How chief executives’ perception of the environment impacts on company performance

Abstract

Environmental scanning is a key factor to sustained competitive advantage of the firm and it is becoming increasingly important in small and medium enterprises (SMEs) theory and practice. Not surprisingly, it is widely viewed as the first step in the process of strategic management. The main debate in strategy and environment management is nowadays concerned with the primary importance of environmental scanning to strategy formulation and implementation. Moreover, effective scanning of the environment is seen as necessary to the successful alignment of competitive strategies with environmental requirements and the achievement of outstanding performance in SMEs. This paper explores the above relationship in the context of the British electrical and electronic industry. It is based on the empirical evidence and the findings of a survey of 132 chief executive officers (CEO) and their perception of environmental scanning and strategy in SMEs. It is concluded that there is a significant relationship between increasing the environmental scanning of the firm, and the success of the firm’s performance in small and medium sized enterprises.