Strategic Group Formation and Performance: The Case of the U.S. Pharmaceutical Industry, 1963--1982

Karel O. Cool and Dan Schendel
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Karel O. Cool: INSEAD, Fontainebleau, France
Dan Schendel: Krannert Graduate School, Purdue University, West Lafayette, Indiana 47907

Management Science, 1987, vol. 33, issue 9, 1102-1124

Abstract: The focus of this paper is on three major questions: (1) what is the theoretical rationale for the strategic group concept?; (2) does strategic group membership have performance implications?; and (3) are strategic groups and membership in strategic groups stable characteristics of industries? A statistical procedure is proposed to longitudinally identify strategic groups. The empirical setting is the U.S. pharmaceutical industry over the period 1963--82. While performance differences are found in terms of market share, profitability differences between groups are not observed. Neither are differences found in terms of risk and risk-adjusted performance. These results are attributed to the existence of performance variation within each strategic group. A dynamic model of competitive repositioning is proposed which helps integrate the findings from the study.

Keywords: strategic groups; performance; pharmaceutical; longitudinal (search for similar items in EconPapers)
Date: 1987
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