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EMJB
5,2 Change readiness: an alternative
conceptualization and an
exploratory investigation
138
Yaron Timmor
Interdisciplinary Center Herzliya (IDC), Herzliya, Israel, and
Jehiel Zif
Center for Academic Studies, Sarnat Business School, Israel and
Hult International Business School, Boston, Massachusetts, USA

Abstract
Purpose – Change readiness (CR) is viewed as a multidimensional behavior that reflects the firm’s
competencies to do three things in response to environmental opportunities and threats in its industry:
trigger identification; gearing up to take action (preparation); and the action’s degree of novelty. The
main purpose of this study is to propose and test an alternative conceptualization for CR.
Design/methodology/approach – Data were collected from 217 organizations in 14 countries. All
respondents were in charge of, or involved with, their firms’ strategic decisions and implementations
thereof and filled out a structured questionnaire.
Findings – It was found that CR is influenced by both internal and external variables, including
management orientation (entrepreneurial, centralization), environmental barriers, and technology and
innovation roles in firms’ business strategies. In addition, a higher degree of CR was correlated with
better performance and with higher management evaluation of success in coping with environmental
triggers.
Research limitations/implications – The size and selection of the sample may pose limits in
generalizing the study findings. Future studies may increase the number of interviews per firm, use
objective assessments of performance and provide more specific information about threats and
opportunities, as well as the type of industry.
Originality/value – The proposed CR concept is based on specific behavior rather than on attitude.
CR is perceived as a strategy-oriented construct that demonstrates the capacity of an organization to
respond effectively to new developments in its environment.
Keywords Management strategy, Interviews
Paper type Research paper

EuroMed Journal of Business
Vol. 5 No. 2, 2010
pp. 138-165
q Emerald Group Publishing Limited
1450-2194
DOI 10.1108/14502191011065482
Introduction
The concept of change readiness has been largely discussed in the management
literature mainly in the Organizational Behavior domain (Alas, 2007; Chonko et al.,
2002; Eby et al., 2000; Jones et al., 2005). These studies focus on organizations’
structures, learning, and personnel’s (managers, employees) attitudes toward
organizational changes (Alas, 2007; Armenakis and Bedeian, 1999; Barr et al., 1992;
Jimmieson et al., 2009; Newman, 2000; Rajagopalan and Spreitzer, 1996). Most studies
have associated change readiness with flexibility, and noted its importance to
achieving a strategic advantage in an increasingly turbulent business environment.
However, though change readiness is strongly related to business and marketing
The authors would like to thank Tel-Aviv University for supplying partial funding for this research.
strategy (i.e. how and when to respond to marketing opportunities or threats), studies Change
of this aspect are limited. readiness
This paper explores the concepts of inertia and change from the aspects of business
and management strategy. As such, it concentrates on the concept of change readiness
(CR) and addresses the following questions:
(1) What does it mean to be ready for strategic change in response to
environmental triggers? 139
(2) What distinguishes organizations that are good at it?
In an attempt to answer these questions, the study’s main contribution lies in
proposing and testing an alternative conceptualization for CR. In this
conceptualization, change readiness is viewed as a multidimensional construct that
reflects the firm’s competencies to do three things in response to environmental
opportunities and threats in its industry: trigger identification; gearing up to take
action (preparation); and the action’s degree of novelty.
We propose that CR is influenced by a set of both internal and external variables,
including management orientation (entrepreneurial, centralization), environmental
barriers, the firm’s resources, and the roles that technology and innovation play in the
firm’s business strategy. We argue that a higher degree of change readiness leads to
better performance both financial and operational and to higher management
evaluation of success in coping with environmental triggers.
In theory, the proposed CR concept draws on the resource-based perspective, which
finds firms’ distinguishing competencies to be important in successfully dealing with
their environments (Barney, 1991; Saini and Johnson, 2005; Sharma and Vredenburg,
1998; Tallon, 2008; Timmor and Zif, 2005). In addition, the CR concept draws on the
industrial organization’s viewing the firm’s competitive strategy to be
industry-dependent (Conner, 1990; Grandy and Mills, 2004; Porter, 1985). Lastly, it
largely considers management perspectives and typologies regarding how firms
handle their environments, i.e. being proactive and flexible (Dreyer and Gronhaug,
2004; Mintzberg, 1994; Rudd et al., 2007; Segev and Gray, 1990).
The study takes the point of view of an independent organization, or a strategic
business unit within a conglomerate. It begins with discussing the meaning of CR,
reviewing the major perspectives of CR and their related influence on organizations’
strategies. The CR concept is then presented by discussing its various dimensions and
their nature in the organization’s behavior. The set of hypotheses is based on the
factors that are expected to affect the CR facet of an organization, and the expected
correlations between CR and business performance. The paper continues by presenting
an empirical study of 217 organizations in the USA, Europe, and Asia that includes
methodology and findings, theoretical aspects, and managerial implications.

The meaning of change readiness

Two related concepts of organizational responsiveness have been discussed in the
literature: inertia and flexibility (Aaker and Mascarenhas, 1984; Hannan and Freeman,
1984; Huff et al., 1992; Kelly and Amburgey, 1991; Rajagopalan and Spreitzer, 1996;
Rudd et al., 2007; Zhang, 2006). Although both concepts characterize the speed of an
organization’s response to environmental change, they reflect different theoretical
heritages (Ginsberg, 1990; Huff et al., 1992).
EMJB The concept of inertia centers on structural and bureaucratic elements that
5,2 organizations develop over time that tend to limit change and are hence considered
“weaknesses” (Rajagopalan and Spreitzer, 1996). Flexibility, on the other hand, may be
defined as the extent to which new and alternative decisions are considered in strategic
planning and execution, enabling positive changes and adaptations to the turbulent
environment (Combe and Greenley, 2004; Feigenbaum and Karnani, 1991; Grewal and
140 Tansuhaj, 2001; Ireland and Hitt, 1999; Rudd et al., 2007). Flexibility focuses on
managerial and organizational abilities to quickly respond to environmental forces,
traits that are considered “strengths” (Hitt et al., 1998; Rajagopalan and Spreitzer,
1996).
With the acceleration of globalization and environmental dynamism, numerous
studies have discussed the relationships between flexibility, strategic changes, and
organizations’ performance (Dreyer and Gronhaug, 2004; Ebben and Johnson, 2005;
Kessler and Chakrabarti, 1996; Rajagopalan and Spreitzer, 1996; Rudd et al., 2007;
Thoumrungroje and Tansuhaj, 2007). Scholars have addressed various types of
flexibility such as operational, technological-financial, manufacturing, and structural
(Harris, 2002; Harris and Ruefli, 2000; Lei et al., 1996; Mensah and Werner, 2003; Zhang,
2006). Most studies have found strategic changes and flexibility to have a positive
effect on firms’ financial (i.e. profitability, costs) and organizational (i.e. efficiency,
productivity) outcomes (Goldhar and Lei, 1995; Hitt et al., 1998; Li, 2000; Li et al., 2005;
Rudd et al., 2007; Tan and Peng, 2003).
Readiness for change has been identified with a “cognitive precursor to behaviors of
either resistance or support for change efforts” (Armenakis et al., 1993; Chonko et al.,
2002). Moreover, CR has been highly associated with the individual’s attitude towards
change as well as her perceptions, feelings, and beliefs surrounding her organization’s
change readiness (Alas, 2007; Armenakis et al., 1999; Chonko et al., 2002; Freiberg,
1992; Ogbonna and Wilkinson, 2003). In addition, it has been argued that readiness for
change reflects an individual’s unique interpretation (Eby et al., 2000; Spreitzer, 1995;
Thomas and Velthouse, 1990). Recent studies have defined CR as more of an active
competency like “preparation of a gun for immediate aim and firing” (Walinga, 2008). It
was also suggested that the construct of perceived organizational readiness for change
(PORC) should refer to the belief of employees that the organization is engaged in
practices that will lead to successful change (Cinite et al., 2009).
Despite the extensive literature of organization flexibility, inertia, and change
readiness, empirical studies have tended to use flexibility and change readiness
intuitively as a clear-cut, universally understood notion (Billet and Garfinkel, 2004).
Hence, they do not specify or measure this notion’s attributes, but rather examine
individuals’ assessments and change’s apparent effects on individuals and
organizations’ outcomes (Alas, 2007; Jones et al., 2005; Miller et al., 1994; Neves,
2009; Santhanam et al., 2000). Somewhat of an exception is Zhang’s (2006) study
focusing on IS support for a few proposed parameters of strategic flexibility and firm
performance. However, it did not measure these parameters directly, but rather studied
IS’s perceived affect thereon, and it also used the term flexibility itself in some of the
parameters, i.e. “increased flexibility of business process”.
Two major approaches were proposed in studying Change theories: the variance
and the process. The former focuses on fixed entities with variable attributes and the
later on entities that participate in events and may change over time (Poole and Van de
Van, 2004; Langley, 1999). Our research follows the line of the variance rather than the Change
process approach. readiness
In this paper, CR is perceived as strategy oriented and is used in a more specific
sense to express the demonstrated capacity of an organization to respond effectively to
important new developments in its business environment. The proposed CR concept is
therefore based on specific behavior rather than on attitude.
141
CR: a business strategy conceptualization
According to this conceptualization, CR is a multidimensional construct consisting of
three related activities:
(1) Trigger identification.
(2) Gearing up to take action (preparation).
(3) Action’s degree of novelty.
These elements identify the firm’s competency to cope with opportunities and threats,
that evolve in its specific business environment.
Business strategy can be viewed as all activities that involve the monitoring,
planning, and implementing of actions to strengthen the position of the firm relative
to its competitors (Alvesson and Wilmott, 1995; Grandy and Mills, 2004). Strategic
change refers to differences in these activities, i.e. the form, quality, and state over
time of an organization’s alignment with its external environment (Chonko et al.,
2002; Rajagopalan and Spreitzer, 1996; Van de Ven and Poole, 1995). Business and
marketing scholars have commonly used Porter’s (1985) SWOT (Strengths,
Weaknesses, Opportunities and Threats) to analyze firms’ environmental
opportunities and threats, and how the firm is facing them with its strengths and
weaknesses (Hill and Westbrook, 1997; Grandy and Mills, 2004; Lin and Hsu, 2006).
It has been argued that amidst the globalization process, firms are more affected by
changes in market opportunities and threats (Frenkel and Peetz, 1998; Kulmala et al.,
2002). Furthermore, how a firm copes with these external changes affects its
competitive position and performance (Hitt et al., 1998; Thoumrungroje and
Tansuhaj, 2007; Zhang, 2006).
Opportunities and threats are both considered external triggers; however, they are
highly distinct from one another. The former is a highly favorable situation in a firm’s
environment, and is indication of a chance to improve performance substantially. The
latter, on the other hand, is a highly unfavorable situation in a firm’s environment, and
indication of pending deterioration in organizational performance if some action is not
taken (Hill and Westbrook, 1997; Lin and Hsu, 2006; Porter, 1985). While it is true that
in many cases a threat can be viewed as an opportunity and vice versa, most
organizations tend to identify environmental signals either as threats or as
opportunities, and the strategic literature frequently classifies outside events into
threats or opportunities (Ansoff, 1984; Urban and Steven, 1991). Another view of
triggers that call for strategic change is their origin:
.
A shift in consumer demand toward or away from the organization’s
products/services (cultural pressure, economic shift, or other causes).
.
A technological development that creates either a threat or an opportunity.
.
A change in governmental regulations or policies.
EMJB .
A major decline/increase in competitive activity.
5,2 .
An adverse/favorable change in financial sources.
We propose that the first element in a firm’s readiness to cope is trigger identification.
Identification of an environmental trigger with a likely strategic impact on the firm is
considered a key signal for change action (Chonko et al., 2002; Segev, 1977; Struckman
142 and Yammarino, 2003; Tichy, 1983). In dynamic environments, it is important to
quickly respond to external triggers (Jack and Raturi, 2002; Li et al., 2005; Zhang, 2006).
It has been argued that with rapid environmental changes (i.e. technology, markets,
regulations) and globalization, leadership is highly associated with pioneering, and
thus requires early identification and quick decision making in the face of external
changes (Alas, 2007; Golder and Tellis, 1993; Kessler and Chakrabarti, 1996; Mittal and
Swami, 2004).
An effective identification mechanism requires certain organizational and
managerial properties. First is the need to properly monitor the environment and
intercept signals for trigger sources. Second, this information should be processed to
separate a meaningful development from random noise. There is also a need to assess
expected likelihood of occurrence, impact, and timing. The third stage requires
substantial attention on the part of higher management to translate the findings into a
managerial conclusion that some response is necessary or desirable (Barr et al., 1992;
Gersick, 1994; Huff et al., 1992; Lant and Mezias, 1999; Li et al., 2005; Struckman and
Yammarino, 2003; Yetton et al., 1994).
The second element in the firm’s readiness for a change is gearing up to take action
(preparation). Recognizing a need, or an opportunity, is a necessary but insufficient
condition for undertaking strategic change. The second variable therefore deals with
the time it takes to respond (Grimm et al. 1993; Kessler and Chakrabarti, 1996; Mittal
and Swami, 2004; Tallon, 2008; Zhang, 2006). The time response variable, however, is
not detached from the environment-monitoring variable: If the organization is slow in
identifying an environmental threat, then the time available for preparing action might
be quite short (Ansoff, 1984). Response time can be assessed by two parameters:
(1) Time to start.
(2) Preparation time.
The first refers to the lag between the recognition of the need to change and the start of
active preparation. This lag reflects the organization’s readiness for taking change
action, i.e. being overly occupied with current projects or crises, or finding it difficult to
put aside existing activities, or organizations that tend to postpone making key
decisions are likely to have a long lag prior to the start of action preparation
(Leonard-Barton, 1992).
Preparation time can be seen as encompassing two discrete components: the time it
takes for the change, and prioritization policy. The former is content-related, i.e. if a
new technology requires an extensive adaptation process, then a long preparation time
is inevitable (Alas, 2007; Laar, 1994; Yetton et al., 1994). The latter component reflects
the organization’s priority for dealing with the specific strategic changes needed.
The third element of the CR construct is the action of response, or more specifically,
the degree to which the firm’s response to the environmental triggers is novel or
innovative. In turbulent environments, effective strategic change is highly associated
with renewal of competencies, product innovations, and diversified and innovative Change
response to external triggers (Huff et al., 1992; Ireland and Hitt, 1999; St-Pierre, 2005; readiness
Rudd et al., 2007; Teece et al., 1997; Vardarajan and Jayachandran, 1999). Firms may
defend their market positions with incremental and limited responses such as reducing
prices or launching a “me too” product. However, such activity reflects tactical
flexibility, and may be less effective for the long haul, particularly for organizations
looking to lead dynamic markets (Cannon and St John, 2004; Ireland and Hitt, 1999; 143
O’Regan and Ghobadian, 2005; Timmor and Zif, 2005).
A strategy’s novelty can be measured by its evolutionary vs revolutionary scope.
Evolutionary changes have a low degree of innovation: They do not require changes in
paradigm or a major shift in managerial behavior; they have been tried before and are
therefore familiar to the organization; they require limited deviation from
organizational inertia. Revolutionary changes, on the other hand, are based on a
new pattern of response. Such changes have to overcome natural resistance both inside
and outside the organization (Boccardelli and Magnusson, 2006; Hannan and Freeman,
1984). A strong, committed leadership is usually needed to implement action that is
completely new to the organization and its affiliates. There are of course intermediate
situations, wherein the organization has been experimenting with an innovative
approach on a small scale prior to its adoption on a large scale.
An organization capable of executing a response that is somewhat more innovative
is assumed to have a high degree of change readiness. This of course does not mean
that a revolutionary response is always desirable (Boccardelli and Magnusson, 2006;
Eisenhardt and Martin, 2000): A major deviation from past behavior is more likely to
be needed when the outside threat or opportunity has a high potential impact on the
firm and when the environment is dynamic and turbulent. In this study, respondents
were asked to select strategic threats and opportunities that have potentially high
impact on their firms.
What are the factors that affect a firm’s CR? In this study, based on the literature
review, we explored five major factors related to the environment, management
orientation, use of technology, and available resources (Poole and Van de Van, 2004;
Langley, 1999). Figure 1 exhibits the research chart with the expected influence of the
various factors on the firm’s readiness for strategic change and CR on the firm’s
performance.
Environmental barriers – the rapid growth of external turbulence and market
dynamism have increased the importance of organizations’ readiness for strategic
change (Chonko et al., 2002; Han et al., 1998; Ireland and Hitt, 1999; Li et al., 2005;
O’Regan and Ghobadian, 2005; Zhang, 2006). However, the environment has a dual
influence on change readiness: On the one hand, as it is dynamic and changing, there is
a greater need for the organization to prepare itself for strategic changes and be flexible
in responding to external triggers (Alas, 2007; Hitt et al., 1998; Eby et al., 2000; Li, 2000;
Rudd et al., 2007; Tallon, 2008). On the other hand, as the environment can be hostile,
complex, and unpredictable, and change readiness becomes a greater challenge, firms’
capabilities of adapting their strategies thereto are deteriorated (Kapasuwan et al.,
2007; McKee et al., 1989; O’Regan and Ghobadian, 2005), and the likelihood of change in
corporate strategy is reduced (Kelly and Amburgey, 1991; Rajagopalan and Spreitzer,
1996). Under volatile circumstances, when uncertainty is high, the consequences of
strategic changes are hard to predict. Therefore, firms can be expected to respond with
EMJB
5,2

144

Figure 1.
Research chart and
hypotheses

greater caution in regard to new and innovative actions. Moreover, hostile and
constantly changing markets may induce tactical flexibility within a short interval
such as price-chopping or increasing supply rather than long-term strategic changes
(Cannon and St John, 2004). This paper views change readiness as a strategic property,
and hence considers environmental hostility and complexity to be barriers to
organizations’ CR. We therefore hypothesize that:
H1. Environmental barriers have a negative effect on a firm’s change readiness:
The higher the barriers, the lower the firm’s CR.
Management orientation – An entrepreneurial mindset and decentralized strategic
decisions appear to be integral parts of the organizational culture and climate that have
a meaningful influence on an organization’s CR (Naman and Slevin, 1993; Zahra et al.,
1999). Entrepreneurship has been reported to have a positive correlation to a firm’s
superior performance and innovative response to dynamic environments (Lumpkin
and Dess, 1996; Stopford and Baden-Fuller, 1994). In addition, entrepreneurship can
help a firm acquire new capabilities, enter new business ventures, and create new Change
products ahead of its competition (Hamel and Prahalad, 1991; Zahra, 1993). Proactive readiness
management trying to shape its environment and managerial willingness to assume
risk are two entrepreneurial variables (Chonko et al., 2002; Gersick, 1994). They are also
two dominant properties of Miles and Snow’s (1978) Prospectors strategic category,
whose members look for opportunities to innovate, develop, and enter new markets.
Part of an entrepreneurial orientation is the commitment to scanning the environment 145
for opportunities and for threats that might be converted into opportunities. As such, it
is not surprising to find that a high score on these variables points to an organization’s
CR. It is important to understand, however, that CR as defined in this paper refers to
responses to environmental triggers rather than the initiation of entrepreneurial action.
The argument here is that an organization committed to initiating change is more
likely to respond quickly and effectively to environmental triggers generated by
outside causes, than is an organization characterized by a purely defensive posture.
H2. Management’s entrepreneurial orientation has a positive effect on a firm’s
change readiness: The stronger management’s entrepreneurial orientation,
the greater the firm’s CR.
Is centralized decision making, a help, or a hindrance, in responding to environmental
triggers? There are occasions, particularly emergencies, when a single decision-maker
or a small group responds faster and possibly better. However, under normal
conditions, a small decision-making group could, over time, be a hindrance to the
acceptance of new trends and ideas. A small group has less chance of viewing external
developments, and may have a tendency to lock out “disturbing” signals delivered by
“non-members”. Kanter (1983, p. 281) argued that a company with a diverse group in
the “dominant coalition” at the top is more likely to pick up on more external cues.
Decentralized strategic planning and decision making are associated with diversity
and organizational flexibility in responding to environmental changes (Chonko et al.,
2002; Jones et al., 2005; Mintzberg, 1994). In a turbulent environment, quick response to
external triggers is required (Dickson et al., 2001; Ireland and Hitt, 1999; Zhang, 2006).
In certain cases, there is a need for learning by doing and improvisation (Dickson et al.,
2001; Moorman and Miner, 1998; Teece et al., 1997). Learning strategies are most
effectively created through a somewhat structured process guided by the top
managers, yet also take place at the grassroots level. When decision making is
centralized, i.e. only a few people located in the head office make decisions, response
may take longer, hence losing both timing and pioneering advantage. In many cases,
centralization is concerned with bureaucracy, or formal and rigid procedures that force
inertia and hence decrease capability of change and adaptation to the environment
(Rajagopalan and Spreitzer, 1996; Rudd et al., 2007; Zeira and Avedisian, 1989).
H3. Management centralization has a negative effect on firms’ change readiness:
The greater the centralization orientation, the lower the firm’s CR.
Technology and innovation – The importance of technology use and innovations, in
both manufacturing and processing of products and services in dynamic
environments, has been largely discussed in the management literature (Andersen,
2005; Borch et al., 1999; Drennan and McColl-Kennedy, 2003; Miller, 2002; Morgan,
2004; St-Pierre, 2005; Timmor and Rymon, 2007; Zahra, 1996). The use of technology is
EMJB key in meeting the requirements of changing markets and new competitive situations
5,2 (Boccardelli and Magnusson, 2006; Timmor and Rymon, 2007). Technology
contributes to organizational dynamic capabilities (Teece et al., 1997) by facilitating
product adaptation as well as new product or service offerings and variations
(Karagozoghu and Lindel, 1998; Lei et al., 1996; Meredith, 1987).
The ability to assess and to respond to new threats and opportunities depends on
146 the current state of knowledge and practice: If a firm maintains updated technological
capability in a variety of technical fields, it enhances its ability to read customers’
preferences and activate the necessary resources to act. It has strategic flexibility and
is in a strong position to respond to serious environmental shifts (Aaker and
Mascarenhas, 1984; Byed, 2001; Harris, 2002; Rudd et al., 2007). Use of technology can
also speed the firm’s response to changing environmental triggers, by better
monitoring the environment, identifying new opportunities and threats, and
accelerating new product developments within reduced costs (Lei et al., 1996;
St-Pierre, 2005; Zahra, 1996; Zhang, 2006;). We therefore hypothesize:
H4. Technology and innovation have a positive effect on firms’ change readiness:
The greater the use of new and innovative technologies in the product
manufacturing and service processes, the greater the firm’s CR.
Resources – Change readiness is a business capability that we suggest gives a firm a
competitive advantage and enhances its performance in turbulent environments.
However, in order to develop this capability, a firm needs to invest in its resources.
(Boccardelli and Magnusson, 2006; Grandy and Mills, 2004; Helfat and Peteraf, 2003).
Moreover, organizations wishing to benefit financially from operational flexibility
( Jack and Raturi, 2002) need to plan their resources (Greenley and Oktemgil, 1998;
Mensah and Werner, 2003; Rudd et al., 2007; Tan and Peng, 2003). These resources can
be identified by two major factors: facilities and human capital. Facilities, reflects the
availability of equipment and infrastructure such as information systems (IS),
computer-aided design (CAD), and flexible manufacturing systems (FMS) (Hitt et al.,
1998; Lei et al., 1996; Pacheco-De-Almeida et al., 2008; Zhang, 2006). It can contribute to
better monitoring markets, greater flexibility in production at lower cost, and
increasing a firm’s speed in introducing new and innovative products. Human capital
is a critical resource on which many core competencies rest and through which
competitive advantages are exploited successfully (Ireland and Hitt, 1999). Availability
of new technologies is not sufficient for strategic changes; personnel need to embrace
these technologies and implement them in the manufacturing process ( Jones et al.,
2005; Powell and Dent-Micallef, 1997; Vankatesh and Davis, 2000). We therefore
hypothesize:
H5. Resource availabilities have a positive effect on firms; change readiness: The
greater the availability of facilities and human capital the greater the firm’s CR.
Performance – Strategic change by itself does not necessarily lead to better
performance (Kelly and Amburgey, 1991; Rajagopalan and Spreitzer, 1996; Zajac and
Shortell, 1989). Especially in stable markets, using a proven strategy with slight
modifications can be more effective in maintaining market positioning than can rapid
and/or continuous changes. However, CR in this paper relates to a firm’s capability of
quickly identifying and adapting its strategy to environmental triggers in turbulent
environments, and to its response in the event of new and significant triggers Change
(opportunities or threats). Hence recent studies arguing for the positive effect of readiness
flexibility and organizational readiness for changes on financial and organization
outcomes (Ebben and Johnson, 2005; Goldhar and Lei, 1995; Hitt et al., 1998; Li, 2000;
Li et al., 2005; Rudd et al., 2007; Tan and Peng, 2003; Thoumrungroje and Tansuhaj,
2007; Zhang, 2006). We therefore hypothesize:
H6. Change readiness has a positive effect on a firm’s performance: the greater the
147
firm’s CR, the better its financial and organizational outcomes.

Methodology
Research procedure and data collection
The empirical study is based on data collected from 217 organizations in 14 countries.
Nearly half of the organizations are headquartered in the USA, 68 percent of the firms
engage in some export activity, and 46 percent make at least half of their sales away
from home. Service organizations account for 36 percent of the firms and
manufacturers accounts for 26 percent, with strong R&D.
The research respondents filled out structured questionnaires during their studies
in enterprise, executive workshops, and executive MBA programs. A total of 60
percent attended such programs at leading academic institutions in the USA, and 40
percent in their home countries (if not US-based). All respondents were key informants
(i.e. in charge of or involved with their firms’ strategic decisions and implementations
thereof (Thoumrungroje and Tansuhaj, 2007; Timmor and Zif, 2005)), and 36 percent
are senior managers. 30 percent of the respondents are employed by state-owned
enterprises, and 36 percent by publicly traded enterprises (for a detailed sample profile,
see Table I).
Self-reported data for firms’ strategy tactics and performance are quite common in
business and marketing research (Cavusgil and Zou, 1994; Grewal and Tansuhaj, 2001;
Thoumrungroje and Tansuhaj, 2007). Studies report a high degree of correlation
between perceptual and objective measures of organizational performance as reported
by questionnaires, suggesting high confidence in the their use (Diamantopoulos et al.,
1994; Hart and Banbury, 1994; Murray et al., 2005; Rudd et al., 2007). However, it is
important to point out some potential concerns regarding self-reporting questionnaires;
the danger of biased responses is always present in a study of this kind: Are
respondents likely to admit poor management policies? The response bias in this study
seems to work against finding significant correlations. Systematic errors would have
been likely to conceal rather than amplify the hypothesized behavior. If managers felt
that they should not disclose their organization’s lag in responding to threats and
opportunities, it would have been difficult to find confirmation of key hypotheses. The
respondents did not have prior knowledge of the hypotheses of the study. On the other
hand, non-systematic errors of perception would have likely increased variability and
made it more difficult to find statistical significance.
In two organizations, the same questionnaires were administered to a number of
managers in order to explore consistency of response by various managers from the
same firm. The comparison supports the assumption that variability in the content of
response from the same firm is much more limited than that between managers in
differing firms.
EMJB
Frequency Percent
5,2
Firms’ ownership
Government 66 30.4
Public 79 36.4
Private (domestic) 56 25.8
148 Private (foreign) 16 7.3
Industry
Service 79 36.4
Manufacturing with limited R&D 61 28.1
Manufacturing with high R&D 56 25.8
Product without manufacturing 21 9.6
Firms’ customers
Final consumer 52 24
Industrial or institutional 59 27.2
Government bodies 63 29.0
Others 43 19.8
Export rate (of total sales)
None 70 32.2
1-20% 60 27.6
21-50% 50 23.0
51-75% 29 13.4
76% þ 8 3.6
Respondents’ positions
Top manager 78 36
Middle manager 70 32
Lower managerial functions 69 31
Missing 1
Location of headquarters
The USA 99 45.5
Developing nation 81 37
Table I. Developed nation 37 17
Sample profile Missing 1

The study questionnaire

The questionnaire contained three parts. In part one, respondents were asked to think
of two separate, recent strategic triggers: one an opportunity, and one a threat. This
part had six questions: three about the organization’s response and success in dealing
with the specific threat, and three parallel questions about the specific opportunity.
Various examples of environmental threats and opportunities were provided.
Part two of the questionnaire was adapted with minor modifications from Segev
and Gray’s (1990) Business Success Expert System (BSES). This part contained
questions dealing with the environment, strategy content and the strategy-crafting
process, and organizations’ structure, performance, age, and size. Inclusion of this set
of variables made it possible to provide each respondent with a separate, confidential,
printed diagnostic assessment of the strategy of her organization based on BSES. As a
result, there was an incentive not only to respond, but also to provide truthful answers
in order to receive meaningful interpretation. The promise of quick feedback, which Change
was kept, ensured that all responses were 100 percent complete. readiness
Part three contained classification questions about the respondents, their
organizations, and their international activities.

Measurements
The measurements were adopted from Segev and Gray (1990) and based on recent 149
studies whenever possible (i.e. Cadogan et al., 2002; Li et al., 2005; Rudd et al., 2007;
Timmor and Zif, 2005; Zhang, 2006). The responses to all questions, with the exception
of the respondent classification data, were rankings on a scale from 0 to 100. Most
questions were based on a comparison with the industry average of the respondent’s
organization, i.e. a score of 50 (see the Appendix for specific items).
Change readiness – The CR dimension contains three variables:
(1) Speed of identification of an environmental trigger for change.
(2) Response time to start preparing for implementing a change.
(3) Innovation in the nature of the response.
Each variable was used twice in every questionnaire: once for measuring the firm’s
competencies to cope with opportunity, and once for coping with threats. Thus the CR
dimension is constructed of six parameters (a ¼ 0:75) and reflects the calculated mean
of each. Since identification of a trigger may depend on interpretation of an evolving
trend, exact identification time might be vague in many cases. In this paper, the
variable selected to represent the trigger identification time is expressed by a position
on a continuum of early versus late identification of an environmental trigger for
change. This measure was considered clearer for assessment purposes than were
alternative formulations.
For statistical comparisons across companies, preparation time is a difficult
variable for two reasons: first because it is content-related, and second because
preparation could be regarded as an ongoing, continuing activity. A continuous
measure of “early versus late start of action preparation” might better represent
response time for preparing to implement a change. An early start would mean
practically no lag in starting to prepare for action; while a late start would mean
starting action when there was no other choice.
Management orientation – Two factors were examined: entrepreneurship and
centralization. Entrepreneurship is measured by three items (a ¼ 0:80): 1.
Willingness to commit a high proportion of the organizational resources to risky
projects; 2. Extent to which the organization is proactive in trying to shape its
environment, as opposed to merely reacting to trends in the environment; and 3.
Degree of tracking opportunities and threats in the environment in order to craft
strategy. For measuring centralization in decision making, two items were used: the
number of personnel that make decisions in the organization, and the degree of
centralization in strategic decision making (a ¼ 0.60). Note that for the analysis, the
number of decision-makers was reverse-scaled, i.e. the more personnel making
decisions, the lower the degree of centralization. The second item was important,
since it is possible that while a considerable number of personnel are involved in
decision making; decisions are authorized strictly at the top vs at the lowest
managerial level.
EMJB Technology and innovation – Three items were measured:
5,2 (1) Extent of use of new technology in manufacturing.
(2) Product innovation, i.e. number and novelty of new products introduced.
(3) Extent of use of various technologies in the service process (a ¼ 0:74).
The first item reflects the organization’s capability of producing and launching new
150 products, whereas the second item reflects the firm’s actual launching of new and
innovative products. The third item is important because the service sector is rapidly
growing, with its role increasing in the manufacturing sector (Brady and Cronin, 2002;
Timmor and Rymon, 2007).
Environmental barriers – Following the literature review, we distinguished
between environmental dynamism that can encourage CR, and environmental barriers
that can inhibit and decrease an organization’s motivation to invest in changing its
strategies. Two items measured such barriers: the assessment of environmental
hostility, and the assessment of complexity (a ¼ 0:62). Hostility relates to factors such
as nationalization and aggressive competition; while complexity relates to regulation
and procedures that hinder new initiatives and actions.
Resources – Two items were used to measure the organization’s availability of
resources: investment in production equipment and facilities, and availability of
human capital (a ¼ 0:65). While these items differ somewhat content-wise, one, human
capital is in many cases essential to the use of the other ( Jones et al., 2005; Powell and
Dent-Micallef, 1997; Vankatesh and Davis, 2000).
Performance – To test respondent assessments of their organizations’ performance
(Cavusgil and Zou, 1994; Diamantopoulos et al., 1994; Hart and Banbury, 1994; Murray
et al., 2005; Rudd et al., 2007), six parameters were measured. In two of them, the
respondents were asked to rate the success of their organizations in dealing with the
threat/opportunity on which they reported earlier in the questionnaire. Three
parameters were used for financial and market performance: growth rate; profitability
and market share; while the sixth parameter examined operational efficiency. For all
four parameters, respondents were asked to rate their organizations’ performance
relative to its specific industry (Segev and Gray, 1990).
Organizations’ ages and sizes have been discussed in the strategic literature as
affecting inertia as well as firms’ flexibility and readiness for strategic changes (Autio
et al., 2000; Feigenbaum and Karnani, 1991; Fombrun and Ginsberg, 1990; Kapasuwan
et al., 2007; Kelly and Amburgey, 1991; Rajagopalan and Spreitzer, 1996; Zajac and
Kraatz, 1993). While age and size are not of main interest in this study, they were
measured by asking the respondents for their evaluation of their organization’s
characteristics relative to their industry.

Findings
We applied a logistic regression analysis to examine the differences between firms
perceived to have high vs. low CR. Firms in the high CR category received a score
above 50 on the CR factor, while those in the low category got a CR score # 50. This
categorization was made for two reasons:
(1) The scale is from 1-100; hence, the score of 50 indicates the mid level.
(2) Following Segev and Gray’s (1990) scaling and the questions’ phrasing, the
score of 50 reflects the average industry rating.
Following this processing of data, the low CR category counts for 77 cases, and the Change
high CR category accounts for 140 cases. The five factors in the research chart that we readiness
hypothesized would affect the firm’s CR were used as independent variables. Table II
presents the logistic regression analysis results.
The model is significant and has a relatively high predictive ability (77.4 percent of
the observations were correctly classified). Consistent with the environmental barriers
factor and supporting H1: a significant negative association was found between 151
environmental barriers and CR. Looking at the variables means and correlations (see
Table I) it can be seen that while environmental barriers correlate with environmental
dynamism, the coefficient is only 0.31 and the mean difference is significant (p , 0:01).
This means that these two variables do not reflect the same content. Supporting H2
and H3, management entrepreneurship and de-centralization were found to have a
positive effect on CR. H4 was supported as well: Firms rated high in the technology
and innovation factor were likewise rated high in CR. Firms with greater availability of
facilities and personnel were expected to have a higher CR. However, no such
significant correlations were found, hence H5 was not supported.
Table III shows the performance results of the firms. The comparative analysis
indicates that for all tested parameters, the firms with high CR significantly
outperformed the firms with low CR, thus H6 is supported.
Table IV presents the age and the size means of the tested firms in the high and low
CR groups respectively. In this study, firms with a high CR score were found to be
significantly bigger than those with low CR scores. No significant differences were
found regarding firms’ relative ages.

Predictor factor B coefficient (SE)

Environmental barriers 2 0.027 *(0.009)

Technology and innovation 0.035 * (0.012) Table II.
Management orientation – entrepreneurial 0.038 * (0.012) Logistic regression
Management orientation – centralization 2 0.020 * (0.012) results. Categorical
Resources 0.035 (0.012) dependent
variable ¼ change
Notes: *p , 0.01. Model statistics: 2 2 log likelihood ¼ 210.501; Chi square (5 df) 88.325 ( p , 0.01); readiness (all variables
Correct classification ¼ 77.4 percent are standardized)

Firms’ classification High change-readiness Low change-readiness

Performance variables n ¼ 140 n ¼ 77

Growth rate * 67.92 (18.80) 60.78 (22.36)

Market share * * 62.36 (29.45) 49.39 (29.88)
Profitability * * 58.52 (24.69) 48.96 (24.79)
Operational efficiency * * 61.24 (18.183) 51.17 (22.07)
Success of opportunity handling * * 69.03 (20.37) 46.97 (26.728) Table III.
Success of threat handling * * 63.63 (20.63) 40.45 (21.82) Performance of firms
with high vs low change
Notes: *p , 0.05; * *p , 0.01 readiness means (std)
EMJB Discussion
5,2 Readiness for change has been identified with a “cognitive precursor to behaviors of
either resistance or support for change efforts” and has been highly associated with the
individual’s attitude and beliefs with regard to the organization’s readiness to commit
changes (Alas, 2007; Armenakis et al., 1999; Chonko et al., 2002; Freiberg, 1992;
Ogbonna and Wilkinson, 2003). This paper follows recent studies that call to define CR
152 as a more active competence (Cinite et al., 2009, Walinga, 2008) and proposes to view
CR as a multidimensional behavior that reflects the firm’s response to environmental
opportunities and threats in its industry. The following tasks were attempted:
(1) To explain and define the concept as a multidimensional construct.
(2) To show that this concept has a predictive value for a given organization’s
performance (H6).
(3) To examine how CR can be predicted based on organizational and
environmental variables (H1, H2, H3, H4 and H5).
The viability of CR as a defined and measurable concept is supported by the findings
of this study. Supporting the research hypothesis, firm performance was found to be
strongly associated with the multidimensional construct of three related CR activities:
early identification of an environmental trigger for change; rapid response by starting
preparing for implementing a change; and novelty in the content of response (for both
opportunities and for threats).
In this study, firms’ performance was measured by six different parameters: growth
rate; profitability; market share; operational efficiency, opportunity handling; and
threat handling. For all six parameters, the firms with high CR scores outperformed
those with low CR scores. Previous studies have argued for the positive effect of an
organization’s flexibility on its financial (profitability; growth rate) and operational
outcomes (Hitt et al., 1998; Rudd et al., 2007; Thoumrungroje and Tansuhaj, 2007;
Zhang, 2006). Flexibility, however, is commonly defined as the extent to which new
and alternative decisions are considered and made (Ebben and Johnson, 2005; Ireland
and Hitt, 1999; Rajagopalan and Spreitzer, 1996; Rudd et al., 2007). In light of this
study’s findings, it can be argued that while novelty of action is one component of a
firm’s CR, early identification of environmental triggers and speed of preparation for
response are integral parts of the CR construct that affect the firm’s performance.
In measuring their firms’ perceived performance, respondents were also asked for
their assessments of their organizations’ success in dealing with the environmental
triggers that were presented as specific major opportunities and threats. It was found
that the greater the firm’s CR, the greater its success in handling these triggers. These
findings, which support the research hypothesis, are not obvious, since it might be that

High change-readiness Low change-readiness

n ¼ 140 n ¼ 77
Firms’ classification Means (Std) Means (std)
Table IV. Firm relative size * 60.68 (22.34) 54.68 (22.74)
Relative size and age of Firm relative age 65.27 (28.18) 68.77 (26.97)
firms with high vs low
change readiness Note: *p , 0.05
speed and novelty of action could lead to inferior outcomes or even failure in handling Change
the triggers. readiness
This study suggests five factors that are hypothesized as affecting firms’ CR, and
hence aid in distinguishing between firms with high vs low CR. Hostility and
complexity were identified as environmental barriers, and have been found, as
hypothesized, to have a negative effect on CR. These findings differ from those of other
studies, which have viewed dynamism as an environmental motive for organizations to 153
increase their readiness for strategic change (Chonko et al., 2002; Han et al., 1998;
Ireland and Hitt, 1999; Li et al., 2005; O’Regan and Ghobadian, 2005; Zhang, 2006). One
explanation for this might be related to the differing conceptualization that this study
presents of CR: Most studies have approached CR as an attitude toward making
strategic changes under turbulent conditions, whereas this study addresses firms’
actual behavior in regard to environmental triggers. The concept of CR in this study
implies the consideration of the required effort in making strategic changes, rendering
making strategic changes under hostile and complex conditions riskier.
Another explanation might lie in the differing meanings of environmental
dynamism and barriers. The former may reflect rapid changes in consumer tastes,
technology, and liberalization (Chonko et al., 2002; Han et al., 1998; Harvey and
Novicevic, 2002), while the latter may be more expressed in regulations and state action
(i.e. nationalization) and political and social constructs that render the business
environment complex and hostile. In this study, we asked for respondent assessment to
environmental dynamism as reflected by the quantity and speed of changes and
uncertainty. Partial correlation was found between environmental dynamism and
barrier constructs, and their mean scores were found to differ significantly.
Following the research hypotheses, the study identified key factors that correlate
with CR: Entrepreneurship (risk-taking, proactive management, and constant external
analysis) and Centralization (number of decision-makers and degree of centralization)
are related to management orientation in process and structure of decision making.
While CR variables are defined in terms of response to external triggers, the research
findings support the notion that high change readiness implies a managerial conviction
that the organization has the internal strength to shape and influence the outside,
rather than merely react thereto. CR is also manifested in willingness to commit a high
proportion of an organization’s resources to risky projects, and systematically tracking
opportunities and threats in the environment in order to craft long-term strategy. In
addition, it was found that organizations that are positioned defensively to react to
external triggers are less successful in responding to those triggers than are
organizations that are positioned offensively to initiate change.
The study supports the hypothesis that decentralized decision making is associated
with greater change readiness. A small top-management team is more likely to reject
external signals that lie outside its comfort zone than is a wider, diversified team that is
capable of raising doubt. Disturbing questions aid learning through improved
interpretation of unexpected external signals. A broader managerial team might aid in
promoting innovative solutions by rendering deviating from inertia an acceptable
activity.
Consistent with the extensive literature and supporting this study’s hypothesis,
technology and innovations, both in the manufacturing/service process and the final
product, were found to have a positive effect on CR (Andersen, 2005; Borch et al., 1999;
EMJB Drennan and McColl-Kennedy, 2003; Miller, 2002; Morgan, 2004; St-Pierre, 2005;
5,2 Timmor and Rymon, 2007; Zahra, 1996). The concept of CR in this study is identified
with speed and innovativeness of organizations’ responses. Hence, it is not surprising
that as firms integrate technology into their operations, they improve their capability
of introducing new product and services within a shorter time.
In order to develop its competencies, an organization needs to invest in its resources.
154 It has been hypothesized that firms’ CR is positively affected by availability of both
equipment and facilities, and human capital. Surprisingly, no significant effect on CR
was found for resources. This might be explained by the relatively high correlation
found between resources and technology. In addition, the findings may support the
notion that entrepreneurial orientation is more critical to CR than are resources.
Finally, the two fundamental properties of age and size, considered to be
indicators of organizational inertia (and therefore possibly related to CR): Age was
not found to significantly differ between the high- and low-CR groups. On the other
hand, the mean size of the firms with high CR scores was significantly greater than
firms with low CR scores. Advocates of small-size firms’ strategic advantage have
argued for greater flexibility and innovativeness due to less bureaucracy (Fombrun
and Ginsberg, 1990; Kapasuwan et al., 2007), while other scholars have found no or
positive effects of firms’ size and age on strategic changes (Kelly and Amburgey,
1991; Rajagopalan and Spreitzer, 1996; Zajac and Kraatz, 1993). It may be that these
two parameters by themselves do not substantially affect making strategic changes,
and need to be meditated by other variables. Their effects however, are yet to be
conclusively found.

Conclusions and managerial implications

In McKinsey Quarterly (April 2008), executives surveyed worldwide reported that,
though most executives recognize the importance of global environmental trends and
changes for corporate strategy, they feel that few companies address these
successfully. Under globalization and increasingly turbulent environments,
organizations need to prepare to make strategic changes. However, the right attitude
is not enough: To be successful in responding to outside events, an organization needs
certain capabilities in order to act.
This study suggests that firms’ readiness for change should be examined based on
three related elements: their capability to continuously scan opportunities and threats;
their timing; and their innovative/varied response. Our empirical research revealed
that managers who ranked their organizations high on this multidimensional construct
reported significantly better performance than did those who ranked their
organizations low. We therefore propose that change readiness can be improved.
This study found that management’s entrepreneurial orientation and decentralized
decision-making contribute to CR. Technology and innovativeness, both in the
production and service processes, also have positive effects on firms’ CR.
Environmental hostility and difficulties, on the other hand, were found to deteriorate
firms’ CR, yet managers can find ways to overcome these barriers (see Table V).
The increasing changes in the business and technological environments make the
concepts of change readiness more critical. The streams of new opportunities and risks
challenge managers to find new effective response in a way that will preserve and
sustain the organization potential for growth.
 Technology and Environmental Management Management
Means Std innovation barriers orientation – entrep orientation central Resources

Technology and innovation 57.31 (17.94)

Environmental barriers 64.16 (15.87) 0.006
Management orientation –
entrepreneurial 50.09 (20.57) 0.436 * * 20.002
Management orientation –
centralization 56.66 (18.92) 20.304 * * 20.077 20.338 * *
Resources 56.33 (21.01) 0.445 * * 20.091 0.371 * * 20.187 * *
Growth rate 65.39 (20.37) 0.317 * * 0.085 0.293 * * 20.112 0.340 * *
Market share 57.76 (30.18) 0.203 * * 20.009 0.210 * * 20.196 * * 0.316 * *
Profitability 55.13 (25.09) 0.270 * * 20.181 * * 0.278 * * 20.102 0.296 * *
Operational efficiency 57.67 (20.18) 0.376 * * 20.178 * * 0.419 * * 20.122 0.312 * *
Success of opportunity
handling 61.20 (25.10) 0.284 * * 0.066 0.297 * * 20.217 * * 0.170 *
Success of threat handling 55.41 (23.77) 0.330 * * 20.005 0.441 * * 20.269 * * 0.210 * *
Environmental dynamism 58.70 (16.17) 0.104 0.316 * * 0.091 * * 20.176 * * 2 0.037
Growth Market Operational Opportunity Threat
rate share Profitability efficiency handling handling
Market share 0.272 * * –
Profitability 0.428 * * 0.261 * *
Operational efficiency 0.302 * * 0.162 * 0.411 * *
Success of opportunity
handling 0.166 * * 0.099 0.173 * 0.086
Success of threat handling 0.185 * * 0.066 0.259 * * 0.300 * * 0.441 * *
Environmental dynamism 0.085 2 0.092 20.076 0.016- 0.072 0.142 *
Notes: *p , 0.05; * *p , 0.01
readiness

correlations
Change

Means, Std and

Table V.
155
EMJB Specific implications for managers include the following:
5,2 .
monitoring the environment informally is not sufficient. The firm has to set up a
more formal system to recognize and assess potential threats and opportunities;
.
the second dimension of CR – mobilization for action, is probably a critical
variable due to the inherent inertia in many organizations. Thus, one needs to
quickly translate the knowledge about threat and opportunity to actionable
156 response (Kotter, 2008); and
.
the third dimension of CR is innovative action.
This requires a change from the natural patterns of response by most organizations.
However, innovative action can take time to design and implement that will be in
conflict with quick mobilization. It is therefore desired that organizations work on
developing a portfolio of innovations in advance. This is in line with the finding that
product innovation, use of new technology, and proactive management are positive
correlated with change readiness.

Limitations and future research

There are a number of limitations to the study. For most firms, there was only one
responding manager from each organization, and the threats and opportunities were
self-selected. Though self-reported data for firms’ strategic tactics and performance are
quite common in business and marketing research, it may raise concerns regarding
potential biases. The size and selection of the sample may pose limits in generalizing the
study findings. Future studies should attempt to include a larger sample of organizations
with more respondents from each, and to perform separate analyses by type of industry,
with more specific information about environmental threats and opportunities. It would
also be useful if survey data could be supported by observation of actual behavior in
field studies. Yet in spite of its shortcomings, the study has explained interesting
variations in response patterns and in the successful handling of environmental changes.

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163
Appendix
The measures
Change readiness. Think of a relatively recent specific strategic opportunity faced by your
organization (i.e. an increase in demand, decline in competition, new course of capital, a new
regulation that has a positive affect for your organization, a new potential product or service for
your organization):
(1) Did your organization identify this opportunity at the earliest possible time (score 100),
or very late after the opportunity was quite obvious? (score 0) _________
(2) Did your organization start preparing to deal with this opportunity immediately (score
100), or when it was almost too late? (score 0) ________
(3) Did your organization take an incremental and familiar action in response to this
opportunity (score 0), or did it take a totally innovative response that differed from past
behavior? (score 100) ________
Think of a relatively recent specific strategic THREAT faced by your organization (i.e.
a decrease in demand, incline of competition, an adverse change in financial resource, a
new regulation that has a negative affect for your organization, a new potential product
or service which competes with your own).
(4) Did your organization identify this threat at the earliest possible time (score 100), or very
late after the threat was quite obvious? (score 0) ________
(5) Did your organization start preparing to deal with this threat immediately (score 100), or
when it was almost too late? (score 0) ________
(6) Did your organization take an incremental and familiar action in response to this threat
(score 0), or did it take a totally innovative response that differed from past behavior?
(score 100) ________
Management orientation
Entrepreneurial
(1) How would you rate the extent to which top management is willing to make
commitments that involve a high proportion of your organization’s resources to risky
projects (business, marketing, financial, or political risk)? A low score indicates a highly
conservative approach; 50 is average across all industries, and 100 indicates a
risk-preferring approach _________
(2) How would you rate your organization’s ability and resource commitment to
systematically track opportunities and threats in the environment in order to craft
long-term strategy? An organization with a highly external environmental analysis and
forecasting abilities is scored 100. The average across all industries is 50. _________
(3) How would you assess the extent to which your organization is proactive in trying to
shape its environment, as opposed to merely reacting to trends in the environment? A
proactive organization continually trying to shape its environment should receive a score
of 100; a business that merely reacts to trends in the environment should receive a score
of 0. ________
EMJB Centralization
5,2 (1) How would you rate the number of main strategic players or decision-makers in your
organization? An exclusively one-person show is scored 0, three to five strategic players
is scored 50, a highly dispersed decision-making team (about 30 persons, or in smaller
units, 30 percent of the staff) is scored 100. __________
(2) How would you rate the degree of centralization in your organization? When
164 decision-making authority is strictly at the top (score 100), the organization is
centralized; when decisions are delegated to the lowest managerial level (score 0) the
organization is decentralized. 50 is the average level of decentralization. __________
Technology and innovation
(1) How would you rate the progress of your organization in terms of the number and
novelty of new techniques used in producing existing products? A score of 100 indicates
the highest possible progress in your industry; 50 would be an average, and 0 is the
lowest. __________
(2) How would you rate the product innovations of your organization in terms of the number
and novelty of new products introduced? The industry score level is 50. _______
(3) How would you rate the relative number of core technologies employed in service
processes? A score of 100 indicates the highest possible use of different technologies; 50
would be an average; and 0 is the lowest. __________
Environmental barriers
(1) How would you rate the extent of hostile environmental factors negative to your
organization? A score of 100 indicates a completely hostile environment; a score of 0
indicates a highly benevolent environment; 50 is for a neutral one. ____________
(2) How would you rate the number and complexity of external elements with which your
business has to contend? A score of 100 indicates the most complex environment; 50 an
environment of average complexity; a score of 0 indicates a very simple environment.
___________
Resources
(1) How would you rate the availability of human resources in your organization? An
organization with abundant resources is scored 100; an organization with depleted
resources is scored 0; an average resource level is 50. __________
(2) How would you rate the amount and frequency of investment in production equipment
and facilities? A score of 100 is given to with the most equipment- and facility-rich
organization in the industry; an organization with the least equipment and facilities
ranks 0; 50 is average in the industry. __________
Performance
(1) The average profitability on the return of equity of your industry is 50. How would you
rate the profitability of your organization relative to your industry? _________
(2) The average operational efficiency of your industry is 50. How would you rate the
operational efficiency of your organization relative to the industry? _________
(3) The average rate of growth of your industry is 50. How would you rate the growth rate of
your organization relative to the industry? ________
(4) How would you rate the relevant market share held by your organization? Monopoly or
an industry leader is scored 100. Other business units’ scores are their sales as a
percentage of the leading competitor’s sales. __________
 (5) How would you rate the success of your organization in dealing with this opportunity? A Change
score of 100 would mean the highest rate of success; a score of 0 would represent a
failure. __________ readiness
(6) How would you rate the success of your organization in dealing with this threat? A score
of 100 would mean the highest rate of success; a score of 0 would represent a failure.
___________
Note: Questions 5 and 6 appeared in the questionnaire after the CR section, questions 3 and 6 165
respectively.

Environmental dynamism
(1) How would you rate your environmental uncertainty? Complete uncertainty about the
environment is 100, an average uncertainty level is 50, if there is no uncertainty (a rare
situation), assign a value of 0. _________
(2) How would you rate the rapidity and the amount of change in your environment? A score
of 100 indicates a quick and total change in the wider environment as well as in your
industry; 50 is the long-term average across all industries. _____________
Firm’s characteristics
(1) How would you rate the size of your organization relative to your industry? Size could be
assessed by sales, assets, and personnel in the organization. An average for your
industry will rate 50. _____________
(2) How would you rate the age of your organization relative to your industry? The oldest
organization in the industry is given a score of 100; the newest 0; and the industry
median is 50. _____________

About the authors

Yaron Timmor is the academic head of the International Business Studies and Marketing
Communication Program at the Arison School of Business, the Interdisciplinary Center Herzliya.
Prior to joining IDC he served as a Marketing Lecturer at Hebrew University and Tel Aviv
University. He consults for Israeli and international firms and his professional record includes
being a supervisor in an advertising agency and a marketing manager of an import and
marketing company. His research interests are in the areas of business strategy, international
marketing strategy, marketing communications, and services policy. Yaron Timmor is the
corresponding author and can be contacted at: timmor@idc.ac.il
Jehiel Zif is a member of the faculty of the Center for Academic Studies, Sarnat Business
School in Israel and Hult International Business School in Boston. For many years, he was a
member of the Faculty of Management at Tel-Aviv University. He has lectured in executive
programs at Harvard, Wharton and Northwestern and in other MBA and executive programs in
different countries. He has been the professional director of Ziv Consulting and Training Ltd, a
firm with 20 years’ experience in marketing and management assignments. Previously, he was
the president of a start-up US firm in the field of educational simulations.

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