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Rivalry and strategic groups: what makes a company a rival?

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Abstract

Strategic group literature has generated a significant amount of research over recent decades. However, the rivalry implications of strategic group have remained unclear. This paper analyses rivalry and strategic groups in the house building industry in a small town from a cognitive approach. We consider rivalry as a subjective and directional phenomenon. Estimating rivalry as the direct identification of competitors we try to explain whether similarity affects rivalry and what factors make a company a “rival”. Results show that perceived rivalry is strongly related to size, past performance, subjective similarity and strategic group structure.

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Notes

  1. These three concepts are identical. The term prototype is typically used in cognitive categorization while “core” is usually employed in strategic group literature. We use the term “representative”.

  2. As an example, De Chernatony et al. (1993) interviewed 24 managers from 5 firms in the North Sea off-shore oil industry. Reger and Huff (1993) interviewed 23 managers from 6 bank holding companies headquartered in the Chicago area. Reger and Palmer (1996) interviewed 25 upper echelon executives from 11 firms in the Arizona financial intermediary industry. Borroi et al. (1998) interviewed 62 managers from the Carpi textile-clothing industrial system.

  3. However, three of the firms in the industry were owned by more than one partner, and a few big companies also operated in this geographical context. In both cases, we considered CEO’s statements as if he were the single owner/manager.

  4. 95% confidence; p = q = 0.5.

  5. Return on sales and return on equity.

  6. Choice of variables is critical to strategic group analysis. Variable selection was made after several interviews with three industry experts (two managers and an estate agent) about the factors that could generate and maintain a competitive advantage in the industry.

  7. Walsh (1995) provides an overview of the managerial cognition literature.

  8. An industry recipe is a set of beliefs and assumptions common to most managers.

  9. The industry-specific frame of reference is the “combination of perceptions shared by the top managers in a given industry on the structure and/or dynamics of that industry” (Calori et al. 1992, p. 63).

  10. This technique requires the respondent to state how the firms are similar/dissimilar. For the purpose of this paper we were only interested in identifying the cognitive groups, not in the underlying dimensions. Therefore, we will just show the cognitive map without any information on the dimensions.

  11. Pegels and Sekar (1989) used multidimensional scaling as a tool to determine strategic groups and similarity profiles of hospitals in Western New York.

  12. Cluster analysis was carried out with standardized variables. However, to facilitate interpretation of groups, Table 2 shows the original variables.

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Acknowledgements

We would like to thank three anonymous reviewers and the editor for their helpful and constructive comments on previous versions of this paper. All remaining errors are ours. Financial support from Junta de Comunidades de Castilla-La Mancha, Consejería de Educación y Ciencia, España, PAI07-0099-3219, is gratefully acknowledged.

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  1. Facultad de Económicas, Universidad de Castilla-La Mancha, Pza. Universidad 1, Albacete, 02071, Spain

    Ángela González-Moreno & Francisco J. Sáez-Martínez

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  1. Ángela González-Moreno
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  2. Francisco J. Sáez-Martínez
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Correspondence to Ángela González-Moreno or Francisco J. Sáez-Martínez.

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González-Moreno, Á., Sáez-Martínez, F.J. Rivalry and strategic groups: what makes a company a rival?. J Manage Gov 12, 261–285 (2008). https://doi.org/10.1007/s10997-008-9060-y

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