Competitive Advantage In The Strategic Group Formation Path Of Study

In the business practices, some firms succeed as well as other firms fail. Also some firms continue their success but some firms break down after its fame. What are the deep reasons that lead to such facts? Studies about competitive advantage and sustained competitive advantage just explore the solution to this problem. Therefore, studies concerning the source of competitive advantage, the benefits of competitive advantage and the sustainability of competitive advantage are the hot topics of Strategic Management. Many researchers have proposed various theories from different aspects such as industrial organization economics and resource-based view of firms (RBV). The industrial organization economics school mainly discusses firm competitive advantage from outside environment perspective, which includes firm positioning, the relationship between the firm and other stakeholders and etc. But the RBV advocates discussing the firm competitive advantage from the firm perspective, which includes firm resources and capabilities.On the basis of the forerunners' fruits, this paper focuses on the strategic group perspective to explore the path to competitive advantage. The major research problems include:(l) Are there strategic groups in the software industry? (2) What are the paths for resources and capabilities to form competitive advantage?This paper firstly systematically reviews the relevant literatures about strategic groups and their influences on the competitive advantage. After a brief introduction of Chinese and even the world's software industry, we propose the prerequisites to engage strategic group analysis. Then, this paper selects the key internal and external variables to start the empirical studies, which are all formed on the base of literature review and experts' suggestions. The empirical studies consist of two parts: cluster analysis and path analysis. The former is to classify different groups and the latter is to compare the different paths to competitive advantage. We find out the following conclusions via empirical studies:The software industry completely complies with the two prerequisites to form stable strategic groups. The product market heterogeneity and resource inimitability of software industry facilitate different software firms to form five strategic groups. Under the prerequisites, this paper conducts cluster analysis from ten dimensions with twelve indices. Finally five stable strategic groups emerge. We think the groups' characteristics represent the firms' characteristics in the group.We take two from the five groups to conduct further path analysis. The researchfinds out that the path of the two groups differentiate from each other. One is sales expenditure - competitive advantage, sales expenditure-->component capability -integrative capability-->competitive advantage. And another is sales expenditure--> component capability - integrative capability - competitive advantage, R&D expenditure-->component capability-integrative capability-->competitive advantage. The different paths demonstrate that for firms in different strategic groups, to choose sound paths is the key to achieve competitive advantage.