Strategic Management Journal

Strat. Mgmt. J., 20: 567–577 (1999)

RESEARCH NOTES AND COMMUNICATIONS

USING INFORMATION-PROCESSING THEORY TO

UNDERSTAND PLANNING/PERFORMANCE
RELATIONSHIPS IN THE CONTEXT OF STRATEGY
PATRICK R. ROGERS1*, ALEX MILLER2 AND WILLIAM Q. JUDGE2
1
School of Business and Economics, North Carolina Agricultural and Technical
State University, Greensboro, North Carolina, U.S.A.
2
College of Business Administration, University of Tennessee, Knoxville,
Tennessee, U.S.A.

This study reveals the importance of viewing planning processes within the context of strategic
orientation. Information-processing theory is used to examine the differences in planning
processes given variable strategy content in the banking industry. Findings suggest that banks
implementing different strategies require their planning systems to focus on different kinds and
amounts of information. Moreover, the relationship between planning and bank performance is
clarified when information requirements of a specific strategy are considered. It appears the
strategy moderates the relationship between planning and performance. Copyright  1999 John
Wiley & Sons, Ltd.

Researchers have devoted considerable effort to
studying planning process–organizational per-
formance relationships. However, reviews of this
literature reveal that no clear or consistent con-
clusion can yet be reached (Armstrong, 1982;
Pearce, Freeman, and Robinson, 1987; Mintzberg,
1994). In their comprehensive review of the strat-
egy process literature, Huff and Reger (1987)
suggested that one of the reasons for the inconclu-
siveness of process–performance studies is the
omission of strategy content. They concluded
their review with a call for incorporation of
strategic content perspectives in future process
studies.
Key words: strategic planning; information proc-
essing; banking; strategic content; Miles and Snow
* Correspondence to: Patrick R. Rogers, School of Business
and Economics, North Carolina Agricultural and Technical
State University, Greensboro, NC 27411, U.S.A.
Two particular reasons have been identified for
studying planning processes and organizational
performance relationships in light of strategic
content. First, theory suggests that firms following
different strategies use planning processes with
different characteristics (Miles and Snow, 1978;
Miller, 1989). Therefore, there is good reason to
suspect that failure to control for different strate-
gies has led to misspecified and misleading mod-
els and resulted in conflicting and confusing
research results. Second, theory suggests that the
relationship between process characteristics and
firm performance differs according to the strategy
being pursued (Miller, 1989; Duhaime and Grant,
1984; Jemison and Sitkin, 1986).
This paper addresses both of these issues by
connecting the study of strategic processes with
strategic content. An important question is
addressed by this research: Are certain elements
of the planning process more critical to the effec-

CCC 0143–2095/99/060567–11 $17.50 Received 15 July 1996

Copyright  1999 John Wiley & Sons, Ltd. Final revision received 11 September 1998
568 P. R. Rogers, A. Miller and W. Q. Judge
tiveness of particular strategies? To address this
question, an information-processing view of plan-
ning is used to develop a model of strategic
planning process–strategic content fit.
THEORETICAL BACKGROUND
Several researchers have argued that planning has
primarily an informational role (Mintzberg, 1981,
1994; Steiner, 1979). For example, predecision
planners provide information input to decision-
makers. Planning activities such as scanning and
analysis provide information that can be assimi-
lated into the decision-making process. Postde-
cision planning provides the information neces-
sary to implement and control planning
decisions—what Mintzberg (1981, 1994) calls
‘programming.’
Viewing planning as this informational support
mechanism leads the theorist to examine the ‘fit’
between planning system processes and the con-
tent of strategy. Different strategies have different
information needs, as well as different implemen-
tation requirements (Miles and Snow, 1978; Gal-
braith and Kazanjian, 1986; Eardley et al., 1996).
Consequently, firms pursuing different strategies
should have different planning system designs
supporting the information needs of strategic
decision-makers. Some organizational theorists
have proposed that information is the key element
involved in this process of aligning strategic con-
tent and processes (Galbraith, 1969; Galbraith and
Nathanson, 1979; Knight and McDaniel, 1979).
Consistent with this theoretical perspective,
organizations are viewed here as information-
processing systems (Galbraith 1969, 1973, 1977;
Driver et al., 1996). Viewing organizations as
information-processing systems requires a contin-
gency approach to theory development. That is,
the information requirements of a firm are contin-
gent upon the combination of strategy/strategic
decision processes, structure, and the environment
of that firm. Moreover, a firm’s strategy requires
specific information, and this information is pro-
vided in a large part by the strategic planning
system (Steiner, 1979). This information-
processing perspective of planning suggests that
there is a good fit between strategy and the
strategic planning system when the information-
processing requirements of a firm’s strategy are
satisfied by the information capabilities of its
strategic planning system.
Copyright  1999 John Wiley & Sons, Ltd.
Information critical to sustaining the organi-
zation’s strategic orientation is received (Lenz
and Engledow, 1986) and interpreted (Daft and
Weick, 1984) by the strategic planning process.
This planning as information gathering is con-
cerned with environmental scanning, competitor
analysis, and the retrieval of some internal infor-
mation. Information is collected and injected into
the strategic decision-making process. Adjust-
ments are made to this predecision planning as
information inadequacies develop or information
needs change. Planning as programming rep-
resents the multitude of functions performed by
planning to assist in the implementation of stra-
tegic decisions through information dissemination
and integration.
As we mentioned above, strategic management
theory has been built on the understanding that
organizations must effectively align their strategy
and structure with the competitive environment if
they are to perform effectively. Clearly the fit
between planning’s information capabilities and
strategic information requirements is critical if an
organization is going to properly align its strat-
egy, structure, and environment (see Miller, 1987,
1989; Austin, Trimm, and Sobczak, 1995).
Consequently strategic planning processes that
properly supply the information-processing
requirements of a particular strategic content will
perform more effectively.
Strategy content
Strategic content research focuses on the outcome
of actual strategic decisions (Huff and Reger,
1987). The Miles and Snow (1978) typology has
been chosen to be used to represent strategy
content in this study. This typology is quite
advantageous since it has been empirically exam-
ined extensively and has been determined to be
relatively sound and inclusive in representing
organizational strategy (see Zahra and Pearce,
1990, for a recent review; see Shortell and Zajac,
1990, regarding reliability and validity). More-
over, specific information flows and anticipated
strategic planning systems are described for each
of the strategic types. Realizing our interest in
examining differences in information provided by
strategic planning systems, the typology becomes
a beneficial tool for analyzing strategy content–
planning process relationships.
Miles and Snow (1978) identified three suc-
cessful strategy types which they named Prospec-
Strat. Mgmt. J., 20: 567–577 (1999)

tors, Defenders, and Analyzers. A fourth type,
Reactors, have a weakly articulated strategy. Pros-
pectors compete through new products, product
innovation, and market development. Products
change often in the Prospector firm and new
markets are continually explored and developed.
Defenders compete in relatively stable product
markets. They offer a much narrower range of
products than competitors, and compete through
cost leadership, quality, and service. They do not
channel great amounts of resources into product
or market development. Analyzers are an inter-
mediate form, combining elements of both
Defenders and Prospectors.
Some studies (e.g., Hambrick, 1982, 1983;
Simon, 1987) have argued for the usefulness of
examining Prospectors and Defenders exclusively
because of their clearly defined theoretical differ-
ences. In these studies, the empirical interest was
directed toward specific organizational constructs
anticipated to be different between different firms.
We chose to focus exclusively on Prospectors
and Defenders since this study seeks to examine
planning/performance relationships in the context
of strategy rather than to test the Miles and
Snow typology.
We rearticulate here that failure to control for
strategic content may have masked the relation-
ship between strategic planning processes and
performance. Several researchers have found
variability in organizational processes across strat-
egy content (Simon, 1987; Duhaime and Grant,
1984; Jemison and Sitkin, 1986; Govindarajan,
1989; Veliyath and Shortell, 1993; Abernathy and
Gutherie, 1994). Given the growing literature that
suggests the usefulness of linking process and
content studies for greater understanding of per-
formance outcomes, we believe that many plan-
ning studies that argued for a direct link between
strategic planning processes and performance ne-
glected an important moderating variable. Thus,
planning may not be empirically linked to per-
formance without considering the moderating
effect of strategy. In fact, even when planning
processes are described and measured, linking
them to performance has been difficult. Therefore,
we suggest the following hypothesis:
Hypothesis 1: The relationship between stra-
tegic planning processes and organizational
performance will depend upon the content of
strategy pursued.
Copyright  1999 John Wiley & Sons, Ltd.
Research Notes and Communications 569
METHODOLOGY
Sample and data
To control for industry effects, data were gathered
from a single industry. We selected a random
sample of 924 U.S. banks within the 1990 Rand
McNally Bank Directory. We chose the banking
industry because of the authors’ personal knowl-
edge of the prevalent use of strategic planning in
the banking industry. Banks of medium size ($50
million to $1 billion in assets) were examined
for the period 1990–1993.
A questionnaire was sent to the CEO of each
bank in the sample. Recognizing the potential
variance among managers’ perceptions of strategy
within the same organization (Snow and Ham-
brick, 1980), some researchers have argued that
CEOs should have the most realistic represen-
tation of a firm’s strategic orientation because
they are the prime strategists (Andrews, 1971).
This is especially evident in smaller organizations
where the CEO can be expected to have a much
clearer view of the overall strategic orientation of
the firm than other potential company informants.
Zahra and Pearce (1990) argued that determin-
ing which of Miles and Snow’s strategic orien-
tations a firm adheres to requires use of multiple
measures. We chose industry experts quite fa-
miliar with the habits of banks in their states.
State-appointed bank supervisors (hired by the
state to supervise state banks) were used to vali-
date the strategy type chosen by the CEOs. Forty-
two state bank supervisors (or a recommended
substitute) responded to our request to validate
the strategy type chosen by responding bank
CEOs from the supervisor’s state. Condensed
versions of the original descriptions of a
market/product strategic orientation and an
efficiency/cost strategic orientation were provided
by phone (we kept the descriptions very brief
and simple). Overall, the industry experts and
CEOs agreed 86 percent of the time in their
assessments of strategic orientation. This level of
agreement led the researchers to be reasonably
confident in CEO responses. Moreover, recent
validation of ‘paragraph strategy typing’ in the
banking industry specifically supports the use of
this technique within the Miles and Snow frame-
work (James and Hatten, 1995).
Each CEO was asked to indicate the strategic
orientation of their bank based on written descrip-
tions of Miles and Snow strategy types developed
Strat. Mgmt. J., 20: 567–577 (1999)
570 P. R. Rogers, A. Miller and W. Q. Judge
by McDaniel and Kolari (1987) (Appendix).
Additionally, each CEO answered 40 questions
about the strategic planning system used by their
banks. The strategy descriptions did not reference
information-processing abilities. In addition to the
primary data collected by the survey, archival
performance data was also gathered for all banks
in the study from the American Bank Directory,
Rand McNally’s Bank Directory, and Standards
and Poors for the period of 1991–93.
CEOs from 252 banks responded (27%) to the
1993 survey and 157 of these were classified as
either Prospectors or Defenders and were there-
fore useful for this study. (Although we had 78
Analyzers and 17 Reactors respond, we chose to
examine the two strategy types anticipated to
be the most different.) We found no significant
differences in organizational size or financial per-
formance between banks that responded and those
that did not. There were also no significant size
differences between responding Prospector banks
and Defender banks. Realizing the potential for
regional differences due to economic or regula-
tory conditions, we also examined five regional
subsets for differences in size, performance, and
responses to the survey items and found no sig-
nificant differences.
Variables and measures
Strategy
Strategy was operationalized as a binary cate-
gorical variable. CEOs classified their banks
either as a Defender (coded ‘0’) or as a Prospec-
tor (coded ‘1’).
Planning process dimensions
The second half of our 1993 questionnaire
requested the CEO to characterize strategic plan-
ning processes in their firm. Forty 5-point Likert
scale (1 = strongly agree; 5 = strongly disagree)
items were used. These items were selected from
previous studies that have investigated either stra-
tegic planning or strategic information systems
(Miller, 1987, 1989; Simon, 1987; McKee, Vara-
darajan, and Pride, 1989; Robinson and Pearce,
1988). A rotated (varimax) principal components
factor analysis reduced the scaled planning system
variables to a more parsimonious set (see Table
1). These factors included 21 of the original 40
Copyright  1999 John Wiley & Sons, Ltd.
item set. The planning dimensions produced by
the factor analysis were: Accounting Control
(␣ = 0.94), Integration and Coordination
(␣ = 0.87), Flexibility (␣ = 0.74), Goals & Plans
(␣ = 0.68), Scanning (␣ = 0.80), and Broad
Analysis (␣ = 0.71). All six factor solutions pro-
duced eigenvalues greater than 1. The associated
item factor loadings (⬎ 0.6 for all items) and
reliability alphas are considered appropriate
according to the criteria established by Nunnally
(1978). The principal components factor analysis
produced uncorrelated exact factor scores for each
planning dimension. These exact factor scores
were used in subsequent regression analyses.
Performance
Archival measures of Return on Assets, Return
on Equity and Loan Growth were gathered for
the time span of 1991 through 1993. An aggregate
measure of performance was calculated by aver-
aging the scores of the 3 years for each variable.
For example, the variable ROA was the average
ROA for the period 1991–93.
RESULTS
Table 2 provides descriptive statistics and corre-
lations for all variables in the study. As we
mentioned above, the majority of previous plan-
ning studies examined the relationship between
performance and some aggregated measure of
planning formality or sophistication. As a precur-
sor to a direct test of our hypothesis, we examined
the association between our planning dimensions
and performance without controlling for strategic
content. We regressed the six variables rep-
resenting the dimensions of planning on each of
the three performance variables for the full sam-
ple (Results ROA: R2 = 0.04, F = 1.12, p = 0.35;
ROE: R2 = 0.07, F = 1.81, p = 0.11; LOAN-
GROWTH: R2 = 0.02, F =0.64, p = 0.70). Inter-
estingly, there was no significant relationship
between planning and performance.
Few strategic planning studies have examined
specific dimensions of planning and performance
while controlling for strategy. A second set of
regressions were performed for each of the three
performance variables using the same six plan-
ning variables as independents while also includ-
ing strategy. This created a reduced model with
Strat. Mgmt. J., 20: 567–577 (1999)
 Research Notes and Communications 571
Table 1. Factor analysis outcome: Planning dimensions

Factor name Factor loading

Accounting Control (␣ = 0.94)

앫 We use tight budget goals. 0.82
앫 Trends in performance closely monitored. 0.88
앫 Use cost centers and control cost through variance analysis. 0.90
앫 Our control system monitors nearly all tasks. 0.83
앫 We intensely monitor profit centers. 0.89
앫 Control reports relate outputs produced to inputs consumed. 0.74
앫 Planning is important for achieving efficiency. 0.82
Integration and Coordination (␣ = 0.87)
앫 Planning helps integrate departments through information exchange. 0.89
앫 Information sharing is critical to our operation. 0.77
앫 Planning initiates coordination of projects and objectives. 0.75
앫 Planning helps us achieve coordination and organizational unity. 0.78
앫 Planning’s critical role is facilitating information sharing. 0.70
Flexibility (␣ = 0.74)
앫 We often adjust planning to meet changing needs. 0.74
앫 Planning must deal with high strategic issue turnover. 0.86
앫 We really plan all the time rather than at regular intervals. 0.78
Goals & Plans (␣ = 0.68)
앫 Specific, short-range goals known to all managers. 0.81
앫 We develop formal plans for potential products and markets. 0.77
Scanning (␣ = 0.80)
앫 Search systematically for products, acquisitions, and investments. 0.63
앫 Planning deals with a great variety of external strategic issues. 0.87
Broad Analysis (␣ = 0.71)
앫 Our strategic issues are broad rather than specific. 0.97
앫 Planning focuses on broad plans, not narrow budgets. 0.66
Total variance explained by the six factors 79.6%

the direct effects of strategy included. Results of
these regressions were as follows: ROA
兵R2 = 0.04, F = 0.96, p ⬍ 0.46其; ROE 兵R2 = 0.02,
F = 1.56, p ⬍ 0.15其; LOANGROWTH 兵R2 = 0.03,
F = 0.58, p ⬍ 0.77其.
We produced a full model for comparison by
including as independent variables the six plan-
ning variables, strategy, and the interaction
between the strategy variable and each of the six
planning variables. Consequently, each perform-
ance regression had 13 independent variables.
Results of these regressions were as follows:
ROA 兵R2 = 0.31, F = 4.84, p ⬍ 0.001其; ROE
兵R2 = 0.22, F = 3.03, p ⬍ 0.001其; LOAN-
GROWTH 兵R2 = 0.20, F = 2.77, p ⬍ 0.002其. To
test for the moderating effect of including strat-
egy, we compared the full and reduced models
to reveal whether the inclusion of the strategy
interaction terms results in a significant increase
Copyright  1999 John Wiley & Sons, Ltd.
in R2 (i.e., variance explained). The SPSS sta-
tistical package produces an F-change statistic
testing the significance in the improvement in R2.
Results were: ROA 兵F = 4.82, P ⬍ 0.001; ROE
兵F = 6.18, P ⬍ 0.001其; LOANGROWTH 兵F =
2.22, p ⬍ 0.05其. The moderating effect of strategy
seems statistically evident.
Finally, we wanted to determine what specific
dimensions of planning are more or less critical
for Prospectors and Defenders. To accomplish
this, we simultaneously estimated two regression
equations for Prospectors and Defenders across
each performance variable with our six planning
dimension variables as independent variables.
Consequently, six regressions were produced as
represented in Table 3. SAS’s MTest procedure,
testing the null hypothesis that the parameter
estimates for a given independent variable are the
same for both dependent variables (ROAP and
Strat. Mgmt. J., 20: 567–577 (1999)
Copyright  1999 John Wiley & Sons, Ltd.

572
P. R. Rogers, A. Miller and W. Q. Judge
Table 2. Descriptive statistics and correlationsa

Variables Mean S.D. 1 2 3 4 5 6 7 8 9

1. ROA 0.007 0.005

2. ROE 0.068 0.057 0.64***
3. Loan Growth 0.266 0.409 0.49*** 0.40***
4. Accounting Control −0.020 0.987 0.02 0.05 0.09
5. Integration and Coordination 0.001 1.022 0.08 0.03 0.10 −0.15
6. Flexibility 0.103 1.00 0.10 −0.001 −0.004 −0.46*** 0.30***
7. Goals & Plans 0.015 1.007 −0.09 −0.184* −0.022 0.006 0.02 0.03
8. Scanning 0.023 1.017 −0.06 −0.088 0.01 −0.14 0.02 0.30*** 0.02
9. Broad Analysis 0.025 1.002 0.11 0.14 −0.06 −0.11 0.07 0.21** 0.01 0.05
10. Strategy 0.452 0.499 0.08 0.04 0.01 −0.57*** 0.49*** 0.59*** −0.04 0.31*** 0.39***
a
N = 157
*p ⬍ 0.05; **p ⬍ 0.01; ***p ⬍ 0.001
Strat. Mgmt. J., 20: 567–577 (1999)
Copyright  1999 John Wiley & Sons, Ltd.

Table 3. Multivariate regression results and comparisons of differencesa (N = 157)

Variables ROA (P)b ROA (D) Difference ROE (P) ROE (D) Difference Loan (P) Loan (D) Difference
model model statistic model model statistic growth model growth model statistic
(F-test) (F-test) (F-test)

Accounting Control −0.34*** 0.41*** 71.1*** −0.37*** 0.33*** 49.5*** −0.18* 0.34*** 20.9***
(−5.7) (6.0) (−6.3) (4.5) (−2.1) (4.4)
Integration and 0.29*** −0.23*** 40.9*** 0.35*** −0.23*** 37.2*** 0.17* −0.04 4.5*
Coordination (5.3) (−3.7) (6.4) (−3.4) (2.2) (−0.57)
Flexibility 0.18*** −0.05 5.7* 0.15* −0.10 5.0* 0.13 −0.11 3.9*
(2.8) (−0.68) (2.3) (−1.3) (1.4) (−1.3)
Scanning 0.15*** −0.23*** 21.9*** 0.19*** −0.22** 19.8*** 0.15† −0.13† 7.3**

Research Notes and Communications

(2.7) (−3.7) (3.4) (−3.2) (1.9) (−1.8)
Breadth of Analysis 0.33*** −0.22*** 48.21*** 0.28*** −0.06 11.5*** 0.09 −0.18** 7.1**
(6.2) (−3.7) (5.2) (−0.88) (1.2) (−2.6)
Goals & Plans −0.02 −0.07 0.51 −0.10† −0.10 0.15 0.07 −0.12† 3.5†
(−0.37) (−1.2) (−1.9) (−1.6) (0.99) (−1.7)
R2 0.58 0.46 0.60 0.36 0.18 0.29
Adj. R2 0.57 0.44 0.58 0.33 0.15 0.26
F 34.8*** 21.3*** 37.4*** 13.8*** 5.7*** 10.2***
a
Standardized regression coefficients are reported.
b
(P) = Prospector Model (D) = Defender Model.
Strat. Mgmt. J., 20: 567–577 (1999)

†p ⬍ 0.10; *p ⬍ 0.05; **p ⬍ 0.01; ***p ⬍ 0.001

573
574 P. R. Rogers, A. Miller and W. Q. Judge
ROAD, for example), was used to make compari-
sons of coefficients. This basic methodology,
wherein regression coefficients are compared
across two models with unique dependent vari-
ables, has been effectively used in previous
research (Acs and Audretsch, 1989; Mata, 1991).
The difference statistics for each paired model
are represented in Table 3.
DISCUSSION
The results presented above produced three clear
conclusions. First, planning and performance may
not be clearly understood without considering
firm strategy. When we ran full sample regression
models of the planning and performance relation-
ship we produced no significant findings. Had we
stopped at this point, it would have appeared that
our dimensions of planning had no significant
impact on ROA, ROE or Loan Growth in banks.
Yet theory suggested to us that this should not
be the case.
Consequently, we explored whether strategy
is an important moderator of the planning and
performance relationship. Quite clearly, our
second conclusion is that strategy matters. Com-
paring the reduced model with the full model
and its associated interaction terms clearly
revealed that strategy moderates the relationship
between planning and performance. The full
model exhibited substantial improvement in vari-
ance explained. Our test of the significance of
the improvement in the interaction models indi-
cated that there was a significant increase in
variance explained as suggested by the test sta-
tistic.
Our third conclusion is that banks pursuing
different strategies use significantly different plan-
ning processes. They also require distinctly differ-
ent kinds and amounts of information, as noted
in the regressions reported in Table 3. The results
suggest that successful Prospector banks empha-
size the integration/coordination, flexibility, scan-
ning, and breadth dimensions of planning, and are
negatively predisposed to utilizing the accounting
control dimension of planning. Conversely,
Defenders emphasize accounting control while
placing much less emphasis on any of the other
dimensions of planning. Defender banks appear
to focus planning and information gathering on
a more narrow range of information. These find-
Copyright  1999 John Wiley & Sons, Ltd.
ings were consistent across all three measures
of performance.
We also found that five of the six planning
dimensions are significantly different across the
two strategy types. Only the Goals & Plans vari-
able shows no significant difference with regard
to the difference test statistic. Prospectors and
Defenders appear to be most different along the
planning dimensions of accounting control,
integration/coordination, scanning, and breadth of
analysis. There are moderate and statistically sig-
nificant differences between the two types regard-
ing the flexibility dimension of planning.
Our findings reveal important answers to the
question that stimulated this research. Clearly, the
relationship between planning and performance is
made more explicit when the content of strategy
is controlled. Strategic planning processes appear
to be different across organizations pursuing dif-
ferent strategies. In general, Prospectors appear
to value information of all types while Defenders
appear to focus their information processing on
critical internal efficiency information.
Moreover, it appears that failure to control for
strategic content may lead to misspecified process
models. When we eliminated strategic content,
we produced models of the planning–performance
relationship that were virtually devoid of any
statistical significance or theoretical meaning. On
the other hand, controlling for strategic type
resulted in planning–performance models that
were both statistically significant and theo-
retically clear.
Specifically, our findings are supported in a
practical sense by what we see in today’s com-
petitive environment. Sokol (1993) describes the
strategic planning changes that took place at a
large Canadian bank as it moved from a Defender
strategy to a more Prospector-like strategy. The
new strategy required different kinds of infor-
mation and a ‘premium’ was placed on planning
flexibility. This anecdote is encouraging, as it
supports our findings that the Prospector strategy
requires substantial amounts of information when
compared to the Defender type. Other researchers
are coming to similar conclusions. By linking
strategy and information, Austin et al. (1995)
have provided practical understanding of the
importance of aligning the types of strategies that
hospitals pursue and the design of their infor-
mation systems. They suggest that information
system planning must be closely linked to stra-
Strat. Mgmt. J., 20: 567–577 (1999)

tegic planning. In fact, they offer the case of a
hospital in South Carolina that, after changing
strategic orientation from Reactor to Prospector,
had to significantly alter the information capa-
bility and capacities of its strategic planning sys-
tem.
Clearly the most intriguing finding of this
research is that the content of strategy is an
important window to look through when examin-
ing organizational processes, specifically planning
processes. Our results hold potentially important
implications for both managers and researchers.
Managers must pay particular attention to the
information needs of the strategies that they pur-
sue. Since strategic planning processes provide
much of this information, planning must be
designed to fit strategy (see Liang and Tang,
1994, for an interesting discussion regarding the
banking industry). Not only do our findings sug-
gest this, but we have shown several practical
examples above.
Given our findings in the banking industry,
replication in other industries would be valuable.
These studies, in combination, may reveal simi-
larities across industries in the planning dimen-
sions most relevant to the needs of Prospectors
and Defenders. Prospector banks appear to utilize
a planning process that emphasizes external scan-
ning, flexibility, broadly focused analysis, and
attention to coordination and integration activities.
While this appears to be a prescription for the
successful Prospector bank, one wonders whether
it would produce success across industries.
Moreover, we believe that as firms change
strategies they must ask themselves what infor-
mation the new strategy will require. Thus, suc-
cessful strategic change will most certainly
require system changes, including information
system changes. Schwenk (1995) has recently
argued that a critical new area that deserves
attention from both strategic managers and
researchers is linking strategy processes with
information technology. For example, Triangle
Bank of Raleigh, North Carolina, has seen its
strategic information needs change dramatically
as its strategy has changed. This bank had to
prepare a plan for information technology to meet
the new demands of its strategy and strategic
planning systems (Britt, 1996).
Finally, we think there may be merit in
extending the integration of process and content
issues to topics well beyond the modeling of
Copyright  1999 John Wiley & Sons, Ltd.
Research Notes and Communications 575
planning–performance relationships. Our disci-
pline is widely bifurcated along the process–
content border. For example, we know of a num-
ber of doctoral programs in strategy that reinforce
this division by organizing their course work into
process-oriented seminars and content-oriented
seminars. Yet, our results suggest that there is
considerable merit to integrating the two rather
than treating them as the domains of separate
research camps. It would be ironic indeed if
strategy, the ultimate integrative discipline in
managerial research, failed to reach its potential
as an area of study because it failed to integrate
its own two dominant streams of thought and
literature.
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 Research Notes and Communications
APPENDIX
Which one of the following descriptions most
closely fits your bank compared to other banks
in the industry? (Please consider your bank as a
whole and note that none of the types listed
below are inherently ‘good’ or ‘bad’).
TYPE 1
This bank attempts to locate and maintain
a secure niche in a relatively stable product
or service area. The bank tends to offer a
more limited range of products or services
than its competitors, and it tries to protect its
domain by offering higher quality, superior
service, lower prices, and so forth. Often
this bank is not at the forefront of develop-
ments in the industry—it tends to ignore
industry changes that have no direct influ-
ence on current areas of operation and con-
centrates instead on doing the best job pos-
sible in a limited area.
TYPE 2
This bank typically operates within a broad
product–market domain that undergoes peri-
odic redefinition. The bank values being
‘first in’ in new product and market areas
even if not all of these efforts prove to be
highly profitable. The organization responds
Copyright  1999 John Wiley & Sons, Ltd.
577
rapidly to early signals concerning areas of
opportunity, and these responses often lead
to a new round of competitive actions. How-
ever, this bank may not maintain market
strength in all the areas it enters.
TYPE 3
This bank attempts to maintain a stable,
limited line of products or services, while
at the same time moving out quickly to
follow a carefully selected set of the more
promising new developments in the indus-
try. The bank is seldom ‘first in’ with new
products or services. However, by carefully
monitoring the actions of major competitors
in areas compatible with its stable product–
market base, the bank can frequently be
‘second in’ with more cost-efficient product
or service.
TYPE 4
This bank does not appear to have a consis-
tent product–market orientation. The bank
is usually not aggressive in maintaining
established products and markets as some
of its competitors, nor is it willing to take
as many risks as other competitors. Rather,
the bank responds in those areas where it
is forced to by environmental pressures.
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