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Context is the setting or circumstances of the actions. Each organization has a unique and evolving context, the understanding of which is developed in the strategy formation activities. The better the context is understood, the more effective its exploration for advantage.

Pettigrew on context (Pettigrew, 1987, pp 650) --
""...context refers to the antecedent conditions of change, the internal structure, cultural, and political context within which leadership occurs, as well as broad features of the outer context of the firm from which much of the legitimacy for change is derived.""

Contextual Variables --
Context, a key variable in strategy formation, is actually many variables --

  • Context includes all relevant elements of the business organization's environment - stakeholders, regulators, competitors, customers, markets, communities, governments, etc.
  • Context also includes elements within the business organization such as mission, vision, values, culture, and capabilities.
  • Other contextual factors include environmental ambiguity, environmental dynamics and complexity, competitive position, and the stage of life of the business.
  • Strategic management competency itself is a contextual factor to be considered in the selection of strategies to pursue.

Context from a complex responsive process perspective --
Context in the complex responsive processes view of organizations is both the living present and the history of experience. It is related to the notion of path dependence. All human action is history dependent. Any current action, whether in the medium of symbols or using tools is both enabled and constrained by the actions preceding it Actions are patterned by both previous history and current context (Stacey, 2001, pp 101)

  • context is the ""real"" lived in world and the history of lived experience
  • the gesture-response structure of communication of people takes place in a context
  • the gesture-response action is shaped and given meaning by context
  • context for both the gesturer and responder is the living present and the historical background from which the gesture-response action evolves
  • symbols are always a social action in the context of the living present of time and place constituted by other humans, their interactions, and the historical experience of each of the interacting individuals interactions with each other and between those around them.
  • beyond the current and historical context in symbols is the historical development of abstract-systemic explanatory frameworks of all kinds. This category of contextual things, these frameworks, can be classifies as reified symbols. This is because meaning goes beyond the gesture-responses and the meanings of words. In the case of the contextual abstract framework of physics, the words ""gravity"" and ""relativity"" refer to a whole abstract systematic framework and the responses those words call forth in each must also refer to that framework if they are to continue to discuss physics.