The temporal development of strategy: Patterns in the UK insurance industry

Much writing in the field of strategic management remains an exercise in comparative statics. Cross-sectional research designs are combined with the static metaphors of contingency thinking to analyse the fit between the positioning and resource base of the firm and its performance in differing environments. However, the inadequacies of this tradition are increasingly recognised even by scholars who have created it (Porter 1991). Strategy can no longer be conceived through the static language of states or positions and must now be understood as an innovation contest where the bureaucratic and inflexible will not survive. This paper takes up the challenge to explore the dynamics of industry and firm strategy development. The empirical focus of the paper is the U.K. insurance industry in a period of upheaval between 1990 and 1996. By means of an innovative cross-correlational time series analysis, we are able to show the ebb and flow of strategic change in the industry and the patterns of initiation and imitation as certain firms lead areas of strategy and others follow. These findings are interrogated and interpreted by drawing on and developing theoretical ideas from three literatures which historically have not talked to one another. These are the literatures on innovation, institutionalism, and contextualism. The empirical results show firms pursuing multiple strategies at one point in time and also altering the strategic agenda over time. A cross-correlational analysis of nine firms in the U.K. insurance industry reveals the existence of leaders and laggards in the development of a variety of strategic initiatives. Theoretically the paper examines the mixture of external conditions and internal context and processes which contribute to the development of early and later adopters of strategies in an industry over time.