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Grand Strategies Re-visitedLessons for High Technology Small and Medium Sized Firms
Nicholas O'Regan, Bristol Business School, Bristol, UK Gerhard Kling, Bristol Business School, Bristol, UK Abby Ghobadian, Henley Business School, UK THIS IS !T TH" FI #L $%!ST-R"&I"'( &"RSI! )!* FI + TH" FI #L &"RSI! H"R", ORegan, N., Kling, G., Ghobadian, A. and . !erren "#$%#& Strategic 'ositioning and grand strategies (or high)technology S*+s, Strategic Change #%",)-&. %//)#%,.

Keywords: Grand strategies, inno0ation, strategy, co1'etiti0e ad0antage 2orres'onding author. Nicholas.ORegan3u4e.ac.u5 6ele'hone 7 88 %%9 :#; :9:, Nicholas ORegan is !ro(essor o( Strategy<+nter'rise and =nno0ation at Bristol Business School, Uni0ersity o( the >est o( +ngland. His research interests include the organisational culture, leadershi' and the strategic 'lanning 'rocesses o( s1all and 1ediu1 si?ed organisations. Gerhard Kling is Senior ecturer in Strategic *anage1ent at Bristol Business School. His research interests include the ad0ance1ent o( co1'etiti0e ad0antage in 1anu(acturing high technology s1all (ir1s and cor'orate (inance. He 4as 're0iously 'ractice s'ecialist 4ith *cKinsey @ 2o1'any, based in *unich. Abby Ghobadian is !ro(essor o( Organisational !er(or1ance and Airector o( the School o( !roBects !rocesses and Syste1s at Henley Business School, Uni0ersity o( Reading. His research is (ocused on identi(ying (actors that contribute to di((erential 'er(or1ance a1ong organisations. His research dra4s on conte1'orary 1anage1ent theories and relies on sound 1ethodologies 4ith a strong bias to4ards rele0ance to 'racticing 1anagers

Grand Strategies Re-visitedLessons for High Technology Small and Medium Sized Firms
#-stract Based on sur0ey data on the engineering and electronic industry, the study unco0ers the grand strategies 'ursued by s1all high technology (ir1s and, in 'articular, analy?es the i1'act o( (or1al strategic 'lanning and industry s'eci(ic e((ects on strategic choice. 6he e1'irical 1odel disentangles the interrelationshi' bet4een the (ir1s co1'etiti0e 'osition, 1ar5et en0iron1ent "technological and regulatory change, threats (ro1 substitutes, ne4 entrants, and 1ar5et stability& and the 'ursued grand strategies. 6he (indings indicate that (ir1 si?e, in ter1s o( turno0er, a((ects strategic decisions signi(icantly. 6echnological change and 1ar5et stability sti1ulate 'roduct de0elo'1ent and inno0ation. An inno0ation strategy see1s to be the only grand strategy that guarantees higher short and long)ter1 'er(or1anceC ne0ertheless, concentrated gro4th, 1ar5et and 'roduct de0elo'1ent (oster long)ter1 'er(or1ance. Keywords: Grand strategies, inno0ation, strategy, co1'etiti0e ad0antage Grand Strategies Re-visitedLessons for High Technology small and medium sized Firms ./ Introduction Organisational strategies are classi(ied into three di((erent le0elsC cor'orate, business and (unctional le0els D"HaE and *aBlu(, "/;8C, Bourgeois, %/;$&. +ach le0el has distinct characteristics. For eEa1'le, the cor'orate)le0el strategy is concerned 4ith do1ain selection or which industry sector"s& to co1'ete in "Bourgeois, %/;$&, 4hereas the business)le0el strategy is concerned 4ith do1ain na0igation, 4hich includes how to co1'ete in a selected 1ar5et seg1ent "Ha1bric5, %/;$&. Functional)le0el strategies are deri0ed (ro1 the business strategy and (ocus on the 1aEi1isation o( resource 'roducti0ity. =n general, cor'orate)le0el strategy is too aggregated to enable a satis(actory understanding o( strategic res'onses to en0iron1ental in(luences 4hile (unctional le0el strategies rarely indicate a strategic res'onse on their o4n. =t is at the le0el o( business strategy that the 1aBority o( research has (ocussed on, largely as business)le0el strategies de'ict the 1ar5et orientations ado'ted by organisations in their chosen industry sectors as 4ell as re(lect organisational 'er(or1ance. Accordingly, any eEa1ination o( strategic

: orientation and its i1'act on cor'orate 'er(or1ance should, in the (irst instance, (ocus on business le0el strategies. Ho4e0er, s1all and 1ediu1 si?ed (ir1s GS*+sH di((er 1ar5edly (ro1 large (ir1s. =ndeed, 4e contend that the distinction bet4een cor'orate and business le0el strategies is not al4ays clear cut and in 1any cases the business strategy is also the cor'orate strategy. Accordingly, this 'a'er (ocuses on generic strategies that ty'i(y the beha0iour o( the (ir1. Generic strategies are generally described in ter1s o( ty'ologies "e.g. *iles @ Sno4, %/9;C !orter, %/;$&. 6y'ologies are theoretically deri0ed di1ensions 4hich rely on identi(ying and 1easuring the 5ey traits o( the strategy and assessing di((erences and si1ilarities across a 'ro(ile consisting o( a set o( characteristics that collecti0ely describe the strategy "Robinson and !earce, %/;;&. 6his ty'e o( strategy classi(ication has attracted greater attention because it assists in understanding the 'riority o( acti0ities. Ho4e0er, little research has been carried out on generic strategies in S*+s 'articularly in the area o( ho4 the (ir1 4ill co1'ete in its chosen 1ar5et"s&. =n an e((ort to deter1ine strategic thrust, !earce and Robinson "%//8& de0ised the conce't o( grand or 1aster strategies, 4hich they describe as the Ibasic direction (or strategic actionsJ and conseKuently the Ibasis o( coordinated and sustained e((orts directed to4ards achie0ing long)ter1 business obBecti0esJ. Studies to)date on grand strategies (ocus on larger (ir1s "see Ku1ar and Subra1anian, #$$$C Ku1ar, Subra1anian and Lauger, %//;C Nar0er and Slater, %//$&. 6here is a dearth o( research on s1aller (ir1s 4ith little indication o( the li5ely 'otential o( grand strategies to S*+s.

Grand Strategies !earce, Robbins, and Robinson "%/;9& de(ine a grand strategy as Ia co1'rehensi0e general 'lan o( 1aBor actions through 4hich a (ir1 intends to achie0e its long)ter1 obBecti0esJ and contend that this is su''orted by a Icoordinated and sustained strategic 1anage1ent e((ortsJ. Grand strategies tend to be associated 4ith a to' do4n 1anage1ent style, 4hich under'in Isustained e((orts directed to4ard achie0ing long) ter1 business obBecti0esJ "!earce and Robinson, #$$,, '.#,$&. !earce et al. "%/;9& suggest (our generic grand strategies. stability "(or eEa1'le. concentration&, internal gro4th "inno0ation, R@A, 1ar5et de0elo'1ent&, eEternal acKuisiti0e gro4th "0ertical

8 and hori?ontal acKuisition, di0ersi(ication, Boint 0entures& and retrench1ent "turn)around, di0estiture and liKuidation&. 6able % de'icts 'otential grand strategies. Ho4e0er, Robinson and !earce "#$$,& contend that any one o( the strategies Icould ser0e as the basis (or achie0ing the 1aBor long)ter1 obBecti0es o( a single (ir1J, and that (ir1s in0ol0ed in 1ulti'le industries 1ight co1bine se0eral grand strategies. +ach grand strategy has an internal or eEternal orientationC strategies 1ar5ed GiH are internal orientated 4here resources are redirected 4ithin the (ir1, and strategies 1ar5ed GeH are eEternal orientated. 6able % here. !earce and Robinson "#$$,& suggest that the gro4th rate o( the general 1ar5et and the (ir1s 'osition 4ithin that 1ar5et deter1ine the grand strategy chosen. Ha0ing an understanding o( the rationale behind the strategy o'tion chosen is 0ital i( e1'loyees are to de'loy the strategy e((ecti0ely. Such an understanding also 'ro0ides an indication o( the longer ter1 0ision (or the co1'any. For eEa1'le, FoE)>ol(gra11, Boal and Hunt "%//;& contend that, Isecond)order change, a shi(t (ro1 one strategic orientation to another, is aty'ical e0en in ti1es o( en0iron1ental u'hea0al "M&.J 6hey note that organi?ations ty'ically con0erge around a 're0ailing archety'e. Istrategic orientation and inertia tend to bind the organi?ational change to that 4hich is consistent 4ith the archety'e re'resenting (irst)order changeJ. Ho4e0er, in contrast to !earce and Robinson "#$$,&, this study accounts (or additional 1ar5et (actors that could in(luence grand strategies and, in s'eci(ic, considers 1ar5et stability, regulation, technology, threat (ro1 substitutes, and 1ar5et entry, 4hich all contribute to 1ar5et attracti0eness. =n addition, this a''roach is consistent 4ith contingency theory 4hich 'osits that the en0iron1ent, 1anagers, and organisational (actors all 'lay a role in deter1ining strategic direction. 2ontingency theory 'resu1es that the ability o( 1anagers to in(luence organisational outco1e is restricted "*eindl, et al, %/;,& by en0iron1ental (actors "Fin5elstein and Boyd, %//;& and organisational (actors "2ar'enter and Golden, %//9&. 6he o'tions are 1any and by selecting the 1eans o( ada'tation, 1anage1ent eEerts so1e in(luence on the organisational outco1e "6ho1as and Ra1as4a1y, %//-&. 6he e((ecti0eness o( the ada'ti0e res'onse is de'endent on the (it bet4een the res'onse and the en0iron1ental

, de1ands "Ha1bric5, %/;:C ee and *iller, %//-&. 6his reKuires rele0ant in(or1ation on changes in the en0iron1ent and an assess1ent o( conseKuences o( alternati0e res'onses "Astley and Nan de Nen, %/;:&. 6he use o( contingency theory to under'in Fig. % is 'articularly a''ro'riate (or S*+s as they are ore 0ulnerable to the e((ects o( the en0iron1ent, are less able to control the en0iron1ent, and their sur0i0al de'ends on ho4 they interact 4ith the en0iron1ent "AA1boise and *uldo4ney, %/;;&. Hence, contingency theory 'ro0ides the do1inant theoretical (ra1e4or5 to under'in this a''roach. Accordingly, the study asserts that the selection o( grand strategies de'ends on t4o criteria, the (ir1s 'osition and 1ar5et attracti0eness. Fig. % here. 6y'ologies o( generic strategies ha0e recei0ed signi(icant attention in the literature "see (or eEa1'le, *iles and Sno4, %/9;C !orter, %/;$&. Ho4e0er, the testing o( these ty'ologies (ocuses on larger (ir1s in the United States 4ith an e1'hasis on clari(ying the strategy)'er(or1ance relationshi'. 6he literature uses both the *iles and Sno4 "%/9;& and !orter "%/;$& ty'ologies. >hile the t4o a''roaches eEhibit si1ilarities, Ithe t4o ty'ologies are di((erent, each stressing so1e4hat di((erent as'ects o( business le0el strategyJ "Sege0, %/;/&. Follo4ing a nu1ber o( (ocus grou' discussions, both ty'ologies 4ere discounted as being too restricti0e (or S*+s. =n !orters "%/;$& 1odel, a (ocus strategy is the only real choice o'en to S*+s, 4hereas in the case o( *iles and Sno4s "%/9;& 1odel, 1anaging directors (eel that in choosing a strategic orientation, they 4ere being IcorralledJ into being classi(ied as 'ros'ectors or de(enders. Accordingly, this study see5s a 4ider ranging ty'ology that could ta5e on board strategic orientation in a 1ore 'ractical and (ocused 4ayC hence(orth, it (ollo4s !earce and Robinsons grand strategy a''roach. 6his 'a'er is structured as (ollo4s. the literature re0ie4 describes the changing 1ar5et en0iron1ent, S*+s and strategic 'lanning, S*+s and 'lanning (or1ality, 1ar5et conditions and organi?ational 'er(or1ance. 6he second section highlights the 1ethodology including the sa1'ling 1ethod and construction o( 0ariables. 6he third section sho4s the e1'irical (indings and econo1etric 1ethods. Finally, the study concludes, outlines the li1itations and suggests a0enues (or (urther research. 0/ Literature revie1 Changing Market Environment and Strategic Thrust 6he literature ac5no4ledges and docu1ents the changing 1ar5et en0iron1ent. For eEa1'le, Oohnson and Greening "%///, '.,-8& strongly contend that Istrategic decision 1a5ers in the %//$s ha0e seen the e1ergence o( a hy'erco1'etiti0e global 1ar5et 'lace.J Arguably 4ith the #$$; sub)'ri1e crisis, the global 1ar5et 'lace has beco1e

1ore co1'leE than e0er be(ore. Ho4e0er, 4hile 're0ious research has little doubt on the changing 1ar5et en0iron1ents, straight(or4ard solutions (or business are di((icult to deri0e. =ndeed, in Buggling 4ith the (actors needed to (ace the ne4 co1'etiti0e en0iron1ent, so1e (ir1s succeed 4hile others (ail. 6he Kuestion as to 4hy this ha''ens has taEed the 1inds o( strategists and researchers (or so1e ti1e. Arguably 'oor 'er(or1ance results (ro1 the (ailure to recogni?e the i1'ortance o( eEternal (actors or the (ailure to 1aEi1i?e the bene(its o( internal resources. 6his 1eans that the 're'aration, de0elo'1ent and de'loy1ent o( strategic thrust is crucial to enhance the chances o( success. 6his is consistent 4ith the contention by Ki1 and *auborgne "%//9& that the di((erence in 'er(or1ance bet4een high gro4th (ir1s and their less success(ul co1'etitors lies in their res'ecti0e a''roaches to strategy. =n doing so, the degree o( e((ecti0eness is enhanced 4ith the degree o( align1ent o( organi?ational strategy 4ith the (ir1s eEternal en0iron1ent "see Ha1bric5, %/;:C *iles and Sno4, %/9;&. =n addition, the literature su''orts the long)ter1 nature o( strategic thrust. For instance, FoE)>ol(gra11, Boal and Hunt "%//;& state that organi?ations ty'ically con0erge around a 're0ailing generic strategic thrust. =t is there(ore reasonable to suggest that a holistic a''roach that ac5no4ledges the generic strategic direction o( the (ir1 can be used to deter1ine the 'otential acti0ities (or co1'etiti0e ad0antage. 6he basis o( this thin5ing is the 'ro0ision o( generic or grand strategic choices to (ir1s, each o((ering the 5ey to gain, attain or regain sustainable co1'etiti0e ad0antage. !earce and Robinson "#$$,, '. #$$& argue that general consensus eEists on the need (or generic strategies that I'ro0ide basic direction (or strategic actionsJ in order to achie0e long)ter1 business obBecti0es. 6hey describe grand strategies as Iindicating the ti1e 'eriod o0er 4hich long) range obBecti0es are to be achie0edJ. Accordingly, grand strategies are the o0erall dri0er o( strategic actionsC ho4e0er, using the conce't o( grand strategies reKuires caution as 1any (ir1s 1ay o'erate in 1ore than one en0iron1ent or indeed ha0e di((erent inter'retations or 'erce'tions o( an en0iron1ent "see Aa(t and >eic5, %/;8&. Ho4e0er to date, little research has been carried out on the strategic thrust o( S*+s. SMEs and Strategic Planning 6he literature suggests that S*+s are o(ten seen as s1aller 0ersions o( larger (ir1s "see ONeill and Auc5er, %/;-C Bradburd and Ross, %/;/& 4ith resultant ad0antages as 4ell as disad0antages. Oennings and Bea0er "%//9& contend that the search (or co1'etiti0e ad0antage in 1any S*+s is accidental rather than 're'lanned as S*+s are s1aller in si?e and sco'e and ha0e (e4er resources co1'ared 4ith larger (ir1s. Ho4e0er, others argue that s1aller (ir1s ha0e greater (leEibility and 'ro'ensity to inno0ate e((ecti0ely co1'ared 4ith larger (ir1s des'ite their resource constraints D >einrauch et al "%//%&. Accordingly, strategic thrust is es'ecially i1'ortant (or S*+s due to their higher degree o( 0ulnerability "Bruderl and Schussler, %//$&, 4here the strategy 1a5ing 'rocesses hel' the 1anagers o( these (ir1s to a0oid or 1ini1i?e obstacles to co1'etiti0e ad0antage "Ara1 and 2o4an, %//$&. 6he relationshi' bet4een strategic 'lanning and the 'er(or1ance o( S*+s is borne out by the literature "e.g. Brac5er and !earson, %/;-C Olson and Bo5or, %//,C Kargar and !arnell, %//-&.

9 Atte1'ts so (ar to establish a generic de(inition o( s1all and 1ediu1 si?ed (ir1s "S*+s& (ocus on (inancial and e1'loy1ent si?e criteria, 4ith each atte1't dra4ing its o4n critics "see ORegan, #$$8&. Ho4e0er, the 1ore co11only acce'ted de(inition is that 'ro'ounded by the +uro'ean 2o11ission "%//-& based on less than #,$ e1'loyees. =t should be noted that the 1aBority o( 're0ious studies used 0arying de(initions ranging (ro1 ,$ to #$$$ e1'loyees, 4ith 1ost studies de(ining (ir1s e1'loying u' to ,$$ e1'loyees as s1all "e.g. *cKiernan and *orris, %//8&. =n any e0ent, 're0ious research on strategic orientations did not incor'orate si?e as an eE'lanatory 0ariable "see Ghobadian et al %//;&. Only Aa0ig "%/;-& eEa1ines the eEistence o( *iles and Sno4s (our strategic orientations 4ithin the conteEt o( s1all 1anu(acturing (ir1s in a''arel, (oundry and (abricated 1etal 'roducts industries. His results are encouraging and contribute to the understanding o( the strategic 1anage1ent o( s1all (ir1s. Ho4e0er, the *iles and Sno4 ty'ology (ocuses on three 1ain strategic ty'es D de(ender, 'ros'ector or analy?er, 4hereas !earce @ Robinsons grand strategies are 1ore co1'rehensi0e and relate to strategies 'ursued rather than strategic orientation. >e 4ere unable to locate any study that eEa1ined the use o( grand strategies in S*+s. Accordingly, this led us to deri0e the (ollo4ing research Kuestions. R1 What are the principal grand strategies, if any, used by manufacturing small firms?, R2 o firms in engineering and electronics use different strategies?, !2erating "nvironment As +isenhardt and *artin "#$$$, '.%%$,& 'ointed out, (ir1s in less dyna1ic en0iron1ents can enact Idetailed, stable 'rocesses 4ith 'redictable outco1esJ that are consistent 4ith the (or1ali?ed 'lanning a''roach. Ho4e0er, the o'erating en0iron1ent is (ar (ro1 stable (or 1ost (ir1s. Follo4ing *iller "%/;;&, this study (ocuses on narro4ly de(ined 'arts o( the en0iron1ent rather than on o0erall industry 'ara1eters because 1anagers select s'eci(ic 1ar5et seg1ents and custo1ers (or attention. 6he (or1er can only be gauged by assessing 1anagers 'erce'tion o( their actual target 1ar5ets "see Aess and Beard, %/;8&, as industry 4ide statistics that could ser0e this 'ur'ose are not a0ailable "see *iller, %/;;&. !ercei0ed 1easures ha0e the strongest association 4ith business strategy, since strategists tend to act on their 'erce'tions "see *iller and Friesen, %/;8&. Arguably, (ir1s that 'ercei0e their o'erating en0iron1ents to be turbulent or dyna1ic 1ight 'ursue a 1ar5et ty'e strategy. =n this case, ee and *iller "%//-& highlight the i1'ortance o( Io((erings rele0ant and attracti0e in a changing settingJ. =n addition, (ir1s ado'ting this a''roach are li5ely to also in0est in research and de0elo'1ent as 4ell as 1ar5eting "see Ha1bric5, %/;:&. 6his suggests that (ir1s are li5ely to ado't a co1bination o( grand strategies rather than one grand strategic a''roach. 6he literature also suggests that (ir1s 'ercei0ing their o'erating en0iron1ent to be stable 1ight (ocus on the e((iciency based grand strategy "see Ha1bric5, %/;:C ee and *iller, %//-&. =n addition, Oauch and Osborn "%/;%, '. 8/#& contend that Ithe 'robability o( organi?ational sur0i0al increases as the congruence o( en0iron1ental, conteEtual, and structural co1'leEity increasesJ.

All (ir1s, e0en in the sa1e industry grou'ing, do not res'ond to the o'erating en0iron1ent in the sa1e 4ay. For eEa1'le, so1e (ir1s 1ay Ianchor their reactions 'ri1arily to the beha0ior o( other (ir1s that are strategically si1ilar to the1J "Garcia) !ont and Nohria, #$$#&. Others 1ay ado't a 1ore inde'endent stance co1'rising 0arious a''roaches. 6he res'onses to the o'erating en0iron1ent can be categori?ed according to the strategic orientation o( each (ir1. =t there(ore (ollo4s that the align1ent o( an organi?ations strategic orientation to its en0iron1ent is o( 'ara1ount i1'ortance (or success. 6his led us to deri0e the (ollo4ing research Kuestion R! oes the competiti"e position and the degree of mar#et attracti"eness affect the selection of grand strategies? R$ %s the alignment of grand strategies and percei"ed operating en"ironment associated with organi&ational performance? 3/ Methodology and research design As it 'ro0ed i1'ossible to locate a rele0ant data set, and in any e0ent, archi0al 1easures cannot 1easure internal organi?ational 'rocesses 'recisely "Boyd, Aess and Rasheed, %//:&, 4e choose a sel( re'orting 'ostal sur0ey. 6he literature indicates strong su''ort (or the use o( sel()re'orting data collection "Ra1anuBa1 and Nen5atra1an, %/;9C !earce and Robinson, %/;9C *cKiernan and *orris, %//8C Kargar and !arnell, %//-C Shrader, 2hac5o, Herr1ann, and *ul(ord, #$$8&. !ugh, Hic5son, Hinings and 6urner "%/-;& argue that sel()re'orting 1easures are su'erior in this ty'e o( research to alternati0e data collection 1ethods because they elicit the in(or1ed o'inion o( organi?ational insiders. *anage1ent research uses 'erce'tual 1easures 4idely because they 'ro0ide an accurate descri'tion o( the (ir1 "Hill1an and Kei1, #$$%&. !erce'tions eEert a signi(icant in(luence on sha'ing strategic beha0ior "2hatto'adhyay et al. %///C S'anos and iou5as, #$$%&. !erce'tual 1easures ha0e distinct 'ractical utility, as they 'roduce the 1ost 'recise assess1ent o( conditions 4ithin a (ir1 as 4ell as enhancing the inter'retability and co1'arability o( data " yon et al. #$$$&. 6he initial sa1'le (or this study consists o( %,$$$ rando1ly selected 1anu(acturing S*+s o'erating in the UKs engineering and electronics sectorsC thus, the study chooses sectors that are high technology orientated. Aue to eEcluding (ir1s that do not 1atch the selection criteria, the e((ecti0e sa1'le si?e is 9$# (ir1s. 6he reasons (or (ocusing on the engineering and electronics sectors are the (ollo4ing. (irst, both sectors are econo1ically and strategically i1'ortant. Second, the already large and signi(icant 'o'ulation o( %,,$$$ S*+s in both sectors "A6=, #$$$&. 6hird, the di((erence bet4een the 'roduct li(e cycles o( the t4o sectors, 4hich is a 5ey contingency (actor "Ho(er, %/9,&. Fourth, changes in organi?ational categori?ations and<or 'aradig1s are o(ten established using S*+s "Kle''er, %//-&.

/ 6he sa1'le 4as selected rando1ly according to sector and si?e band s'eci(ications using the +uro'ean 2o11issions +2<A6=s de(inition o( S*+s ) a (ir1 e1'loying u' to #,$ 'eo'le. !earce and Robinson "#$$,& highlight the need to eE'lore grand strategies by de0elo'ing a robust conce'tual (ra1e4or5 or ideally by conducting sound e1'irical studies based on such a (ra1e4or5. Although so1e sound e1'irical studies ha0e been conducted in recent years on grand strategies, e1'irical studies on high technology S*+s in 'articular are lac5ing. 6he strategies 4ere ta5en (ro1 the grand strategies de0ised by !earce et al. "%/;9& 4ith res'ondents being as5ed to select the strategy that best described their o0erall strategic orientation. 6he contacts resulted in %/8 0alid res'onses ) a #9 'ercent res'onse rate. 6his res'onse is relati0ely high as ty'ical res'onse rates (or studies addressing strategic issues are in the region o( %$)%# 'er cent "Gelet5anyc?, %//9C Koch and *cGrath, %//-&. 2ontact 'rior to the dis'atch o( the Kuestionnaire and (ollo4 u' calls 'robably account (or the high res'onse. 6he 'otential i1'act o( non)res'onse bias 4as assessed by (irst contacting all non)res'ondents in0iting the1 to ans4er a li1ited nu1ber o( Kuestions concerned 4ith the le0el o( e1'hasis 'laced on strategic thrust. Second, to analy?e sa1'ling di((erences, 6)tests co1'are the 1eans (or the sa1'le o( #- 2+Os 4ho 'artici'ated in the short tele'hone sur0ey 4ith the 1eans (or the 1ain sa1'le, and di((erences are statistically insigni(icant. >e used 6)tests to eEa1ine the di((erence bet4een early and late in(or1ants res'onse to 5ey Kuestions. 6his 'ro0ides an e((ecti0e test (or assessing non)res'onse bias because late res'ondents are li5ely to res'ond in a 1anner si1ilar to non)res'ondents "Ar1strong and O0erton, %/99C a1bert and Harrington, %//$&. 6he analysis suggests that non)res'onse is not a serious 'roble1 and should not a((ect conclusions. Finally, 4e too5 1easures to 1ini1i?e 2o11on 1ethod 0ariance "2*N&. 2*N re(ers to the a1ount o( s'urious co0ariance shared a1ong 0ariables because o( the co11on 1ethod used in collecting data "Buc5ley et al. %//$&. 6he literature suggests that sel()re'orting sur0eys in0ol0ing a single res'ondent 1ay be susce'tible to 2*N "Ke1ery and Aunla' %/;-C indell and >hitney #$$%&. 6he constructs used in this study reKuired the res'ondents to re'ort on discrete e0ents reducing the li5elihood o( distorted sel()re'orts and < or socially desirable res'onses. Hence, the 2*N 'roble1 is 1ini1ised to a large eEtend. >e also used the one (actor test 'ro'osed by Har1an "%/-9& that o((ers a statistical 'rocedure (or testing the 1agnitude o( 'otential 2*N 'roble1s. 4/ "m2irical analysis

%$ 6able : highlights the grand strategies (a0ored by S*+s and indicates that 'roduct de0elo'1ent, 1ar5et de0elo'1ent and inno0ation are 'ro1inent generic strategies used. Need a bit 1ore here Arguably the 1aBority o( S*+s ai1 to deli0er inno0ati0e and high) Kuality 'roducts, 4ith 1any tending to concentrate on a single 'roduct, single 1ar5et and a single do1inant technology. 2or'orate le0el strategies related to 'ort(olio 1anage1ent are not at the heart o( S*+s strategic thin5ing, 4hich is, arguably, due to their 'roduct, geogra'hical and organi?ational concentration. 6able : here. Aue to ordered data, na1ely 0alues (ro1 % to , indicating the degree o( i1'ortance to the indi0idual, linear regression 1odels (ail in analy?ing ran5ings, as they treat the di((erence bet4een 8 and , the sa1e as bet4een % and #. =n (act, di((erences bet4een categories cannot be inter'reted in a linear 4ay, as they re'resent di((erences in ran5ings and not continuous 0ariables. Hence(orth, to account (or sel()anchoring scales, ordered logit and 'robit 1odels re'resent the best econo1etric 1ethod "Pa0oina and *c+l0ey, %/9,&. Besides using ordered logit 1odels instead o( linear regressions, ordinal le0el data reKuire ran5 correlation coe((icients 4hen analy?ing the interrelation bet4een t4o grand strategies. 6he S'ear1ans ran5 correlation and Kendalls "%/:;& 1easure are both non) 'ara1etric esti1ators and do not reKuire a linear relationshi' bet4een the t4o tested 0ariablesC hence, they 'ro0ide correct esti1ates (or the correlation bet4een res'onses. Kendalls "%/:;& 1easure is su'erior in 1ediu1 and s1all si?ed sa1'les. Stars indicate statistical signi(icance on the // 'ercent le0el o( con(idence and are based on Bon(erroni adBust1ents, 4hich account (or the nu1ber o( statistical tests carried out. 6able 8 (ocuses on the (our do1inant grand strategies "see 6able :& and dis'lays ran5 correlations. 6he grand strategy 'roduct de0elo'1ent (osters inno0ation and 0ice 0ersa, 4hereas 1ar5et de0elo'1ent eEhibits only a 4ea5 'ositi0e correlation 4ith 'roduct de0elo'1ent and inno0ation. =nterestingly, the strategy concentrated gro4th is not strongly lin5ed to any o( the other three (a0orite strategic choices. 6able 8 here.

%%

A(ter unco0ering S*+s strategic thrust 're(erences, the study analy?es the i1'act o( (or1al and in(or1al 'lanning on the choice o( grand strategies. 8, 'ercent o( the res'ondents do not ha0e any 4ritten strategic 'lanC hence, one could consider that these (ir1s 'ursue in(or1al strategic 'lanning. 6able , su11ari?es the descri'ti0e statistics, na1ely the a0erage ran5 in both grou's, and the results o( ordered 'robit 1odels, 4hich eE'lain the ran5 o( the res'ecti0e grand strategies dri0en by (or1al or in(or1al 'lanning. 6able , indicates the di((erence bet4een (or1al and in(or1al 'lanning and test (or its signi(icance. 6able , here. =n(or1al 'lanning (ir1s tend to ran5 nearly all grand strategies lo4er, eEce't 0ertical integration and concentric di0ersi(ication. Ho4e0er, signi(icance le0els deri0ed (ro1 ordered 'robit 1odels indicate that the obser0ed di((erences bet4een (or1al and in(or1al 'lanning are not statistically signi(icant D hori?ontal integration and 'roduct de0elo'1ent being an eEce'tion. =ndustry s'eci(ic e((ects see1 to 1atter 4ith regard to 're(erred grand strategies. Fig. # 'lots the strategic 'ro(ile o( engineering and electronics (ir1s and indicates 4hether the obser0ed discre'ancies are o( statistical signi(icance. 6his re(ers to ordered logit 1odel 4ith indicator 0ariables (or industries as eE'lanatory 0ariables. High technology S*+s in electronics tend to (a0or 'roduct de0elo'1ent 1ore co1'ared to engineering co1'anies, 4hereas the latter (ocus 1ore on conglo1erate di0ersi(ication and turnaround strategies. A(ter con(ir1ing industry s'eci(ic e((ects, the study considers the interrelation bet4een co1'etiti0e 'osition, 1ar5et en0iron1ent and a''lied grand strategies. =n 'articular, the e1'irical 1odel 1easures the co1'etiti0e 'osition based on turno0er and gross 'ro(it 1arginsC hence, si?e and 'ro(itability deter1ine the (ir1s 'osition. *ar5et en0iron1ent as 'ercei0ed by the res'ecti0e res'ondent consists o( an o0erall assess1ent o( 1ar5et dyna1ics "stable, dyna1ic, turbulent& and 1ore s'eci(ic (eatures that i1'ose an i11inent threat to the organi?ation "technological change, substitutes, ne4 do1estic and

%# (oreign entrants, regulatory changes&. 6he technological co1'onent is (urther re(ined into an o0erall change in technology a((ecting the 4hole 1ar5et, 'roduct related technological ad0ances, and decreasing 'roduct li(e cycles. Based on ordered 'robit 1odels, 6able re'orts the esti1ated 'artial i1'act o( co1'etiti0e 'osition "turno0er and gross 'ro(it 1argin&, 1ar5et dyna1ics and threats due to technology, substitutes, entrants and regulatory changes. 6able - here. 6he analysis indicates that the co1'etiti0e 'osition and en0iron1ental (actors deter1ine strategic decisions. =n 'articular, high technology S*+s (a0or a concentrated gro4th strategy i( the single 1ar5et in 4hich they o'erate is stable and regulatory changes are unli5ely. *ar5et de0elo'1ent, in contrast, is highly dri0en by the threat (ro1 substitutesC thus, co1'anies (acing co1'etition (ro1 substitutes try to establish stronger custo1er relationshi's by adding 1ore distribution channels and re(ining their ad0ertising. 6echnology in ter1s o( o0erall technological change, 'roduct technology, and shortening o( 'roduct li(e cycles (orces co1'anies to (ollo4 a 'roduct de0elo'1ent strategy. Let 1ar5et stability is a crucial (actor (or high technology S*+s that a''ly a 'roduct de0elo'1ent strategy. FreKuent changes and i1'ro0e1ent o( 'roduct o((erings "inno0ation& de'ends on technological (actors D but in contrast to a 'roduct de0elo'1ent strategy, si?e in ter1s o( turno0er 'lays an essential role. Hence(orth, s1aller co1'anies see1 to be reluctant to 'ursue an inno0ation strategy and (a0or instead 'roduct de0elo'1ent due to their 4ea5er 1ar5et 'osition and (inancial constraints. Gro4th through acKuisitions "hori?ontal integration& is hea0ily in(luenced by si?e in that larger co1'anies 4ith regard to turno0er see5 eEternal gro4th o''ortunities, (or their organic gro4th 'otential see1s to be li1ited. =n addition, technology 1ight 'lay a role in the decision to acKuire hori?ontally, as 'atents or 'rocess inno0ations could be an attracti0e co1'onent o( acKuisitions. 2o1'anies eE'eriencing lo4 gross 'ro(it 1argins tend to consider conglo1erate di0ersi(ication to change their (ortune. A turnaround strategy see1s to be a 0iable 'ath (or high technology S*+s 4ith lo4 gross 'ro(it 1argins but su((icient turno0er in an unstable 1ar5et en0iron1ent. 6hreats i1'osed by substitutes

%: dri0e di0estitures to so1e eEtent. 6he 1odel re0eals an interesting di((erence bet4een Boint 0entures and strategic alliances in that both strategies are dri0en by si?e, technology and 1ore li5ely to be (or1ed in less stable 1ar5ets "in ter1s o( 1ar5et gro4th& D but Boint 0entures and hence eKuity sta5es 1atter i( co1'anies (ace a 'otential threat o( 1ar5et entry. Again technology 1atters in the (or1ation o( consortiaC yet, other (actors do not 'ossess a signi(icant e((ect. Finally, the Kuestion arises 4hether the grand strategies (a0ored by high technology S*+s and dri0en by the co1'etiti0e 'osition and 1ar5et en0iron1ent really enhance o'erational 'er(or1ance in the long)ter1. Accordingly, the e1'irical 1odel uses subBecti0e 'er(or1ance, relati0e (ir1 costs, the change in turno0er and 'ro(its o0er the last three years as indicators (or o'erational 'er(or1ance to e0aluate the i1'act o( grand strategies on these 'er(or1ance 1easurers. Besides these general 'er(or1ance 1easurers, res'ondents assess 4hether their strategic choices a((ect their short and long)ter1 'er(or1ance. Accordingly, 6able 9 re'orts the 'artial i1'act o( the res'ecti0e grand strategy chosen and its statistic signi(icance on the siE o'erational 'er(or1ance 1easures. 6o circu10ent the inherent endogeneity and causality 'roble1 4hen analy?ing the strategy<'er(or1ance relationshi', 6able 9 sho4s the i1'act o( 'ast 'er(or1ance "1easured by the change in turno0er and 'ro(its during the 'ast three years& on grand strategies. 2onseKuently, high technology S*+s that su((ered (ro1 a decline in turno0er and 'ro(its tend to ado't a turnaround strategy. =nterestingly, a turnaround strategy does not see1 to (oster current and (uture 'er(or1ance. An inno0ation strategy due to its related in0est1ent is 1ore li5ely 4hen 'ast 'er(or1ance is strong and it see1s to enhance current and (uture 'er(or1ance. =n s'ite o( lac5ing current and short)ter1 success, concentrated gro4th, 1ar5et de0elo'1ent and 'roduct de0elo'1ent are belie0ed to increase (uture 'er(or1ance. Follo4ing an inno0ation strategy see1s to be the best choice (or guaranteeing higher short and long)ter1 'er(or1ance. 6able 9 here. 5/ +iscussion

%8 '(1( )ain findings and concluding remar#s Generic strategies are rele0ant to high technology S*+s as 4ell as larger (ir1s. Ho4e0er, high technology S*+s (a0or (ocusing and de0elo'ing on a single 1ar5et, 4hereas 'ort(olio strategies are only rele0ant (or larger S*+s and large (ir1s that see5 to gro4 through acKuisitions. Accordingly, the i1'act o( (ir1 si?e on strategic decisions e0en in the (ield o( high technology S*+s, is signi(icant. =ndustry s'eci(ic e((ects eEist D but are not do1inant, as the study eEa1ines rather si1ilar industries, na1ely engineering and electronics. Ne0ertheless, high technology S*+s in the electronics sector tend to (a0or 'roduct de0elo'1ent 1ore co1'ared to engineering co1'anies, 4hereas the latter (ocus 1ore on conglo1erate di0ersi(ication and turnaround strategies. 6he co1'etiti0e 'osition and 1ar5et (actors sha'e strategic decisions considerably. 6urbulent 1ar5ets 1a5e Boint 0entures and strategic alliances attracti0e, (or they allo4 better di0ersi(ication o( ris5s. 6echnological changes (orce high technology S*+s to ado't 'roduct de0elo'1ent and inno0ation strategies. By incor'orating 'ast, current, and (uture o'erational 'er(or1ance, the e1'irical 1odel can 1itigate the inherent causality and endogeneity issue 4hen analy?ing the strategy)'er(or1ance relationshi'. Fir1s su((ering (ro1 declining turno0er and 'ro(its try to i1'le1ent a turnaround strategy, 4hereas strong 'ast 'er(or1ance enables high technology S*+s to in0est in inno0ation. =nno0ation in turn is the only grand strategy that signi(icantly boosts current and (uture 'er(or1ance. Let, concentrated gro4th, 1ar5et de0elo'1ent, and 'roduct de0elo'1ent 'ro1ise higher long)ter1 'er(or1ance. Strategic 1anage1ent is a continuous, cyclical 'rocessC the 'lanning 'art is not a one)o(( e((ort. !earce and Robinson "#$$,& 'oint out that 0ie4ing strategic 1anage1ent as a 'rocess 1eans that a change in any co1'onent has an e((ect on all or on at least se0eral other co1'onentsC that 'lanning, (or1ulation, and i1'le1entation are seKuentialC that (eedbac5 is the 1eans by 4hich 'ost i1'le1entation results can enhance (uture decision 1a5ingC that 0ie4ing strategic 1anage1ent as a 'rocess underlines the need to regard it as a dyna1ic yet interde'endent syste1. 6he study cannot detect a 'ronounced i1'act o( (or1al strategic 'lanning on 'ursued grand strategies, 4hich indicates that in the case o(

%, high technology S*+s (or1al strategic 'lanning is less rele0ant. 6his 1ight suggest that the traditional to')do4n 1anage1ent a''roach in high technology S*+s does not reKuire (or1al strategic 'lanning (or i1'le1entation o( strategies. 6he 1ost i1'ortant lesson (or high technology S*+ 1anaging directors is that strategic direction can a((ect short and long)ter1 'er(or1anceC hence, selecting the right grand strategy gi0en the (ir1s o4n co1'etiti0e 'osition and 1ar5et attracti0eness is the 5ey to enhancing 'er(or1ance and guaranteeing longer ter1 sur0i0al. 2oncentrated gro4th, 1ar5et and 'roduct de0elo'1ent 'ro1ise higher long)ter1 'er(or1anceC thus, high technology S*+ 1anaging directors are strongly ad0ised to (ollo4 these strategies. =nno0ation is the 1ost 'ro1ising grand strategy (or boosting short and long)ter1 'er(or1ance D but a strong 'ast 'er(or1ance see1s to be essential (or choosing this 'ath. '(2( *imitations A nu1ber o( li1itations occur in this study. 6he 0ariety and nu1ber o( generic strategies are such that any single in0estigation o( generic strategies is unli5ely to be eEhausti0e. 6he study (ocuses on the generic strategies 'ro'ounded by !earce and Robinson. 6he study suggests that increased inno0ation i1'ro0es 'er(or1ance, but 4ithout longitudinal obBecti0e 1easures the si?e o( the bene(it is di((icult to Kuanti(y. Ho4e0er, (ro1 a 'ractical stand, 'ractitioners need to 5no4 not only that it is bene(icial, but also the 'otential 1agnitude o( the bene(it. Aug1enting the subBecti0e 1easures 4ith te1'oral obBecti0es 1easures 4ould ha0e strengthened the study by ans4ering this Kuestion as 4ell as o((ering additional su''ort (or the use o( subBecti0e 1easures. 6his study relies on data collected using a sel()re'orting 'ostal Kuestionnaire. =deally, this should be aug1ented 4ith real)ti1e longitudinal studies to obtain a better understanding o( causal relationshi's "both degree and direction& bet4een the 0arious generic strategies and o0erall cor'orate 'er(or1ance. ongitudinal studies 4ill illu1inate ho4 the generic strategy being 'ursued e0ol0es in the conteEt o( en0iron1ental and other in(luences.

%-

6he study only includes 1anu(acturing high technology S*+s o'erating in the engineering and electronics sectors. Accordingly, the generalisability o( the results to other industries, or (ir1s o( larger si?e, 1ust a4ait (uture research. *oreo0er, the study only establishes 4hether the le0el o( e1'hasis on a generic strategy is related to 'er(or1ance. Ob0iously, as other organi?ational and en0iron1ental (actors a((ect o0erall 'er(or1ance, any causal relationshi's are eEtre1ely di((icult to Kuanti(y. Not4ithstanding the li1itations the article 1a5es a 'ositi0e contribution to the strategic literature by (ocusing on generic strategies in 1anu(acturing high technology S*+s.

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#% Shrader, 2. B., 2hac5o, 6.=., Herr1ann, !., and *ul(ord, 2. "#$$8& !lanning and (ir1 'er(or1ance. e((ects o( 1ulti'le 'lanning acti0ities and technology 'olicy, =nternational Oournal o( *anage1ent @ Aecision *a5ing ,"#<:&, '%9%, #,'. S'anos, L.+., and iou5as, S. "#$$%& An eEa1ination unto the causal logic o( rent generation. 2ontrasting !orters 2o1'etiti0e Strategy Fra1e4or5 and the Resource) based !ers'ecti0e, Strategic *anage1ent Oournal ##"%$&, /$9)/:8. 6ho1as, A.S., and Ra1as4a1y, K.,"%//-&, *atching *anagers to Strategy. Further 6ests o( the *iles and Sno4 6y'ology,. British Oournal o( *anage1ent, Se'/-, Nol. 9 =ssue :C >einrauch, A.O., *ann, O.K., Robinson, !.A. and !harr, O. "%//%& Aealing 4ith li1ited (inancial resources. a 1ar5eting challenge (or s1all business, Oournal o( S1all Business *anage1ent #/"8&, 88D,8. Pa0oina, R., and *c+l0ey, >., "%/9,& A statistical 1odel (or the analysis o( ordinal le0el de'endent 0ariables, Oournal o( *athe1atical Sociology, %$:)%#$.

##
Ta-le ., %earce and Ro-inson grand strategies
Strategy 6oncentrated Gro1th 7i8 Main "m2hasis 6haracteristics

the 'ursuit o( 'ro(itable gro4th o( a single 'roduct ability to assess 1ar5et needs, 5no4ledge o( buyer in a single 1ar5et 4ith a single do1inant technology beha0ior, custo1er 'rice sensiti0ity, e((ecti0e !ro1otion, builds on co1'etencies !verall result, increased use of technology9 increased 2roductivity and -etter coverage of 2roduct-mar:et segment 1ar5eting eEisting 'roducts to custo1ers in related areas additional geogra'hic outlets by adding channels o( distribution and<or changing attracting other 1ar5et seg1ents the content o( ad0ertising and 'ro1otion !verall result, increased sales substantial 1odi(ication o( eEisting 'roducts, or the 'rolong 'roduct li(e cycle creation o( 1ore but related 'roducts that can be build on eEisting brand 1ar5eted to current custo1ers 0ia eEisting channels !verall result, retain satisfied customers (reKuent changes and i1'ro0e1ents to 'roducts create a ne4 'roduct li(e cycle !verall result, high 2rofits $if 2roduct is Successful( gro4th through acKuisition o( si1ilar (ir1s o'erating access to ne4 1ar5ets at the sa1e stage o( the 'roduction)1ar5eting chain !verall result, eliminate some com2etitors acKuisition o( (ir1s su''lying in'uts or (ir1s that are eE'ansion o( o'erations, greater 1ar5et share custo1ers (or its out'ut econo1ies o( scale !verall result, increase sta-ility of 2roduction and;or demand

Mar:et +evelo2ment 7i8

%roduct +evelo2ment 7i8

Innovation 7i8 Horizontal 7e8 Integration &ertical Integration 7e8

6oncentric see5ing unrelated in0est1ents 4ith 'otential (or increased gro4th<earnings, high co1'atibility +iversification 7e8 higher 'ro(its. 4ith eEisting business !verall result, increases synergy 6onglomerate acKuisition o( 'otentially 'ro(itable business based on 'ro(it considerations only +iversification 7e8 !verall result, increased 2rofit Turnaround 7i8 (orti(y the (ir1s distincti0e co1'etencies by cost or changes in 1anage1ent Asset reduction during declining 'ro(itability !verall result, entrenchment and recovery sale o( 1aBor co1'onents o( the (ir1 i1'ro0e cash (lo4, Ai0est units unable to 'ro0ide Synergy !verall result, address cor2orate financial needs

+ivestiture 7i8

<oint ventures 7e8 Strategic #lliances 7e8 6onsortia 7e8

Boining (orces 4ith another (ir1 to succeed in a shared costs 'articular co1'etiti0e 1ar5et entry to ne4 1ar5ets !verall result, Shared ris:s and shared 2rofits si1ilar to Boint 0entures 4ith the eEce'tion that licensing agree1ents, ti1e li1ited outsourcing 'artners do not ta5e an eKuity 'osition in one another !verall result, increased mar:et share;2roductivity see5ing interloc5ing relationshi's bet4een businesses o( industry coordination an industry !verall result, cost sharing and increased economies of scale

!ther

li=uidation;-an:ru2tcy

#:
Ta-le 0, +escri2tive statistics Mean 2oncentrated gro4th *ar5et de0elo'1ent !roduct de0elo'1ent =nno0ation Hori?ontal integration Nertical integration 2oncentric di0ersi(ication 2onglo1erate di0ersi(ication 6urnaround Ai0estiture Ooint 0entures :.% :.8 :.:.: #.# %.; %.; %.:.$ %., #.8 #.#.: Standard deviation %.:# %.%% %.## %.%8 %.#$ $./; %.$: $./$ %.#9 %.;; %.#, %.#8 %.%/

Strategic alliances 2onsortia

#8
Ta-le3, 6orrelation matri>

2oncentrated gro4th *ar5et de0elo'1ent !roduct de0elo'1ent =nno0ation

2oncentrated gro4th %.$$ $.%;V $.%;VV $.%#

*ar5et de0elo'1ent

!roduct de0elo'1ent

=nno0ation

%.$$ $.#;VVV $.##VVV %.$$ $.,8VVV %.$$

Stars indicate le0el o( signi(icance VVV 'W$.$%, VV 'W$.$,, V 'W$.%

#,
Ta-le 4, +ifference -et1een firms 1ith formal and informal 2lanning Mean formal 2lanning :.%: :.88 :.9# :.:/ #.:9 %.9, %.-%.,, :.%: %.,9 #.8; #.9, #.:Mean informal 2lanning :.$9 :.#9 :.:/ :.#$ %./$ %.;# %./% %.9# #.;, %.,% #.8% #.,% #.%% Stars indicate le0el o( signi(icance VVV 'W$.$%, VV 'W$.$,, V 'W$.% +ifference in means $.$$.%9 $.::V $.%/ $.89VVV )$.$9 )$.#, )$.%9 $.#; $.$$.$9 $.#8 $.#,

2oncentrated gro4th *ar5et de0elo'1ent !roduct de0elo'1ent =nno0ation Hori?ontal integration Nertical integration 2oncentric di0ersi(ication 2onglo1erate di0ersi(ication 6urnaround Ai0estiture Ooint 0entures

Strategic alliances 2onsortia

#-

Ta-le 5, Interrelation -et1een com2etitive 2osition9 mar:et environment and the choice of grand strategies 2o1'etiti0e 'osition Gross 'ro(it 1argin $.$$ $.$% $.$$ )$.$% $.$$ $.$$ $.$$ )$.$%V )$.$%VV $.$$ $.$$ $.$$ $.$$ 6urno0er Sub) stitutes $.%% $.#/VVV $.%: )$.$$.%# $.%$ $.%: $.%% )$.$9 $.%-V $.$)$.$: $.$9 +ntrant *ar5et (orces Re) gulation )$.%9VV )$.$8 )$.$: )$.$% )$.$8 $.$% $.$: )$.$, )$.$% $.$; $.%$ $.$# $.%$ 6ech) nology $.%: )$.$$.::VVV $.,,VVV $.#$V )$.%% )$.$)$.%8 )$.%% )$.$9 $.#$V $.#-VV $.##V Sta)bility

2oncentrated gro4th *ar5et de0elo'1ent !roduct de0elo'1ent =nno0ation Hori?ontal integration Nertical integration 2oncentric di0ersi(ication 2onglo1erate di0ersi(ication 6urnaround Ai0estiture Ooint 0entures

$.$$.$/ $.$8 $.%%V $.%,VVV $.$8 )$.$8 $.$# $.%$V $.$8 $.%%V $.%#V $.$;

$.%% $.$, )$.%9 )$.%, )$.%: )$.%$ )$.$# )$.$% $.$; )$.%# )$.#8VV )$.%$ )$.%%

$.%9V $.$, $.%,V $.%$.$9 )$.%# $.$, $.$9 )$.#%VV )$.$, )$.#$VV )$.%;VV )$.%8

Strategic alliances 2onsortia

Stars indicate le0el o( signi(icance VVV 'W$.$%, VV 'W$.$,, V 'W$.%

#9
Ta-le ?, Interrelation -et1een grand strategies and o2erational 2erformance %ast 2erformance 6urn)o0er !ro(it last : last : years years 2oncentrated gro4th *ar5et de0elo'1ent !roduct de0elo'1ent =nno0ation Hori?ontal integration Nertical integration 2oncentric di0ersi(ication 2onglo1erate di0ersi(ication 6urnaround Ai0estiture Ooint 0entures $.$: $.$$ $.$$.##VVV )$.$)$.$/ )$.$% )$.$: )$.%,VV )$.$, )$.$% $.$: $.$; $.$8 )$.$, $.$; $.##VVV )$.%,VV )$.$; $.$, $.$# )$.#8VVV $.$9 )$.$8 $.$% $.$, 6urrent 2erformance SubBecti0e Relati0e 'er) (ir1 costs (or1ance $.%$ $.$% $.%: $.$/ $.%/VV $.$8 )$.$; )$.$# )$.$# )$.$)$.$9 $.$$ $.$, $.$)$.$% $.$)$.%% )$.$; )$.$: )$.%% )$.%, $.$: )$.$, )$.$# )$.$: )$.$/ Future 2erformance Short)ter1 ong)ter1

$.$8 $.%% $.$/ $.#$VVV $.$9 $.$: )$.$# $.$# $.$$ $.$, )$.$/ )$.$# $.$%

$.%#VV $.%-VV $.##VVV $.:$VVV $.$# $.$$.$% )$.$: )$.$, $.$# )$.$, $.$/ )$.$#

Strategic alliances 2onsortia

Stars indicate le0el o( signi(icance VVV 'W$.$%, VV 'W$.$,, V 'W$.%

#; Fig/ ., Selecting a grand strategy

Ra2id Mar:et gro1th ; High mar:et attractiveness

2oncentrated gro4th Nertical integration 2oncentric di0ersi(ication Strong com2etitive %osition 2onglo1erate di0ersi(ication Ooint 0entures

Hori?ontal integration Ai0estiture

'ea: com2etitive 2osition 6urnaround

Slo1 mar:et gro1th ; Lo1 mar:et attractiveness

#/ Fig/ @, Strategic 2rofiles in engineering and electronic

% 2oncentrated gro4th *ar5et de0elo'1ent !roduct de0elo'1ent =nno0ation Hori?ontal integration Nertical integration 2oncentric di0ersi(ication 2onglo1erate di0ersi(ication 6urnaround Ai0estiture Ooint 0enture Strategic alliances 2onsortia

+ngineering

+lectronic

Arro4s indicate a signi(icant di((erence in the res'ecti0e strategic co1'onent on the /,'ercent le0el o( con(idenceC signi(icance is based on ordered 'robit 1odels (or sur0ey data