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How Organizations Prepare for the Future: A
Comparative Study of Firm Size and Industry
Tobias Meyer , Heiko A. von der Gracht , and Evi Hartmann
Abstract—The question of how companies can best prepare for
the future to maintain or improve their existing position in the
market place has increased its momentum. This article aims to
analyze future preparedness as a joint construct consisting of a
company’s exploitation and exploration capabilities. In this article,
we thereby consider exploitation as a firm’s strategy to prepare for
the future by focusing on its organizational structure and resources,
and exploration as its strategy to engage in corporate foresight to
anticipate changes in their environment. Previous scholars centered
their research on large companies and single industries. In this
article, we close this gap by analyzing future preparedness of large
companies as well as of small and medium-sized enterprises from
12 different industries. Data were obtained from a heterogeneous
sample of 602 companies of the German economy. For data analysis,
the measured variables were classified using principal component
analysis and compared by means of variance analysis. Our results
indicate that companies rather build on exploitation of internal
resources than on exploration of their environment. We further
present firm size and industry as predictors for future preparedness strategies and found that the scope of future preparedness
augments with firm size.
Index Terms—Ambidexterity, comparative study, corporate
foresight, factor analysis, future preparedness, managerial survey,
small and medium-sized enterprise (SMEs).
I. INTRODUCTION
HE ENVIRONMENTAL conditions that today’s businesses have to face are characterized by increasing volatility, uncertainty, and complexity. Changes in the environment
influence a company’s competitiveness and its strategy to generate revenues sustainably. History shows that especially the
sustainment of competitive advantage is difficult [1]. Many studies in strategic management have investigated the reasons why
some companies survive, whereas others vanish. One reason for
survival is an organization’s capability to adapt to changes in
its environment [2], [3]. A fast reaction to changes can help to
minimize risks or to develop new strategies to generate revenues
[4]. Organizations, therefore, increasingly look into the future
in order to prepare for it at an early stage. In this vein, Rohrbeck
T
Manuscript received May 31, 2019; revised October 25, 2019; accepted April
10, 2020. Date of publication June 1, 2020; date of current version January 7,
2022. Review of this manuscript was arranged by Department Editor D. Ehls.
(Corresponding author: Tobias Meyer.)
Tobias Meyer and Evi Hartmann are with the Friedrich-Alexander
University Erlangen-Nuremberg, 90403 Nuremberg, Germany (e-mail:
tobias.t.meyer@fau.de; evi.hartmann@fau.de).
Heiko A. von der Gracht is with the School of International Business and
Entrepreneurship, Steinbeis University, 71083 Herrenberg, Germany (e-mail:
vondergracht@steinbeis-sibe.de).
Digital Object Identifier 10.1109/TEM.2020.2992539
and Kum [5] recently introduced “Future Preparedness” as a
new construct that measures the foresight activities of a firm
in relation to its foresight need. Companies that match their
foresight need with the appropriate amount of foresight activities
seem to be better prepared for the future than others are. Literature shows that most organizations apply corporate foresight
to anticipate future developments and transformational change
early in order to identify more advantageous strategies and to
gain superior positions in the market place [6]. They expect to
see upcoming threats and opportunities ahead of competitors
and to respond adequately to these changes by investing in their
resources [7]. These vigilant organizations use capabilities of
identifying, seizing, and reconfiguring changes in a suitable
amount in view of their environmental requirements [5], [8].
On the other hand, despite being vigilant, these firms react
to anticipated trends by investing in internal and external
organizational skills, resources, and competencies early in
order to work out a competitive edge [5]. As innovation cycles
and time-to-market become increasingly critical, Paliokaitė
and Pačėsa [2] point out that an organization’s structure and
internal resources have to develop accordingly. Successful
organizations’ strategies thereby develop from a strict resourcebased view by accumulating and exploiting firm-specific
resources and assets to a flexible dynamic capability strategy
allowing them to rapidly renew and adapt resources [9]–[11].
A combination of both, exploitation of existing resources
and assets and exploration of changes and upcoming trends
is often recommended [2], [12], [13]. Whereas, exploitation
considers the internal view into a company, exploration is
highly dependent on a firm’s context and the uncertainty
of its environment. To investigate future preparedness, we,
therefore, extend recent research on this topic by incorporating
both strategies, i.e., exploitation and exploration. In terms of
ambidexterity, both strategies have received much attention in
management literature but have not yet been considered as a
joint construct to improve the future preparedness of companies.
Furthermore, most studies on corporate foresight have so far
centered on large organizations [4], [5], [14]. However, to
develop and sustain competitiveness, future preparedness is
equally important for smaller firms. Limited resources may force
small and medium-sized enterprises (SMEs) to concentrate on
specific areas when preparing for the future, but the concrete
strategies are unknown [15]. Furthermore, does the industry
environment seem to be a predictor for foresight activities
and should, therefore, be controlled when investigating future
preparedness [15]–[17]. Cross-industry studies on foresight
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are limited and it is unclear how environmental differences
influence the exploitation of internal resources.
Accordingly, the purpose of this article is to examine future
preparedness by operationalizing the exploitation and exploration capabilities of companies of different sizes and industries.
Therewith, we seek to contribute to a better understanding
of the way different companies prepare themselves for future
challenges.
The rest of this article is organized as follows. In Section
II, a theoretical background introduces the importance of future preparedness and our research model. It also presents our
hypotheses regarding firm size and industry as predictors for
future preparedness. In Section III, we describe our methodology
and research design. Section IV analyzes the findings. Finally,
Section V concludes this article.
II. THEORETICAL BACKGROUND AND HYPOTHESES
A. Future Preparedness and Research Model
Rohrbeck and Kum [5] propose future preparedness as a new
construct, which compares the need for corporate foresight with
the corporate foresight maturity of a company. They measure
the specific company’s needs by assessing the complexity and
volatility of its environment. Vigilant companies match their
needs with their foresight maturity, whereas neurotic or vulnerable companies either exceed the need through their capabilities
or fall short in their capabilities to address the needs. The authors
demonstrate that vigilance has a positive effect on a company’s
performance, measured as its profitability and market capitalization growth. However, from the 83 multinational European
firms in the study, only 36% were rated as vigilant, showing
that an adequate integration of foresight processes in order to
prepare for the future is rather rare than the norm in today’s
organizations.
Previous research has shown that organizations integrate foresight into their processes with various expectations. Most of
them expect that early anticipation of trends leads to advantages
in occupying new ways to create value for customers and to protect the company from external threats [5], [18]–[20]. Foresight,
therefore, assists management in planning the organization’s future course of action. It consists of two fundamental capabilities
that a company needs to master. First, the capability of taking
a forward-view in order to recognize environmental changes
and opportunities that are caused by the uncertainty of their
environment, and second, the capability of adaptation by deriving insights and adequate reactions to these observations. To
address the forward-view capability, organizations observe their
environment [21]. Regarding these scanning practices, research
has discussed several modes, e.g., inactive, reactive, or proactive
[22], environmental segments, e.g., market, political, economic,
social, technological, or ecological [23], as well as information
sources, e.g., external, internal, personal, and impersonal [24].
The uncertainty of the environment thereby influences the extent
to which scanning is required. Environments of high volatility,
ambiguity, and complexity require more intensive scanning
than less uncertain environments. On the other hand, the capability of adaptation requires an organizational structure that
can develop appropriate response strategies. In order to do so,
companies need to exploit existing resources and competences.
The literature identifies two strategies of how companies build
up an organizational structure that prepares them for changes.
From a resource-based view, companies should accumulate and
exploit internal resources and assets to gain competitive advantages [25]. Barney [26] distinguishes between, first, physical
resources such as finances, processes, and equipment, second,
organizational resources such as the organizational structure and
planning, and third, human resources such as skills and employee
intelligence. The development of these resources combined with
differentiation from competitors generates value and allows for
higher resistance against future changes. The other, more recent,
strategy is defined under the term dynamic capability and implies
a more agile and flexible approach [10], [11]. Companies should
design their organizational structure and build resources in a way
that they can promptly adapt to changes. Both strategies require
investments into internal resources and competencies to prepare
the organizations for the future.
Numerous studies show that exploration of the environment
and exploitation of internal resources for adaptation help companies in gaining a competitive advantage [11]–[13], [27]. The
concept of ambidexterity suggests a combination of both strategies at the same time. However, case studies describe the difficulties of companies in acting ambidextrous. Christensen [27]
even argues that in the light of disruptive change, exploration
and exploitation cannot be handled at the same time. Internal
conditions and environmental influences lead companies to find
distinctive strategies to generate revenues and prepare for the
future.
Considering the assumptions above, we apply future preparedness as the capability of a company to increase its evolutionary fitness by, first, exploring environmental changes
through foresight or scanning activities and, second, building
an organizational structure that exploits internal resources and
competences to adapt to these changes. We measure the capabilities by asking German organizations to self-assess first
their future preparedness and second their investment focus to
increase their future preparedness for different variables. This
way, we get an indication of how exploration and exploitation
capabilities to prepare for the future differ between companies.
Moreover, research did so far not investigate, which factors
influence the way companies prepare for the future. To identify such predictors of future preparedness, we follow previous
studies on subareas such as foresight, environmental scanning,
and dynamic capabilities, which applied firm size and industry
as potential predicting factors [12], [15], [17], [28], [29]. Hence,
it is likely that companies of different sizes and industry types
also prepare for the future differently, so that the respective
capabilities of exploration and exploitation gained by studying
large companies from one industry cannot be generalized and
will not be applicable to SMEs or other industries.
B. Firm Size
When comparing the way SMEs and large companies prepare
for the future, it seems sensible to begin by analyzing the
particular characteristics that these firms possess. The relative
weakness of SMEs depends on their “liability of smallness”
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MEYER et al.: HOW ORGANIZATIONS PREPARE FOR THE FUTURE: A COMPARATIVE STUDY OF FIRM SIZE AND INDUSTRY
[30], which states that larger companies have better chances to
survive than SMEs. Large companies tend to have easier access
to critical resources, whereas SMEs have to deal with a scarcity
of time, methodological knowledge, resources, and personnel
[31], [32]. Financial constraints further limit small companies
in taking risks due to the awareness of the implications in case
of failure and consequently, size should be an advantage [15].
On the other hand SMEs are more flexible and agile than large
companies, more innovative in meeting customer requirements,
and more responsive to market needs [33]. The flat hierarchy and
short communication channels facilitate decision processes and
make cultural changes easier in SMEs. Large companies, on the
contrary, are often bureaucratic with a complex organizational
structure.
In previous studies on corporate foresight, environmental
scanning and ambidexterity practices, control of firm size was
important, as it often explained the extent to which companies
apply these practices [34]. However, literature in the field of corporate foresight for SMEs is limited. Many studies restrict their
samples to large international companies when investigating
corporate foresight, as SMEs due to resource constraints often
do not engage in foresight activities [4], [5], [31], [32], [35]. Jain
[22] and Costa [36] argue that as companies grow in size, their
need for strategic planning increases accordingly, and with it,
the need for a systematic approach to observe the environment.
Sharma and Yang [37] describe scanning as fundamental for
scenario planning and Ben-Menahem et al. [38] explain scanning as an antecedent to strategic change. Companies that scan
their environment to acquire information on events, trends, and
relationships potentially affecting their businesses are likely to
anticipate changes early. In SMEs, owner–managers are typically responsible for environmental scanning activities, but also
they do not often have time for frequent scanning because of their
involvement in the daily operations of the firm [39]. Franco et al.
[15] investigate environmental scanning practices and information sources in Portuguese firms and found that the importance
of practices augments with increasing firm size, and information
sources are more broadly exploited in large companies. SMEs
lack the infrastructure to search for information in a systematic
manner [40] and are generally more prone to overlooking new
ideas and innovations, as they rather focus on concrete knowledge in their direct environment, instead of expanding their
view for strategic foresight knowledge [31]. The recognition
that myriad options are available in the environment and the
limited cognitive ability to understand and completely scan these
options, limits the company’s search to information areas that are
familiar in terms of processes and payoffs [41]. This leads SMEs
to a more path-dependent approach by searching for solutions
locally in their direct environment, which they can easily map
on their existing knowledge base [42]. Scanning of SMEs,
therefore, often concentrates on small numbers of well-defined
areas of interest [43] and neglects scanning areas that are outside
of their value creation area [17], [22]. Major and Cordey-Hayes
[31] found that most small companies merely exist to satisfy
short-term needs and only respond reactively to changes, while
only a minority of the surveyed SMEs proactively integrate a
long-term approach and foresight attitude. The authors identify
a third group of small companies who are willing but not able to
513
engage proactively. Global search requires far more resources
and knowledge than a market search. Large companies are generally broader in scope, which requires them to gain information
not only from actors of their market environment such as customers, suppliers, and competitors but also from actors outside
the market, such as administrators and professional associations
[15]. This gives large companies a more precise overview of
the opportunities and risks in their environment. Hofer et al.
[44] investigated differences between small and large Austrian
companies in their forecasting processes and found an increased
perception of global crisis and their impact on the business
environment by large companies compared to SMEs. Higher
awareness of potential threats makes a company more resistant
to future changes, as long as it is able to respond effectively.
On the other hand, Piore and Sabel [45] found higher responsiveness to rapid changes within SMEs compared to large
companies, taking into account the limited resources and assets
of SMEs. Hannan and Freeman [1] confirm the difficulties of
large companies to adapt to discontinuous change. The internal
organizational structure of large companies is too complex in
order to efficiently react to disruptions [1] and they are less
likely to adjust to potential threats in the environment, which
increases the risk that environmental shocks will lead to an
organizational failure [46]. Rohrbeck [6] emphasizes that being
a large company decreases your reaction speed while exposing
you to a larger number of threats, which makes it crucial for
these companies to focus on high impact trends. SMEs, on
the other hand, can build on their flexibility, adaptability, and
efficient internal communication processes in order to react to
external shocks [47] and prevent organizational rigidity [46].
However, SMEs must manage their limited financial and human
resources carefully and make efficient and targeted use of them.
SMEs, therefore, focus on strengthening internal structures to
avoid the risk of not being able to mitigate even small changes
in their environment. O’Reilly and Tushman [13] argue that
ambidexterity in organizations who are able to balance exploitation of resources and exploration of the environment is
primarily supported by stable internal processes and a solid
resource-base, which enable firms to process a large amount of
data and make decisions. Exploitation and exploration require
completely different knowledge processes, which is why the
integration of both strategies is complex in particular for SMEs
[48], [49].
Given the constraints (e.g., resources) and advantages (e.g.,
flexibility) of SMEs, their strategy to sustain a competitive
advantage and be prepared for future changes may be more likely
in strengthening their organizational structure than in expanding
their view to changes in the global environment. On the other
hand, large companies may be able to integrate both, exploitation
and exploration. Major differences are expected in particular in
using foresight and scanning practices for taking a forward-view.
Therefore, we hypothesize that
H1. Small companies focus on the exploitation of internal resources
and competences when preparing for the future, while large enterprises in contrast to small companies focus on both the exploitation of
internal resources and exploration of global environmental changes.
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C. Industry Type
Corporate foresight literature intensively builds on case studies, which primarily investigate foresight activities of single
firms or industries, such as biotech companies [32], information
and communication industry [20], [50], [51], airline industry
[52], industrial companies [39], or manufacturing industry [53].
Some studies also compare strategic planning and foresight
activities between industries [6], [54], [55]. These studies give
evidence that industry type is important when studying foresight
activities. Almani and Esfaghansary [56] describe an industry
mindset, which develops out of similar assumptions and values
between companies. The stronger this industry-wide mindset is,
the lower is the likelihood for the companies to initiate planning
activities. Volatile industries with constantly new entrants and
strong competition develop less likely an industry mindset and
the engagement in planning and foresight activities increases.
Pivotal for interindustry comparisons is the context and environmental uncertainty of the companies. High uncertainty and
discontinuous changes in the market and global environment
require conformant measures to prepare for the changes. Vecchiato [54] investigates foresight and strategic decision making
between the oil and chemical industry describing the complexities and practices in each industry type. The author concludes
that dynamism and complexity are the main determinants of
uncertainty for these industries. Complexity results from the
heterogeneity of drivers of change, whereas dynamism appears
from the frequency of the drivers [54]. Complex business environments of mature and global industries are determined by
a high number of drivers of change in the macro environment,
whereas technologies and customer needs are settled. Emerging
industries, on the other hand, are dynamic because technology
is the main driving force and new customer needs arise in
shorter cycles. In general, Becker [17] describes that in industries
characterized by long product cycles and high development
and investment costs such as automotive or chemical industry,
long-range monitoring and planning is an inevitable prerequisite
to any strategical decision, as they require the identification
of changes in markets and technologies. Moreover, a stronger
foresight focus is observable in industries that are strongly
globalized such as financial services or the chemical industry
[17]. On the other hand, more service-oriented sectors such
as transportation or insurance put less value on research and
development activities as innovations are less important and can
be substituted by other strategies.
To conclude, the industry environment seems to be a strong indicator of foresight activities and for the way companies prepare
for the future. However, changing environmental requirements
also affect the response strategy. Companies in less volatile environments often neglect intensive exploration and rather focus on
exploitation of their resources [57]. Yet, companies’ strategies
are far from static, even within industries. Raisch and Tushman
[57] show that the level of environmental dynamism and the
according response strategies shifts as industries evolve. This
might end up in a constant transition between exploration and
exploitation strategies. However, based on the review above, we
hypothesize
H2. Differences between industries result in different company
strategies to prepare for the future.
Fig. 1 demonstrates our research model based on the analysis
above.
III. METHODOLOGY
A. Research Design
To investigate how firms differ in preparing for the future,
we designed a quantitative survey consisting of two constructs.
The first construct measures the companies’ current status for
being prepared for the next five years. The second construct
inquired about the companies’ current focus of activities and
investments to increase its future preparedness. Current status
and investments were measured by self-assessment for internal
resources and competences, for market view variables, and for
global environmental variables to cover exploitation as well
as exploration practices. The derived variables and hypotheses
were based on a literature review, expert interviews and discussions in the research team to ensure content validity [58]. In
total, the respondents were asked to assess 15 variables using a
10-point Likert scale from 1 (equivalent to “badly positioned”
and “no priority”) to 10 (equivalent to “very well positioned”
and “highest priority”). The selection of variables included the
resource-based perspective [26], Porter’s forces for the market environment [59], and macroenvironmental variables for
strategic management [60], and was based on March’s [49] and
Alcalde-Heras’ [48] surveys for exploitation and exploration.
Table I shows the assessed variables.
To capture the determinants of a companies’ future preparedness, we included firm sizes by combining the number
of employees and revenue per year, and added the industry or
branch, where the respective company has its main business in,
to control for interindustry differences. We further controlled
for the organizational leadership form of the companies by
separating between family-run and nonfamily-run businesses.
Cunha et al. [61] emphasize that firms which are associated with
or related to one leading decision-maker, which is often the case
in family-run businesses, are expected to follow the forecasts of
its CEO without encouraging people at all levels to participate
in sensemaking, peripheral vision, and prompt reactions. This
could potentially influence the way these companies prepare for
the future. However, our results show no significant difference
in the ratings between companies of different leadership forms,
which is why we excluded it from our analysis.
B. Data Collection and Sample Characteristics
Our comparative study consists of 12 industry sectors of the
German economy. The sectors describe a heterogeneous sample
of key industries, which are automotive, chemical, energy, mechanical and plant engineering, financial services, healthcare,
trade, consumer goods, life science, technology, telecommunications and media, and transport and logistics. In total, we
received 602 completed questionnaires. In order to allow for
investigating interindustry differences, we gathered at least 50
completed responses in each industry. The sample consists of
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MEYER et al.: HOW ORGANIZATIONS PREPARE FOR THE FUTURE: A COMPARATIVE STUDY OF FIRM SIZE AND INDUSTRY
Fig. 1.
515
Research model and hypotheses.
TABLE I
MEASUREMENTS
companies with less than 100 employees until more than 2000
employees. In terms of revenue per year, the sample includes
companies with less than 250 million Euro until more than
one billion Euro per year. Company classification was carried
out based on a combination of the number of employees and
revenue, resulting in three groups, which are small, medium,
and large companies. As the revenue is no size characteristic
for financial service companies or insurances, these companies
were classified only by their number of employees. The total
sample covers more than 570 000 employees and more than 360
billion Euro revenue per year, which is approximately 11% of the
German GDP (3,277 bill. Euro in 2017). Table II describes some
of the characteristics of the organizations that participated in our
survey. It provides information about the size and industry distribution. From the 602 companies, which participated in our study,
40.5% have less than 100 employees and 55.3% make less than
250 million Euro revenue per year. On the other hand, the largest
companies with more than 2000 employees and with more than
one billion Euro annual revenue represent 5.7% and 11% of
the sample, respectively. Company size distribution across the
industries is fairly even with a small overweight in numbers of
small businesses. Largest companies according to the number of
employees and revenue can be found within the mechanical and
plant engineering industry, whereas a higher number of smaller
organizations represent the telecommunication and media as
well as the energy industry.
Data collection was carried out using the computer-assisted
telephone interviewing (CATI) method [62], [63]. This method
ensures good return rates and allows to monitor the number
of correctly completed questionnaires in each sector. It further
helps to manage the quality of the answers, as misunderstandings
and irregularities can be directly solved. The CATI method also
allows for high confidence in the identity of the interviewees
and it is therefore suitable when interviewing hard-to-reach
respondents such as executives, senior managers, or owners.
Due to the strategic focus of our article, we addressed the
questionnaire to managing directors, members of the executive
board, or the heads of corporate planning or corporate strategy,
who have knowledge about the activities and strategic directions
of the firm [64]. The data were collected between November
2017 and February 2018. We tested for nonresponse bias by
comparing firm characteristics of the respondents with those of
the original sample [65]. No statistically significant differences
could be found considering the number of employees, revenue
per year, and leadership form, suggesting that nonresponse bias
is not a problem in our sample. To address common method
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TABLE II
COMPOSITION OF THE SAMPLE COMPANIES
variance, which is a possible threat to construct validity if all
of the data are self-reported, we followed Podsakoff et al. [66]
and Conway and Lance [67]. The respondents were informed
that (a) answers cannot be correct or incorrect, (b) that they
should give attention in answering the questions in an honest
way, and (c) that answers will be handled anonymized. This
way, respondents are less likely led to provide a socially desired response behavior or a presumed goal of the survey. The
questionnaire was further pretested several times in order to
eliminate potential ambiguities. Regarding ex-post analyses, we
applied Harman’s single-factor test, which can help to uncover
the extent of common method variance but is not able to control
it. The test assumes that common method variance is present if
a single factor accounts for most of the variance in an unrotated
explorative factor analysis [66]. In this article, the single factor
accounts for only 29% of the variance, which speaks against the
influence of common method variance in the data.
a certain percentage of the total sample variance. We further
applied varimax procedure of orthogonal rotation to facilitate
interpretation of factors. The reliability of results and consistency between variables was assured with the Kaiser–Meyer–
Olkin sample suitability measure, Bartlett Sphericity Test, and
Cronbach’s Alpha.
To test the hypotheses, we divided the sample into defined
groups. By applying the Kolmogorov–Smirnov test, we tested
for normal distribution within all groups. Results indicate that
all groups are not normally distributed. We, therefore, applied
the nonparametric Kruskal–Wallis H-test to compare groups and
detect estimates, which differ significantly. We further used the
Dunn-Bonferroni test as a post hoc test for comparisons with
more than two groups to reveal intergroup influences.
IV. RESULTS AND DISCUSSION
A. Clustering of Preparedness
C. Data Analysis
To analyze the data and validate the hypotheses, several statistical tests were obtained. After a general descriptive analysis of
current preparedness level and investment focus of companies,
the number of variables associated with the constructs was
reduced using factor analysis. By applying principal component
analysis, the initial number of variables was reduced to a few
factors for each construct. Each identified factor thereby explains
Table III shows the aggregated results of the survey for the
self-assessed current status of future preparedness of the companies. The mean scores indicate to which extent companies
feel prepared for the future regarding the inquired variables.
The questions were rated on a 10-point Likert scale with higher
numbers representing a higher degree of preparedness. The
results reveal that, in general, German companies rate their
internal structures as better prepared for the future than their
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TABLE III
FACTOR ANALYSIS FOR CURRENT PREPAREDNESS LEVEL
Notes: KMO = .903; Bartlett’s sphericity test 3608.95; gl = 105; p < .000; SD = Standard deviation.
adaptation capabilities to global environmental changes. Companies feel best prepared in addressing customer needs through
their product or service portfolio and in defending their market
position through innovation. They further assess their “financial
condition” as sustainable.
Table III also shows three factors, which were derived from
the principal component analysis with orthogonal rotation (varimax). The Kaiser–Meyer–Olkin measure verifies the sampling
adequacy for the analysis, KMO = .903, which is rated as
“superb” according to Field [66]. Bartlett’s test of sphericity
χ2 (105) = 3608.95, p < 0.000, indicates that the correlation
between items is sufficiently large for principal component
analysis. To derive the factors, we run an initial analysis to
obtain eigenvalues for each factor in the data. Three factors
have eigenvalues over Kaiser’s criterion of 1 and make good
conceptual sense as they explain 59.68% of the variance [15],
[68]. The last column shows the factor loadings after rotation,
which are all well above .50 and, therefore, preferable according
to Field [68]. Furthermore, Cronbach’s alpha is above 0.80 for all
factors, ensuring high reliability of the psychometric instruments
used in the study. The variables that cluster on the same factors
suggest that factor 1 represents the future preparedness for global
environmental changes, factor 2 the internal organizational preparedness, and factor 3 the product and service preparedness of
companies.
In the first factor, preparedness for global changes, organizations must be able to adapt to environmental uncertainty covering
changes in the political, economic, social, legal, and ecological
environment. The factor also contains the variable “positioning
vis-á-vis substitutes,” as most companies seem to rate this as
a global task. In order to address the first factor, companies
must engage in broad environmental scanning activities and
integrate foresight methods to make long-term plans. The particular objective lies, therefore, in observing the environment and
determining the best course of action by deriving a foresight
strategy and scenarios. The low rating indicates that, overall,
companies do less engage in global activities. However, high
standard deviations suggest a high degree of variance between
the companies. It is therefore likely that in preparing for the
future, global factors will only be in focus for certain companies.
The second factor, organizational preparedness, contains
companies’ internal infrastructure resources. These resources
are essential for companies as they provide grounding for all
other activities to prepare for the future. Sufficiently grounded
internal resources allow companies to take risks and enable
them to absorb environmental shocks. Focusing or exploiting
these resources helps to decrease internal costs, improves the
flexibility of the organization, or increases production capacities
[48]. Overall, companies rate their internal infrastructure as
better prepared for the future than factor 1.
The third factor, product preparedness, builds on a company’s
capability to serve customer needs and differentiate oneself from
competitors through innovative products or services. Knowledge
about customers and competitors is important for aligning a
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TABLE IV
FACTOR ANALYSIS FOR INVESTMENT FOCUS
Notes: KMO = .887; Bartlett’s sphericity test 2393.23; gl = 105; p < .000; SD = Standard deviation.
company’s strategy toward its market environment. Building a
competitive advantage and sustaining this advantage by constantly renewing and adapting product and service portfolios,
generates revenues, and protects against market surprises. Overall, preparedness for the third factor is rated highest among the
companies, but only slightly higher than for factor 2, organizational preparedness.
According to the three factors, it must be said there is no
particular strategy for organizations to prepare for the future.
However, a preference for focusing on one or another variable
should be based on a company’s objectives and characteristics,
whereby internal and resource-based aspects are, in general,
higher prioritized than external global variables.
B. Clustering of Investments
Similar to the current preparedness level, the findings in
Table IV reveal three factors, where companies currently focus
their activities and investments. The factors draw an almost
identical picture to our first analysis with only two differences in
the allocation of the variables. “Societal changes” and “politicalregulatory changes” are assigned a higher priority than before.
Variables with highest priorities and investments are again related to the third factor, product investments, and its supporting
variables, followed by organizational investments, and investments to adapt to global changes. The factors were derived
from a similar principal component analysis with orthogonal
rotation (varimax). The KMO = 0.887, Bartlett’s sphericity test
χ2 (105) = 2393.23, p < 0.000, and the explained variance of
51.26% indicate the good adequacy and reliability of the test
[68].
The two-factor analyses reveal a positive correlation between
current preparedness level and investments to improve future
preparedness. Ordinary least squares regression between the
mean values confirms that the initial preparedness influences the
investment behavior significantly (F(1.14) = 102.82, p = .000)
with R2 = 0.87. High perceived preparedness of internal resources and market environmental variables, therefore, implies
also high investments into these factors. Accordingly, companies
invest in resources or capabilities where they are already good
at, which is a strong indicator of the presence of path dependence between past actions and future directions. On the other
hand, even though companies rate themselves as insufficiently
prepared in certain areas, they do not invest in them. Thus,
companies consider factors in which they are already good at, as
more important than factors that have been already neglected in
the past. Higher factor priorities are thereby largely set within the
company and within their direct environment. However, global
environmental factors are classified lower, which are especially
relevant for setting a strategic direction for new business opportunities and for adapting to potential risks.
C. Future Preparedness and Firm Size
Our first hypothesis H1 proposes firm size as a predictor
for the way companies prepare for the future. To test H1, we
divided our sample into small, medium, and large companies
based on their relative size, i.e., revenue per year and number
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MEYER et al.: HOW ORGANIZATIONS PREPARE FOR THE FUTURE: A COMPARATIVE STUDY OF FIRM SIZE AND INDUSTRY
519
TABLE V
KRUSKAL–WALLIS TEST FOR THE INFLUENCE OF FIRM SIZE ON FUTURE PREPAREDNESS
Notes: ∗ p < 0.05; ∗∗ p < 0.01; ∗∗∗ p < 0.001; SD = standard deviation; H = Kruskal–Wallis
of employees. Kruskal–Wallis tests were then used to examine
the differences among the three groups in terms of their status
of future preparedness and current investment focus across the
inquired variables.
Table V shows that large companies feel significantly better
prepared and invest more intensively into global environmental
variables (factor 1) compared to medium and small companies.
The gap in the relative ordering in preparedness level and investments between global environmental variables, organizational
variables, and product variables for large companies is significantly lower than for smaller companies. Large companies are,
therefore, broader in scope when preparing for the future. Small
companies, on the other hand, focus more strongly on internal
factors such as their products (factor 3) and organizational
structure (factor 2). Across almost all variables, small firms show
the lowest means in the preparedness level and investments,
and the ratings generally decline with decreasing firm size.
Medium-sized companies, therefore, tend to fall in between
small and large companies, showing an explicit effect of firm
size on the ratings.
Based on these insights, our first hypothesis H1 can be accepted, as large companies focus significantly more on global
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TABLE VI
DIFFERENCES ACROSS INDUSTRIES IN FUTURE PREPAREDNESS AND INVESTMENT
Notes:∗∗Amount of variables with significant differences in ratings based on Kruskal–Wallis H-test (p < 0.05).
∗ Industries contributing to significance rating of single variables based on Dunn-Bonferroni test.
environmental variables when preparing for the future than small
companies, who rather build on the exploitation of their internal
resources. We can conclude that, in general, firm size can be seen
as a predictor for the way companies prepare for the future and
that the scope of future preparedness augments with firm size.
We, therefore, confirm that small companies more heavily focus
on the reinforcement of internal organizational structures, while
engaging less in taking a forward-view to anticipate changes in
their environment. The relatively low preparedness for global
factors by small companies should be interpreted as an alarm
signal on their future proof and sustainability of their competitive
advantage, as they are, in this respect, much more vulnerable to
external threats and less likely to anticipate business opportunities compared to their larger counterparts.
There are several explanations for this relative ordering. Major
and Cordey-Heyes [31] argue that small and medium-sized companies focus on concrete knowledge in their direct environment,
instead of expanding their view for strategic foresight knowledge. The scarcity of small firms’ resources (e.g., financial or
staff) limits the possibilities to engage in broad-scale activities,
such as environmental scanning [15]. Small companies’ attitude
that internal resources such as employees are considered as the
main source of success [31] and their willingness to increase
resistance to environmental shocks by improving financial conditions, drives them to strengthen the organizational structures
[26]. Furthermore, small companies, in contrast to their larger
counterparts, generally operate in more narrow business environments and, therefore, shut themselves off to global changes,
as they do not see the need to react or prepare for them.
D. Future Preparedness and Industry
To investigate the influence of industries on a companies’ way
to prepare for the future, we tested for differences in single variables for preparedness and investment between the 12 industries.
Table VI shows the mean industry values aggregated for each
factor from our principal-component analysis for preparedness.
The Kruskal–Wallis H-test reveals significant differences in 9 of
the 15 queried variables for each construct, i.e., preparedness and
investments. It is evident from Table VI that the global environmental factors generated the most statistically significant differences among the industries. Automotive, technology, chemical,
finance, and life-science rate themselves highest, while healthcare, trade, telecommunication, and transport are among the
industries with the lowest assessments. For organizational and
product variables, differences are smaller with only occasional
significances between industries for product variables. These
differences are mainly influenced by single outliers in the data.
For example, life science and technology industry, who have a
strong research focus, rate investments into innovativeness and
product portfolio higher compared to industries with a stronger
service focus, such as transportation [17]. As there is mainly an
agreement on assessments for internal variables, but significant
differences between industries for global environmental factors,
there is only partial support for our second hypothesis H2.
Our data support the argument that business environments
influence the forward-view strategy of companies. Industries
characterized by long product cycles and high development
and investment costs such as automotive or chemical [17]
force companies to prepare more intensively for environmental
changes. Moreover, industries with a strong global focus such as
finance are in our article among those industries with the highest
preparedness level and investments into global environmental
factors. On the other hand, Raisch and Tushman [57] argue that
companies in less volatile environments often neglect intensive
exploration and rather focus on exploitation of their resources.
While we can confirm the former, industries with less volatile
environments such as transport or telecommunication do not
significantly differ in their preparedness or investments into
organizational variables in our sample.
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MEYER et al.: HOW ORGANIZATIONS PREPARE FOR THE FUTURE: A COMPARATIVE STUDY OF FIRM SIZE AND INDUSTRY
Interestingly, investments and preparedness levels for global
environmental variables within one industry are not equally
high or low. Single industries seem to select their focus areas,
which they consider as most important while neglecting other
global variables. The resulting patterns are unique for each
industry where single global areas are sometimes considered
as most important for one industry, while for another industry
the same factor is rated as least important. Therefore, it seems
that industries concentrate on business focus specific changes,
neglecting other environmental areas. This could be caused by
(a) selective scanning (only within a particular business area) or
(b) impact prioritization [22]. In both cases, companies are more
vulnerable to environmental uncertainty, which is outside of
their business focus. Further data would be necessary to confirm
this correlation and present the resulting patterns in detail.
V. CONCLUSION
Uncertain environments and discontinuous change require organizations to prepare for the future in order to sustain their competitive advantage [69]. Corporate foresight suggests strategical
and operational measures for companies to anticipate opportunities or threats early and proposes possible paths that companies
can take in order to react to changes or to proactively prepare
for them [9]. Ambidextrous companies thereby apply both,
exploitation of existing resources and exploration of the environment to increase their preparedness [2]. Based on an extensive
managerial survey consisting of 602 respondent companies of
the German economy, this article highlighted the way companies
prepare for the future and threw light on differences in the preparing activities between companies of different sizes and from
different industries. The survey findings revealed that companies
primarily concentrated on the exploitation and development of
internal resources and assets, whereas adaptation capabilities to
global environmental factors were less prioritized. We further
found significant variance in how companies of different sizes
and from different industries positioned themselves. We present
that firm size could be seen as a predictor for the way companies
prepare for the future and that the scope of future preparedness
augments with firm size. The gap in the relative ordering in
preparedness level and investments between global environmental variables, organizational variables, and product variables for
large companies was identified to be significantly lower than for
smaller companies, showing that small companies are, in general, much more vulnerable to external threats and less likely to
anticipate business opportunities compared to their larger counterparts. Industry analysis revealed that business environments
influence the forward-view strategy of companies but did not
support the argument that industries with less volatile environments more heavily prepare or invest in organizational variables.
As with any study using self-reported and single-respondent
data, the objectivity of the data may be lower than in studies using
multiple respondents. However, due to the undertaken measures
to control the reliability and validity of this article, most biases
could be bypassed. We focused this article on the German
economy. Previous studies on foresight and environmental
scanning where often country-specific [43], [70], demonstrating
521
that country of origin may impact aspects of future preparedness.
Therefore, the results may not be generalizable globally and
should be handled with care when transferring findings to other
regions. For further research, it would be interesting to see
whether there is a country-specific influence and how this affects
corporate behavior. Especially in large companies, corporate
foresight is often driven by individual departments and less
centrally managed, as we have considered it. This could have
an impact on the individual assessments of the respondents,
as they not always have an overview of the activities of all
departments. However, in order to maintain comparability with
SMEs and building on previous studies [15], we have refrained
from distinguishing between unit-driven and centrally managed
foresight. For future studies, a performance assessment could
also be interesting. In their study on future preparedness,
Rohrbeck and Kum [5] found a positive correlation between the
vigilance and performance of organizations. Transferring this to
our study could reveal a relationship between the differences in
the way companies prepare for the future and the performance
and longevity of a firm.
APPENDIX
How do you evaluate the current state of your company in
order to be successful also in five years? (Likert scale 1-10: 1
badly positioned, 10 very well positioned).
1) Personnel (e.g., competences, recruiting).
2) Organizational structure (e.g., agility, stress resistance).
3) Processes (e.g., efficiency, lean, flexibility).
4) Financial condition (e.g., securing investment funds).
5) Innovativeness (e.g., innovation-friendly corporate culture).
6) Product portfolio/service portfolio.
7) Serving customer needs.
8) Positioning in the competitive environment.
9) Positioning vis-à-vis substitutes.
10) Innovative technologies.
11) Political-regulatory changes (e.g., legislative amendments).
12) Global economic changes (e.g., protectionism, customs).
13) Societal changes (e.g., demographic/cultural change).
14) International crises and conflicts.
15) Ecological changes (e.g., climate change, resource
scarcity).
What are the current priorities of your investments or activities? (Likert scale 1-10: 1 no priority, 10 highest priority).
1) Personnel (e.g., competences, recruiting).
2) Organizational structure (e.g., agility, stress resistance).
3) Processes (e.g., efficiency, lean, flexibility).
4) Financial condition (e.g., securing investment funds).
5) Innovativeness (e.g., innovation-friendly corporate culture).
6) Product portfolio/service portfolio.
7) Serving customer needs.
8) Positioning in the competitive environment.
9) Positioning vis-à-vis substitutes.
10) Innovative technologies.
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11) Political-regulatory changes (e.g., legislative amendments).
12) Global economic changes (e.g., protectionism, customs).
13) Societal changes (e.g., demographic/cultural change).
14) International crises and conflicts.
15) Ecological changes (e.g., climate change, resource
scarcity).
ACKNOWLEDGMENT
We would like to thank the independent reviewers and editor
for their valuable comments and suggestions. Furthermore, we
would like to thank all the participants of interviews, expert panel
sessions, and workshops for their thoughts, visions, and ideas.
Additionally, many thanks go to KPMG Germany for providing
the anonymous data of their Future Readiness Index 2018, which
they got collected by one of the world-leading independent
research institutes.
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Tobias Meyer received the M.Sc. degree in industrial engineering in 2017,
from the Friedrich-Alexander-University Erlangen-Nuremberg, Nuremberg,
Germany, where he is currently working toward the Doctoral degree in supply
chain management.
He is currently a Research Assistant of Supply Chain Management, FriedrichAlexander-University Erlangen-Nuremberg. His current research interest focuses on strategic foresight and sustainable supply chain management.
Heiko A. von der Gracht received the Ph.D. degree in business studies from
EBS University of Business and Law, Wiesbaden, Germany, in 2008.
He is currently a Professor of Strategic Foresight with the School of International Business and Entrepreneurship, Steinbeis University, Herrenberg,
Germany. He was an Associate Professor with the University of ErlangenNuremberg. He serves on various editorial boards, among others as Associate
Editor of Technological Forecasting & Social Change. His works have been published in several peer-reviewed journals, including Technological Forecasting &
Social Change, Journal of Business Research, and Journal of Supply Chain
Management. His current research interests encompass corporate foresight, the
Delphi and scenario techniques.
Evi Hartmann received the Dr.-Ing. degree from the Technical University
Berlin, Berlin, Germany, in 2002.
She is currently a Professor of Supply Chain Management, FriedrichAlexander-University Erlangen-Nuremberg, Nuremberg, Germany. She has
authored or coauthored the International Journal of Production Economics,
Journal of Business Logistics, International Journal of Physical Distribution &
Logistics Management, Journal of Supply Chain Management, and other managerial and academic outlets. Her current areas of research include purchasing
and supply management, global sourcing, and supply chain management.
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