Strategic Management Journal Strat. Mgmt. J., 27: 1221–1231 (2006) Published online in Wiley InterScience (www.interscience.wiley.com) DOI: 10.1002/smj.569 RESEARCH NOTES AND COMMENTARIES THE MODERATING INFLUENCE OF STRATEGIC ORIENTATION ON THE STRATEGY FORMATION CAPABILITY – PERFORMANCE RELATIONSHIP STANLEY F. SLATER, 1 * ERIC M. OLSON 2 and G. TOMAS M. HULT 3 1 College of Business, Colorado State University, Fort Collins, Colorado, U.S.A. 2 College of Business and Administration, University of Colorado—Colorado Springs, Colorado Springs, Colorado, U.S.A. 3 Eli Broad Graduate School of Management, Michigan State University, East Lansing, Michigan, U.S.A. An effective strategy formation capability is a complex organizational resource—a dynamic capability that should lead to superior performance. Strategy scholars have examined the strategy formation capability from many perspectives. However, no study has examined a comprehensive model of strategy formation in the context of the firm’s strategic orientation. We develop and examine such a model. The results show that strategic orientation moderates the relationship between different elements of the strategy formation capability and performance. Copyright  2006 John Wiley & Sons, Ltd. Strategy formation has been at the heart of strategic management for more than three decades (e.g., Mintzberg, 1973) and is concerned with ‘how effective strategies are shaped within the firm’ (Chakravarthy and Doz, 1992: 5). In this vein, our research question is: How can the strategy formation process lead to superior performance for businesses that have adopted different strategic orientations? A firm has competitive advantage when it has a strategy that increases effectiveness or efficiency, and is valuable, rare, and difficult to imitate (Bar- ney, 1991). We suggest that an effective strategy Keywords: strategy formation; strategic orientation; re- source-based view; contingency theory; Miles and Snow strategy types; performance *Correspondence to: Stanley F. Slater, College of Business, Col- orado State University, Fort Collins, CO 80523-1278, U.S.A. E-mail: Stanley.Slater@ColoState.edu formation capability is valuable when it enables the firm to create strategies that increase its effec- tiveness or efficiency. It is rare when it enables the firm to create a strategy that is not pursued by large numbers of firms. Finally, the strategy for- mation process may be difficult to imitate due to causal ambiguity and/or social complexity (Bar- ney, 1991). Thus, the strategy formation capabil- ity may be a dynamic capability (Teece, Pisano, and Shuen 1997) that, when matched to the firm’s environment or strategic orientation, leads to com- petitive advantage. The proposition that the firm’s strategy forma- tion capability must match its strategic orienta- tion is the essence of the contingency approach to strategy. Contingency theory posits that for each strategic orientation there exists a config- uration of organizational characteristics that fits the strategy to yield superior performance (e.g., Copyright  2006 John Wiley & Sons, Ltd.