Managing organizational stretch to overcome the uncertainty of the Great Recession of 2008

Purpose – The purpose of this paper is to address issues related to organizational design and strategy fit by examining the “strategic stretch” that occurs when there exists a mismatch between an organization's structure and firm‐level strategy. Design/methodology/approach – The paper contains a discussion of relevant issues and a presentation of research that considers the relationship between organizational design, strategy selection, and the competitive environment within which a firm operates. This research includes an analysis of a survey of top managers and an evaluation of organizational design and firm strategy to determine the existence of strategic misfit. Findings – Misfits in strategy and structure exist because of Russian managerial proclivity to maintain direct control through centralization of all strategic formulations and because of high risk‐taking behaviors of Russian managers. While organizational inertia is a clear driver of organizational structure, cultural inertia also exists and, in the case of Russian organizational design, societal organizational culture drives strategy misfits. Practical implications – An understanding of strategic misfits is crucial for managers so that they may recognize these disconnects early and make improvements as market or firm conditions changes. The results of the analysis of Russian firms suggest that in designing efficient organizations, greater attention should be placed on the specific impact of societal organizational culture. In addition, practitioners in organizational design consulting positions should make clear, whenever they attempt to eliminate misfits between existing structures and current strategies, the need to develop effective stretch for implementation of intended strategies. Originality/value – The paper provides a unique application of the connection of strategy and organizational design under conditions of extreme uncertainty. This paper also extends the analysis of organizational design and strategy to firms operating in emerging markets. Rapid changes in dynamic, emerging markets provide fertile testing grounds for management theory and practices; this paper examines a unique set of empirical evidence.