Corporate Strategy and Operational Reality: Why Managers Do What They Do

This paper contributes to the management debate regarding the gap between intended corporate strategy and operational reality by examining the relationships between senior executives and line managers within the multiple store retail industry. Using a case study methodology and an Agency theory perspective, the research investigates the implementation of two operational policies designed to achieve corporate strategy - employment and supplier relationship policies. The findings reveal that the incentives offered in the principal-agent relationship drove the behaviour of the line managers. Managers sought to maximise their rewards by focusing efforts on surrogate measures designed to evaluate performance. The research concludes that organistional long-run considerations are counteracted by reward systems for employees that encourage behaviour that focuses on short-run sales and earnings at the expense of long-term growth and development.