This study examines the relationships among environment, strategy, and structure and the impact of fit among these three constructs on small and medium sized firm`s performance. The data were collected from 179 small and medium sized firms located in...
This study examines the relationships among environment, strategy, and structure and the impact of fit among these three constructs on small and medium sized firm`s performance. The data were collected from 179 small and medium sized firms located in Daegu and Kyungbuk district area. Empirical results showed that fit among environment, strategy, and structure is still important for small and medium sized firms. Firms with high fit were performing significantly better than firms with low fit. An important finding of this research is that fit among environment, strategy, and structure is not universally applicable for all types of strategy. High performers with externally oriented strategy (i.e., differentiation strategy) achieved external fit, while high performers with internally oriented strategy (i.e., cost leadership) pursued internal fit. It is also found that most of hypotheses are better supported for high performing firms than for low performing firms. The implications of these findings, limitations, and future research directions were also discussed.