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1. Summary

This assignment is set out to critically evaluate study that looks at the effect that the alignment of business strategy and characteristics of the management. The paper was written by Entrialgo, M. (2002) with the title “The Impact of the Alignment of Strategy and Managerial Characteristics on Spanish SMEs”.

The assignment analyzed business context, research design and approach, data collection and statistical analyses and overall study findings. It ascertained how study theoretically integrate with prior research findings.

In-depth study of the topics on managerial characteristics, strategy and their influence on success were carried out. Related research was examined in relation to managers and corporate performance ((Norburn, David; Birley, Sue 1988), and Thomas, Alan Berkeley (1988)) and on managerial characteristics, and business unit effectiveness at strategy implementation (Gupta, Anil and Govindarajan 1984). It was further investigated research design, approach and data collection and analysis in context of hand book (Research Methods in Business Studies, Ghauri and Gronhaug 2005) and study book (Business Research, James Wallace 2006).

Overall findings of the study are;
• The aim of the study was to account for SME success by means of a coalignment between managerial characteristics and firm strategy.
• The research is different to prior research as it look into three distinct construct; firm strategy, managerial characteristics and organizational performance, incorporating coalignment as the independent variable
• The study provides a theoretical framework for integrating prior research findings, explains the process by which a manager influence the firm success and is supported with empirical results.
• The study opted to look into three strategic behaviour (Entrepreneurial, conservative and adaptive) but data analysing was carried out on only two of them.
• The study considers 4 set of demographic managerial characteristics. It focused on tenure, age, formal education and functional experience. Opting out other cognitive and affective variables of characteristics not generalises to accept or reject hypotheses.
• The data was analysed from 233 SME’s out of 16,000 of population in spain in 1997, which covers only 1.45% of whole enterprises. The validity and generalization of data to Spanish territory is even less.
• It concluded findings that the coalignment between managerial characteristics and strategy has significant success implications for entrepreneurial managers, leaving unanswered about conservative and adaptive managers.
• The overall study is balance with few exceptions of poor clarifications of the theoretical linkages and inappropriate statistical modelling might be a question.

2. Business Context

2.1 Context of the study
The study carried out by Montserrat Entrialgo in 1996 from Spanish small-to-medium enterprises (SME’s), employee strength between 5 and 500. The data were collected from 233 valid surveys of firm from 16,000 firms population at that time.

2.2 Aims and objective of the paper:
The study aimed to explore the impact of organizational success of the coalignment between managerial characteristic and firm strategy. It aspired to analyse the relationship between the characteristics of a firm’s managers (tenure, age, formal education and functional experience) and the development of entrepreneurial behaviour in the firm.

2.3 Appraisal of the Aim and Objective
The overall study is balance with few exceptions of poor clarifications of the theoretical linkages and inappropriate statistical modelling might be a question. It concluded findings that the coalignment between managerial characteristics and strategy has significant success implications for entrepreneurial managers, leaving unanswered about conservative and adaptive managers.

3. Research design

The study conducted survey, used questionnaire to cover three constructs, which enables to define, and test alignments are individual characteristics, strategy and success within a systematic approach. The study used theoretical framework for integrating prior research findings, explains the process by which a manager influenced the firm success and is supported with empirical results.

The study tested and did empirical scrutiny of existing literature, and It found few result accepted and also came up with rejection of other. The research favours more on induction study as it draw conclusion from empirical observation. Ghauri et at. (2005). It is also inductive, as it establishing findings on basis of facts.

4. Research approach
This research used a mixture of Inductive and Deductive approaches both include elements of the other and so are not entirely mutually exclusive. As this research used existing knowledge and used systematic data collection. It further link relevance of data to theory for accepting or rejecting hypotheses (Ghauri and Gronhaug, 2005)

5 Research hypotheses

Entrialgo (2002) look into one of the important aspect of different organizational behaviour. He looked into the strategy and managerial characteristics role to play in the development. Miller (1983) argued that individual exhibits entrepreneurial behaviour when he or she performs product-market innovations, take risks, and behaves proactively.

5.1 Strategy
The study look into organizational behaviour as identifies by Dess ett al (1997). The three kind of strategic behaviour are;
• Conservative
• Entrepreneurial
• Adaptive

5.2 Managerial Characteristics
The study considered 4 set of managerial characteristics are, tenure, age, formal education and functional experience.

5.3 Coalignment and success
The study expected that success of the firms are associated where it is more align with the characteristics of their managers and with the requirements of their strategies. Beal and Yasai-Ardekam (2000) found that superior performance occurs when a manager’s functional experience is congruent with the requirements of the firm’s strategies.

6. Data collection

The research questionnaire was tested and refined in northern Spain. Questionnaire was mailed to 1600, followed by telephone contact with the managers of approximately 1000 firms. After follow-up interview, 233 valid surveys were received. The response was 10 percent.

The primary data collected raised concern in both qualitative and quantitative aspects. The data was analysed from 233 SME’s out of 16,000, which covers only 1.45% of whole enterprises. The validity and generalization of data to Spanish territory is even is much less.

7. Data Sampling

This study carried out random data sampling of firms drawn from a population of 16,000 firms with between 5 and 500 employees. Firms were included from all sectors including mining, construction, food industry, wood, paper, chemicals, and transportation. The geographical area is the entire Spanish national territory.

1.45% of firm response cannot justifies “maximum precision in inference” from sample i.e. Get as much information as possible from sample of given size (Ghauri and Gronhaug, 2005). The result might be more generalise if systematic data sampling, covering each industries with number of surveys.

8. Hypothesis testing and Statistical analysis of data

The research testing was organized in two main block.

1. Questions about how the top managers make decisions in the firm.
It was used to find the levels of innovation, risk taking and proactively, using five-point Likert scales. Entrepreneurial strategy was measured by calculating the sum of three indicators.

2. Questions about characteristics of manager
The research opted subjective marker of the result on age, tenure, formal education and functional experience. It was calculated as a weighted average of the manager’s satisfaction in performance maker like, economic and financial profitability and growth.

In order to examine the coalignment between manager characteristics and firm strategy, each top manager was classified into one of the identified groups and a Student’s t test was applied. The group of successful managers is made up of 20 percent of the managers whose firms reported the best performance.

The difference was observed between the ideal characteristics, those of the successful managers group and those observed for each type of the manager. Spearman’s correlation coefficient was applied between these differences and the success attained. Study further analyse data in 4 steps (detailed in Appendix 1)

Step 1: identifying Homogenous Strategic Types
- Used spearman coorelation for between variable testing
- median spilt method used to identify strategic types
- Student’s t-test to check results

Step 2: Analyzing the Strategy Manager Match
Student’s t-test determine association between managers’ demographic characteristics and firm’s strategies.

Step 3: Specification of Coalignment
- Identified ideal profile

Step 4. Testing the success Implications of the Coalignment
- Correlation analysis between misalignment and performance

9. Findings

9.1 Summary of Research

The study finding were summarized as;
1. Neither age nor tenure explains the manager’s type of strategic behavior, more specifically the study found no significant difference between conservative and entrepreneurial managers with respect to these managerial characteristics. This contradicts the result obtained by Thomas, Litschert and Ramaswami (1991).
2. The findings that entrepreneurial managers were more likely to have marketing experience and conservative managers were more likely to have experience in finance are similar to those obtained by Gupta and Govindarajan (1984) and Thomas, Litschert, and Ramaswami (1991).
3. The study also demonstrated clearly that the coalignment between managerial characteristics and strategy has significant success implications for entrepreneurial managers.

9.2 Limitation of Research finding
The study analyzed entrepreneurial and conservative types of strategic orientations, for better result other strategies (adaptive and participative) might also need to work on.

The study carried research on variables of a demographic nature, there are other cognitive and affective variables that also can account for performance under conservative or entrepreneurial orientations (Barsade et aL 2000; Kilduff, Angelmar, and Mehra 2000).

The study was conducted with empirical data collected in 1996 from small firms in Spain. Which cannot finding make generalize to other countries, time periods, and firm sizes.

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