A substantive theory of strategic change of successful companes in hostile environments: the case of Embraco in Brazil

Abstract

In Brazil, the study of the process of organizational strategic change generally doesn’t consider the consequences of change on organizational performance and studies that explain the performance variations don’t consider the process of underlying strategic change. This article tries to fill this theoretical gap and offers an explanation of the strategic change of companies that have a competitive advantage over the competitors in a hostile environment like Brazil. A simple case study was developed to generate a substantive theory through the Grounded Theory method, combined with a process-oriented and contextual approach to the study of strategic change. On the basis of the perception of the managers of Embraco, which has historically generated high profits in the Brazilian mechanical-metallic sector, a set of propositions was developed on how and why the company has changed its strategies. Contrary to the literature about adaptation to hostile environments, Embraco didn’t base its strategies on the relationship with the government and didn’t adopt a reactive attitude. The case reveals that successful strategies protected the company against environmental hostilities. Two strategies proved to be important: the commitment to the accumulation of a higher technological capacity and internationalization.

Key words: strategic change, competitive advantage, hostile environments, Grounded Theory.