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Strategic orientations in a competitive context: The role of strategic orientation differentiation

Abstract

Strategic orientation studies often provide ‘best practice prescriptions’ for firms in a given context—matching orientations to environmental conditions. While this perspective has value, empirical results are equivocal and an important reality has been overlooked: the fact that a firm’s decision to emphasize a particular strategic orientation can depend on its competitors’ orientation choices. Based on two studies of customer, technology and production orientations, we show that the emphasis a firm places on a strategic orientation depends on how competitive its environment is. When competition becomes less intense, firms place emphasis on the strategic orientation that matches the dominant environmental condition (e.g., technology orientation when technology turbulence is high). However, as competition intensifies, firms tend to follow strategic orientation differentiation: de-emphasizing the strategic orientation their main rival is emphasizing. Finally, we show that the greater the competitive intensity, the greater the contribution strategic orientation differentiation has on business performance.

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Notes

  1. For example, the company description for production orientation was as follows: company A is involved in improving manufacturing and distribution efficiency. The primary emphasis in this company is on productivity enhancement, standardization, cost minimization and mass marketing. The company’s products are of reasonable quality, they are widely available and relatively inexpensive.

  2. For example, if the focal company, company Z, possesses the following strategic orientation profile: 45 % customer orientation, 25 % technology orientation and 20 % production orientation (while accounting for 10 % selling orientation), and its main rival, company Y, possesses the profile: 55 % customer orientation, 30 % technology orientation and 15 % production orientation (while accounting for 0 % selling orientation), then the aggregate measure of strategic orientation differentiation for company Z is: (|45 − 55| + |25 − 30| + |20 − 15|) = 20.

  3. Full results are available upon request. Note that the negative signs for the coefficients of our interaction effects are the result of the impact of lower competitive intensity; a positive sign appears only for the impact of slow market growth and is the result of the joint effect of slower market growth (−) and lower competitive intensity (−).

  4. As per Table 1, because we are using strategic orientation scales rather than constant sum measures, we run separate models for each dependent variable (i.e., each strategic orientation).

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Correspondence to Amir Grinstein.

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Deshpandé, R., Grinstein, A. & Ofek, E. Strategic orientations in a competitive context: The role of strategic orientation differentiation. Mark Lett 23, 629–643 (2012). https://doi.org/10.1007/s11002-012-9167-4

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  • DOI: https://doi.org/10.1007/s11002-012-9167-4

Keywords

  • Strategic orientation
  • Competition
  • Strategic differentiation