Strategic group formation and evolution in an emergent industry: An exploratory analysis of the personal computer industry

Recent developments in industrial organization have conceptualized an industry as composed of finer groups of firms. Firms within such a group compete in similar ways. The cluster of firms that form such a group is called a "strategic group". This concept has important implications for strategic management and industrial organization researchers because it offers a systematic way to study relationships between industry structure-strategy, strategy-performance, and industry structure-performance. A review of the literature and empirical works on strategic groups revealed that the creation and evolution of strategic groups has not been systematically studied. The major thrust of this study is to explore how groups are created and how they evolve thereafter.;For the foregoing potential to be realized, understanding how strategic groups form in the first instance and evolve thereafter would appear to be an area for potentially significant research. In order to observe the creation of strategic groups it seemed appropriate to select an industry of recent creation. It should be noted that emergent industries constitute a topic that has been relatively little researched. For both as well, the creation and evolution of strategic groups and emergent industries, there is not at present a well established framework to inform the operationalization of readily testable hypotheses. The significance of the research gap, and the present state of the art, therefore, have led to what may be seen in the most appropriate sense as an exploratory study.;Theoretical groundings are provided to support the selection of the level of analysis (functional level-business level), the selection of the variables to operationalize strategy and selection of method and procedures to identify strategic groups.;This dissertation uses a combination of clustering methods with canonical discriminant analysis and a test of clusters with the Mahalanobis distance. The inclusion of the Mahalanobis distance permitted the comparison of strategic groups between pairs of contiguous years. An index of dendogram (here called tree) similarity is introduced in order to guide the choice of clustering method and data input.;The nature of this study required a longitudinal analysis allowing for entry and exit of firms and yet producing results that could be comparable over periods of time. Consistent with the exploratory nature of a study in one industry, the findings have resulted in refined hypotheses that may lend to replication in this industry and potential generalizability beyond one industry.;Generalization of findings is limited because the study is focused on one single industry. However, it is hoped that the methodology presented in this study may be of help in future longitudinal research intended to study strategy.