Strategic Groups as Reference Groups: Theory, Modeling and Empirical Examination of Industry and Competitive Strategy

Publication Type

Journal Article

Publication Date

9-1995

Abstract

Previous studies on strategic groups have mainly focused on their static characteristics in order to test the theory of strategic groups and intraindustry performance differences (Porter, 1979; Cool and Schendel, 1988; Fiegenbaum and Thomas, 1990). In contrast, this study takes a longitudinal, dynamic perspective and describes the forces driving strategic group membership and structural evolution. It proposes that a strategic group acts as a reference point for group members in formulating competitive strategy. A partial adjustment model of strategic mobility is then developed which incorporates the idea of a strategic group as a reference group. It models strategic change in an industry both within and across strategic groups. The model is tested in the context of an in-depth industry analysis of the more significant firms in the insurance industry over the 1970-84 time period. The results suggest that strategic groups act as reference points for firm strategies and that predictions of future firm strategies and industry/group structures may also be successfully derived.

Discipline

Business

Research Areas

Strategy and Organisation

Publication

Strategic Management Journal

Volume

16

Issue

6

First Page

461

Last Page

476

ISSN

0143-2095

Identifier

10.1002/smj.4250160605

Publisher

Wiley

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