Dynamic Aspects of Strategic Groups and Competitive Strategy: Concepts and Empirical Examination in the Insurance Industry

255 p.Thesis (Ph.D.)--University of Illinois at Urbana-Champaign, 1987.Since Hunt (1972) coined the term "strategic groups" in his study on the home appliance industry, a growing body of literature, both theoretical and empirical, has used this concept in different ways for different purposes. The fundamental goal of this study is to explore how the concept of strategic groups can be used to understand competitive patterns in the context of an industry analysis (Porter, 1980), a core task in the strategic management area. The top 33 firms of the insurance industry (which capture about 75% of the entire premiums written), form the sample which is used to examine five important research questions and the hypotheses derived out of them for the 1970-1984 time period.The first research question considers the theoretical framework underlying the formulation of strategic groups. A general framework based on the concept of the Strategic Space (SSP), and Stable Strategic Time Periods (SSTP's), is developed and tested in the context of the insurance industry.Question 2 examined the dynamic characteristics of strategic groups and found: (1) The number of strategic groups changes over time; (2) the location of strategic groups in strategic space also changes over time; and (3) partial support for the view that strategic groups have a quantum type of movement.Question 3 tested strategic groups and intra-industry performance differences and found partial support for Porter's (1979) theory of strategic groups and intra-industry performance differences.The interplay between strategic groups, mobility barriers, and the modeling of Firms' Competitive Strategy Decisions, (FCSD's) was examined. The main findings are that: (1) firms within the same strategic group perceive the strategic group as the arena (reference group) for competitive decisions; (2) firms within the same strategic group adjust their strategic behavior toward the strategic group's reference point; and (3) strategic group members are not motivated to contribute to the building of their group mobility barriers.Question 5 examined the past pattern of competition and the prediction of future strategic outcomes and found that: (1) past patterns of competition enable the future values of firms' competitive strategy decisions to be predicted accurately; and (2) past patterns of competition also enable future competitive patterns of the industry to be predicted accurately. (Abstract shortened with permission of author.)U of I OnlyRestricted to the U of I community idenfinitely during batch ingest of legacy ETD