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The research proposes a model, which relates the following variables: (a) the CEO's perceptions of the environment, (b) the strategic business orientation, scanning, and structural characteristics, (c) technology policy, (d) realized innovative efforts of the firm, and (e) measures of firm performance. The empirical data from small manufacturing enterprises (SMEs) that share a common economic and industrial environment show that CEOs' perceptions of external environment-and not objective measures-are key significant issues with respect to technology policy formulation and enactment in SMEs and its subsequent organizational impacts. In particular, perceived environmental hostility and dynamism are shown to have specific and differing moderating roles on the form and strength of the relationships between technology policy and its determinants and between technology policy and realized innovative efforts. Furthermore, a more aggressive technology policy leads to greater realized innovative efforts, which in turn are positively related to export performance and, to a lesser extent, to financial performance.
(Strategic Management of Technology; Small Firms; Strategy Enactment; Perceptions of the External Environment)
1. Introduction
Technology is considered to be one of the most powerful factors shaping the rules of competition. As a result, the strategic management of technology is a crucial concern for an increasing number of firms and also generates considerable academic interest (NRC 1991). This paper investigates one central theme in the area of strategic management of technology, focusing on the determinants and outcomes of technology policy at the firm level. More specifically, the study presented here is conducted in the context of small manufacturing enterprises (SMEs), where the CEO is known to play a crucial role (Harrison 1992). This paper makes a substantial contribution to understanding technology and strategy in SMEs because heretofore little empirical evidence has been available on the formulation or effects of technology policy in small firms (Zahra and Covin 1993).
The study also builds extensively on previous work realized in contingency theory where environmental characteristics are known to be important moderating variables (Prescott 1986). However, it departs from past research by simultaneously pursuing two objectives:
(i) to analyze the specific moderating role of environmental variables not on the classical link between strategy and performance (S -> P) but rather on the relationships defined in the sequence S&D -> TP -> RIE -> P...