Linking hypercompetition and strategic group theories: strategic maneuvering in the US insurance industry

Abstract

Focusing on the dynamics of strategic maneuvering, this paper draws parallels between the accumulated perspectives of strategic group theory and ideas drawn from evolutionary economics and from a recent strategy-oriented book on hypercompetition (D'Aveni RA. 1994. Hypercompetition: Managing the Dynamics of Strategic Maneuvering. The Free Press: New York). Using insurance industry data, the paper first uses the methodological framework of strategic groups to define competitive positioning and the identity of close competitors. It then develops a Markovian model to analyse two important aspects of strategic maneuvering over time: the level of firm movement, and the determination of optimal maneuvering paths and their related long-term performance. The results provide insights into industry competitive dynamics and rivalry. First, there is clear evidence of strategic maneuvering over the entire time period studied and a higher level of maneuvering in the long run. Second, for some competitive scenarios, there are optimal maneuvering trajectories that optimize a firm's long-term economic performance. Copyright © 2001 John Wiley & Sons, Ltd.

Dynamic strategic groups: deriving spatial evolutionary paths

“…Among the exceptions (i.e., last four studies in Table 1), Wiggins and Ruefli (1995) focus on performance groups, rather than strategic groups, and use nonparametric techniques, but they still employ a multistep approach. Fiegenbaum, Thomas, and Tang (2001) also use a multistep approach, but they add a Markov process to account for firm switching between strategic groups. Nair and Filer (2003) attempt a unique methodology that relies on recent cointegration advances in time series analysis to examine firm behaviors within strategic groups, without considering the issue of the evolution of strategic groups.…”

Hybrid strategic groups

“…From a theoretical standpoint, all firms in a hybrid strategic group blend the same pure strategic group recipes (i.e., SG1 and SG2 for HG1) to differentiate themselves from the pure strategic group firms (i.e., HG1 firms differentiate themselves from SG1 and SG2 by blending their competitive recipes). Thus, extant literature would suggest that first-level competition should exist among the firms in HG1 (e.g., Fiegenbaum et al, 2001;Smith et al, 1997). Because HG1 firms blend recipes from SG1 and SG2, these pure strategic groups represent the next (second) level of competition (Panel D, Figure 1).…”

“…From a theoretical standpoint, we conceptualize the existence of hybrid strategic groups that blend the strategic recipes of pure strategic groups to derive their own unique strategic postures. In addition, similar to research that uses a traditional notion of strategic groups to identify competitive market structures (e.g., Smith et al, 1997;Fiegenbaum, Thomas, and Tang, 2001;Nair and Filer, 2003;Smith et al, 1997), we consider hybrid strategic groups to develop a levels theorization of competition and thereby derive competitive market structures. As we elaborate subsequently, our conceptualization of competitive market structure varies depending on whether the firm uses the strategic recipe of one or multiple strategic groups (Figure 1).…”

“…W. S. DeSarbo and R. Grewal In terms of competition, assuming market commonality (Chen, 1996), contemporary strategic groups research implies that firms in a strategic group compete more intensely with one another than do firms across strategic groups (e.g., Fiegenbaum et al, 2001;Nair and Filer, 2003;Ruiz, 1999;Smith et al, 1997). Thus, from a traditional managerial perspective, firms should focus on other firms in their strategic group as primary competitors and consider firms outside the strategic groups as peripheral competitors.…”

Senior management perceptions of aspirational groups: A study of the UK general insurance market

“…Insurance is a well-recognized context for strategic group studies (see e.g., Fiegenbaum and Thomas, 1990;Fiegenbaum et al, 2001;Ferguson, Deephouse and Ferguson 2000;Esper, Mas and Munillo, 2008;Schimmer and Brauer, 2012). Although it has been common practice in strategic group research to focus on a single industry (see for example, Fiegenbaum and Thomas, 1990), substantial strategic differences may exist at an industry segment level.…”