Business environment, high-involvement management, and firm performance in Korea

This paper tests configurational theory. Configurational theory argues that firms with holistic management practices consistent with their environment will outperform those firms whose management practices do not fit with each other or their environment. The construct of high-involvement management (HIM) was used to capture management configurations. We hypothesized that businesses that operated in uncertain environments and had HIM (strategic alignment) would outperform those businesses that operated in uncertain environments and did not have HIM. This hypothesis was supported using a sample of large Korean businesses. However, strategic alignment in stable environments did not affect firm performance. Thus, it was concluded that strategic alignment may have more importance in uncertain than in stable environments. Further, although HIM seemed to be a necessary condition for successful performance in uncertain environments, we found that it was not sufficient.