STRATEGIC GROUPS AS REFERENCE GROUPS - THEORY, MODELING AND EMPIRICAL-EXAMINATION OF INDUSTRY AND COMPETITIVE STRATEGY

Previous studies on strategic groups have mainly focused on their stat ic characteristics in order to test the theory of strategic groups and intraindustry performance differences (Porter, 1979; Cool and Schende l, 1988; Fiegenbaum and Thomas, 1990). In contrast, this study takes a longitudinal, dynamic perspective and describes the forces driving st rategic group membership and structural evolution. It proposes that a strategic group acts as a reference point for group members in formula ting competitive strategy. A partial adjustment model of strategic mob ility is then developed which incorporates the idea of a strategic gro up as a reference group. It models strategic change in an industry bot h within and across strategic groups. The model is tested in the conte xt of an in-depth industry analysis of the more significant firms in t he insurance industry over the 1970-84 time period. The results sugges t that strategic groups act as reference points for firm strategies an d that predictions of future firm strategies and industry/group struct ures may also be successfully derived.