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Abstract:
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This study focused on performance implications of strategic group membership. The research to date on this issue has been inconsistent. Specifically, this study investigated potential sources of statistical variation relative to strategic groups and performance. The context of this study is the banking industry and it investigates the impact of firm tenure and the industry environment on the strategic groups in the industry. To consider the relative impact of firm tenure in a strategic group, two five year time periods were selected and for each time period, all strategic groups were partitioned in subgroups of constant member firms and shifting member firms. Further, to investigate the impact of the industry environment, the time periods were selected to reflect environmental stability and instability. The major findings of this study are: 1) The firms which maintained their strategic group membership out-performed those firms that shifted group membership; 2) Strategic groups expanded in number during periods of industry environmental stability and contracted during periods of industry environmental instability; 3) Strategic group membership predicts performance better during periods of industry environmental stability than during periods of instability. |