In Search of Excellence Ten Years Later: Strategy and Organisation Do Matter

Abstract

The Peters and Waterman framework of eight management principles, focused largely on organisational design issues, is used to examine differences between 19 “excellent” and 50 “non‐excellent” firms. Data from large United States manufacturers show that the “excellent” companies earn higher returns on capital, have less variable returns and are more innovative. They also tend to operate businesses which emphasise high value‐adding activities further downstream, closer to the final market. Twenty‐two measured items associated with the eight Peters and Waterman principles differ systematically between the “excellent” and “non‐excellent” firms. In addition, 13 measures associated more directly with strategy also differ systematically. High investment in R&D, a strong international posture, and strong market positions provide an alternative explanation to the Peters and Waterman principles for good profit and innovation performance by the “excellent” firms, thus reinforcing the need to better understand industry and global strategy dynamics – as well as the ingredients of entrepreneurial, open climates.

Citation

Capon, N., Farley, J.U., Hulbert, J.M. and Lei, D. (1991), "In Search of Excellence Ten Years Later: Strategy and Organisation Do Matter", Management Decision, Vol. 29 No. 4. https://doi.org/10.1108/00251749110006013