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Middle management’s role in strategy implementation projects: a behavioral analysis

Abstract The ability of businesses to adapt their strategy quickly and effectively to the changing environment in an ever more globalized economy has become one of the key success factors for sustainable competitive advantage and above average economic returns. Success factor oriented research has identified a number of obstacles that hinder effective strategy implementation and there is growing support in the research community that the behavior of middle management, who frequently take on key positions in strategy implementation projects, is of significant importance for success or failure. However, most studies have looked at the issue from a descriptive perspective, only few have analyzed the role of middle management from a normative viewpoint. This study builds upon Porter and Lawler’s qualitative model of managerial motivation which is transformed into a quantitative principal agent model to analyze the behavior of middle managers as key actors in executing strategic projects. The analysis highlights the necessity of adequate incentive systems for strategy implementation projects. Further, the importance of managing both objective and perceived implementation risk is demonstrated. Finally, the authors suggest distinguishing obstacles of strategy implementation into process issues and behavioral issues.