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STRATEGY AND PERFORMANCE IN AN EMERGING INDUSTRY: THE CASE OF MICROCOMPUTER SOFTWARE
Abstract
This study addresses a gap in the empirical literature of strategic management, i.e., the study of strategy and performance in an emerging industry. Two theoretical approaches were integrated and tested with a sample of microcomputer software firms. Population ecology theory predicts that only high-risk, simple and exploitative firms, called r-strategists, will thrive in early industry stages. The r-strategists are predicted to be outcompeted, in later industry stages by lower-risk, complex and efficiency-oriented firms, called K-strategists. Competitive density, the number of firms in the industry, is a key contingency predicting survival. R-strategists are expected to thrive when competition is sparse, and K-strategists when competition becomes dense. These strategies are similar to the generic strategies proposed by Michael Porter: Overall Cost Leadership, Differentiation, and Focus. In contrast to population ecology, each generic strategy is expected to be successful, if firms implement them well. The r-strategy resembles a Focus-Differentiation strategy, due to concern with innovation and smaller market targets. The K-strategy resembles Overall Cost Leadership, because of its implications for economies of scale, complex control and coordination, and large markets. While the strategies are similar, the predictions about their success and survival are different. Neither theory has been tested in an emerging industry. Predictions of the competing theories were tested with data gathered through published sources and questionnaires. Results showed that, contrary to predictions, the microcomputer software firms did not represent clear archetypes of the strategies, but instead they mixed their approaches. The more K-like firms competed in slightly more dense environments, but neither strategy alone, nor the strategy-environmental density interaction predicted performance or survival over two years.
Subject Area
Management
Recommended Citation
BARTON, MARY ELIZABETH, "STRATEGY AND PERFORMANCE IN AN EMERGING INDUSTRY: THE CASE OF MICROCOMPUTER SOFTWARE" (1986). ETD collection for University of Nebraska-Lincoln. AAI8706221.
https://digitalcommons.unl.edu/dissertations/AAI8706221