The Engagement of Employees In The Strategy Process and Firm Performance: The Role of Strategic Goals and Environment

Abstract

Despite the call to engage employees in strategy making processes, empiricalevidence that ties this engagement to financial performance has not been forthcoming.This study fills this gap by investigating whether involving employeesin the strategy making process leads to a higher achievement of strategic goalsand subsequently increased financial performance. Our findings suggest thatthe link between strategy making processes and financial performance may beunderestimated unless strategic goals are included as a mediator. We also findenvironmental dynamism moderates the relationships we investigate. Under conditionsof low dynamism, there is a stronger relationship between the engagementof employees and strategic goals related to innovation than under conditions ofhigh dynamism. Conversely, strategic goals related to quality have a strongerrelationship with engagement of employees under conditions of high dynamismwhen compared to conditions of low dynamism.