Patterns of intra-industry competition: A dynamic analysis of theoretical foundations of strategic groups

Strategic group research has progressed over the last two decades to the point where the creation of intra-industry groupings is no longer a significant contribution to management in and of itself. The research to date has not, however addressed questions of why these structures emerge in the first place or of how they change over time. Closely related to this omission is the failure of group researchers to systematically test theories which underlie different views of strategic management. Identification of processes which created grouping would provide strong evidence in support of corresponding organization theories. This research systematically looks at the prior research in strategic groups, and presents a series of research questions to be addressed. The analysis is conducted using a qualitative analysis of competition in the U.S. pharmaceutical market. This analysis includes industry wide and firm specific discussions. A competitive grouping analysis is done and the research questions are discussed in light of these results. The study then conducts a statistical analysis of the same industry over a twenty year period. This analysis uses clustering techniques consistent with found in other strategic group research. The results of this statistical analysis are compared with the preceding qualitative analysis and a further discussion of the research questions is presented. The study concludes that strategic group literature and research is still essentially driven from an Industrial Organization Economics' view rather than a Strategic Management view. An alternative view is proposed which recast strategic groups as competitive groups and addresses intra-industry homogeneity from the perspective of the individual firm and its asset base.