by using also restricted or exclusive sources (such as personal
contacts and specialized databases) 0.732 31.899
Method sophistication
Our organization uses structured ways to integrate future-related market and technology information 0.716 30.512
Our organization uses structured ways to integrate future-related information from different time horizons 0.803 49.584
For processing future-related information our organization uses structured ways that fit a specific objective or
business issue 0.732 31.362
For processing future-related information our organization uses structured ways that fit the specific context of our
firm (e.g. volatility of the environment) 0.747 31.145
People and networks
People in our organization that engage in future-related research activities have a broad knowledge reaching
beyond their own domain 0.714 31.864
People in our organization that engage in future-related research activities have a strong internal network 0.720 33.644
People in our organization that engage in future-related research activities have a strong external (outside the
organization) network 0.680 25.812
People in our organization that engage in future-related research activities are good communicators 0.684 27.436
Organization
In our organization future-related research activities are triggered top-down (e.g. by top management) 0.624 22.411
In our organization top management strongly supports future-related research 0.722 37.835
In our organization future-related research is formally implemented 0.776 42.837
In our organization future-related information is rapidly diffused through formal channels 0.714 29.991
Culture
In our organization most employees are receptive to signals from the external environment (outside the
organization) 0.682 12.930
In our organization basic assumptions are challenged explicitly and frequently 0.656 25.441
In our organization every employee is encouraged to detect weak signals (i.e. signals that announce a possible
external change early) 0.738 37.212
In our organization every employee is encouraged to transmit weak signals (i.e. signals that announce a possible
external change early) 0.721 31.418
SDM (AVE:0.741; CR:0.89)
Rationality
To what extent did the decision-makers gather relevant information for making this decision? 0.744 36.563
How extensively and thoroughly did the decision-makers analyses relevant information for making this decision? 0.830 56.650
There are some techniques, which may be used by decision makers to get more information so as to take the
decision (e.g. attending training courses, conducting feasibility studies, using consultants etc.). To what extent did
the decision-makers rely on such techniques in making this decision? 0.790 43.835
How successful were the decision-makers at focusing their attention on crucial information during making this
decision? 0.814 47.397
Intuition
To what extent did participants in making this decision rely basically on personal judgment? 0.663 2.521
On many occasions, important decision-makers do not have enough information, and must make these decisions
based on a “gut-feeling”. To what extent did participants in making this decision depend on a “gut feeling” to
make it? 0.759 33.452
To what extent did past experience play the main role in making this decision? 0.695 18.194
(continued)

VOL. 19 NO. 6 2017 Foresight PAGE 575

Table AI
Loading t-value

Political Behavior
To what extent were decision-makers open with each other about their interests and preferences related to the
decision? 0.703 28.774
To what extent did the decision-makers use their power in order to defend their interests and preferences? 0.707 16.89
To what extent was the decision affected by bargaining among decision makers? 0.604 11.317
To what extent did the managers form alliances with each other in order to get their points of view on the table? 0.723 27.177
Were managers primarily preoccupied by their own goals, or by the goals of the company? 0.785 43.258
To what extent was there variation in participants’ points of view between formal meetings and informal
discussions? 0.718 33.322
To what extent did participants in this decision tend to hide or/and distort information to defend their points of
view? 0.763 40.283
Innovation (AVE:0.721; CR:0.91)
In our bank emphasizes both exploration and experimentation for opportunities 0.706 26.862
In our bank frequently tries out new ideas 0.707 28.694
In our bank seeks out new ways to do things 0.795 31.577
In our bank is creative in its methods of operation 0.855 70.938
In our bank is often the first to market with new products and services 0.793 51.120
We activity introduce improvements and innovations in our bank 0.823 51.268
We are not afraid to ad-lib and improvise our actions (modified) 0.605 18.551
Organizational performance (1 “Much worse than my competitors”, 7 “Much better than my competitors”). Relative to your main
competitors, what is your firm’s performance in the last three years in the following areas? (AVE:0.726; CR:0.93)
Organizational performance measured by return on assets (ROA) 0.855 61.752
Organizational performance measured by return on equity (ROE) 0.891 82.875
Organizational performance measured by return on sales 0.897 71.955
Organization’s market share in its main products and markets 0.836 29.235
Growth of sales in its main products and markets 0.853 56.971

Corresponding author
Mahdi Joneidi Jafari can be contacted at: m.joneidi@modares.ac.ir

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