This paper investigates the embeddedness of strategy into the macro- and microenvironments. The results suggest that strategy making is influenced and reflects managerial ‘mental maps’ and that the macro- and microenvironments significantly guide functional strategies (market orientation, manufacturing orientation, human resource management and product innovation) and organizational performance. In turn, the functional strategies significantly influence marketing effectiveness and organizational performance. Thus, the relationship between environment and marketing effectiveness is mediated by functional strategies just as the relationship between functional strategies is mediated by marketing effectiveness. Marketing effectiveness is shown to contribute significantly to financial performance. The model is hierarchical and demonstrates the pervasive influence of the environment and functional strategies on financial performance. The model developed and tested permits exploration of the direct and indirect effects of these complex hierarchical relationships. The path model suggests the data fit the hypothesized model well and that the parameter estimates are robust.
- Marketing effectiveness