The Peters and Waterman framework of eight management principles,focused largely on organisational design issues, is used to examinedifferences between 19 excellent and 50nonexcellent firms. Data from large United Statesmanufacturers show that the excellent companies earnhigher returns on capital, have less variable returns and are moreinnovative. They also tend to operate businesses which emphasise highvalueadding activities further downstream, closer to the final market.Twentytwo measured items associated with the eight Peters and Watermanprinciples differ systematically between the excellent andnonexcellent firms. In addition, 13 measures associatedmore directly with strategy also differ systematically. High investmentin R&D, a strong international posture, and strong market positionsprovide an alternative explanation to the Peters and Waterman principlesfor good profit and innovation performance by theexcellent firms, thus reinforcing the need to betterunderstand industry and global strategy dynamics as well as theingredients of entrepreneurial, open climates.
Management Decision – Emerald Publishing
Published: Apr 1, 1991