Session 164

Competitive Strategy and Firm Performance

Track E

Date: Tuesday, October 13, 2009


Time: 11:30 – 12:45

Common Ground

Room: Meeting Room 7

Robert Grant, Bocconi University

Title: A Measurement Model of Firm Performance


  • Juliana Santos, Getulio Vargas Foundation
  • Luiz Brito, Getulio Vargas Foundation

Abstract: Firm performance is one of the most important concepts of business strategy. Regardless of its importance and ubiquitous use, there is no consensus about its precise definition and dimensionality limiting theory advance. Drawing on stakeholder theory, this paper investigated the dimensionality of firm performance, using a survey with 111 senior managers and board members. Different dimensional structures considering alternatives of first and second order factors were tested with Confirmatory Factor Analysis. Our results indicated six first-order dimensions and the existence of a financial performance as a second-order dimension.

Title: Defying the Trend: Strategies for Countering the Negative Impact of Operating in Declining Industries and Markets


  • Vassiliki Bamiatzi, University of Liverpool
  • Thomas Kirchmaier, University of Manchester

Abstract: In this paper, we identify the strategies SMEs employ to grow in declining industries. We use inductive case study methodology to examine 25 firms from 22 sectors. In contrast with the dominant view of the literature suggesting large firms to pursue pure strategies, we show that SMEs seem to better shield themselves against declining markets when playing mixed strategies. In fact, all the over-performing firms in our sample follow a mix of cost leadership and differentiation strategy; when differentiating, they focus on innovation or quality. Finally, only a few firms pursue either a niche strategy or international diversification.

Title: Do Incumbents Improve Service Quality in Response to the Threat of Entry: Evidence from Airlines’ On-Time Performance


  • Daniel H. Simon, Indiana University
  • Jeffrey Prince, Indiana University

Abstract: In a recent paper, Goolsbee and Syverson (2006) show that airlines reduce prices in response to the threat of entry by Southwest Airlines. We extend this research to examine whether incumbent airlines improve their on-time performance in response to the threat of entry or actual entry by Southwest. Further, we examine whether incumbent characteristics moderate the effect of Southwest’s planned or actual entry on incumbent response. The threat posed by Southwest poses an ideal case study for assessing whether firms improve service quality in response to the threat of entry. Southwest has long been a leader in on-time performance. Our analysis contributes to our understanding of how firms use non-price strategic weapons to deter or respond to entry.

Title: Resource Potential as Performance Differences


  • Steven Michael, University of Illinois at Urbana-Champaign
  • Sharon Alvarez, University of Denver

Abstract: Researchers have increasingly employed the resource based view of the firm (RBV) to explain performance differences. The dominant empirical approach has been to examine whether performance, broadly defined, has been affected by different levels of resources. Typically, researchers define and measure a set of resources, analyze them with regard to characteristics expected to have an impact on performance, and then to examine correlations or regressions with performance as the dependent variable and levels of the resources as the independent variables. Performance has been measured as financial performance. This paper makes two contributions to the research literature. We define and measure resource potential. Second, we contribute to the literature on corporate strategy and performance by examining the potential of the resource of information technology.

Title: Strategic Competition Under Earnings Pressure


  • Yu Zhang, China Europe International Business School

Abstract: We develop a formal model to analyze the effect of earnings pressure on the firm’s strategy and performance in strategic competition. We find that the effect of earnings pressure on strategic action is nonlinear in both strategic output and price competition. Moreover, we show that a rival’s reactions to changes in strategic action differ depending on the type of competition. It follows that the impact of earnings pressure on the firm’s performance also differs depending on the type of competition. We also examine boundary conditions of the theory by exploring how punishment in response to missed earnings targets and the benefits of strategic action moderate the effect of earnings pressure on the firm’s strategy and performance.

Title: Value in the Resource-Based View: Resource Functionality as Source of Sustained Competitive Advantage


  • Jeroen Kraaijenbrink, University of Twente

Abstract: This paper puts forward that we can reach a better understanding of the value of resources in the resource-based view by embracing the notion of resource functionality and considering that value is a subjective feature of a resource. It is argued that the value of a resource does not only derive from its application in product markets and that the value-price-cost model is too limited. It is then argued that the value of a resource depends on managers’ assessments of four generic types of functionality: the suitability, combinability, fecundity, and durability of a resource. The paper contributes by providing a generic typology of resource value that facilitates resource-based theorizing and that enables a systematic assessment of the value of resources in practice.

All Sessions in Track E...

Sun: 10:00 – 11:30
Session 256: Discipline Based Theories: What Do Theories of the Firm Say About Organizational Dynamics
Sun: 13:00 – 14:30
Session 257: Applying Theories: What Does Strategy & Organization Say About Health Care?
Sun: 15:00 – 16:30
Session 258: Integrating Theories of Problem Formation
Sun: 16:30 – 17:30
Session 309: Competitive Strategy, IG Meeting
Mon: 12:45 – 14:00
Session 159: Strategic Factor Markets: Antecedents, Consequences and Dynamics
Session 166: Competitive Strategy and the Business of Science
Mon: 15:45 – 17:00
Session 160: Emerging Strategies in Acquisition
Session 220: Contemporary Challenges to Organization Theory
Mon: 17:15 – 18:30
Session 157: Managerial Cognition and Dynamic Capabilities at the Crossroads: Current Issues and Novel Strands of Development
Session 222: Challenging Traditional Notions of Competitive Strategies and Competitive Advantage
Tue: 10:00 – 11:15
Session 161: Demand-based Approaches to Strategy: The Role of Customers and Communities
Session 163: Resources and Capabilities to Strengthen Alliance Formation and Execution
Tue: 11:30 – 12:45
Session 164: Competitive Strategy and Firm Performance
Session 165: Emerging Organizational Solutions for Exploration Strategies
Tue: 14:30 – 15:45
Session 158: Strategic Change and Dynamic Capabilities
Session 169: Unpacking Sources of Heterogeneity: Market Frictions, Firm Resources, Strategic Actions
Wed: 10:00 – 11:15
Session 216: Industry Evolution and Resource Architecture
Session 217: Designing Organizations to Sustain Performance
Wed: 11:30 – 12:45
Session 214: Managerial Capabilities and the Microfoundations of Strategy

Strategic Management Society

Washington DC