Strategic Groups And Performance: Empirical Study Of Chinese Manufacturing Firms

In the strategic management area, there have been two sorts of theoriesexplaining the differences between companies. Traditional School of IndustrialOrganization believes that differences between companies attribute to industry. While,the strategy management holds the view that variant resources owned by differentcompanies cause these differences. In1972, Professor Hunt proposed a phrase named“strategic group”, which is used as a new method to explain differences betweencompanies. In1979, M. Porter developed a whole theory on strategic group, whichestablishes the foundation of strategic group. Meantime, foreign researchers didempirical study many industries, and got rich yet different results.Manufacturing industry is the material basis for national economic and socialdevelopment, and also an important reflect of our country’s comprehensive nationalstrength. Since our China has been a member of WTO, our economy has witnessedgreat development from accepting global order to be one of the world’s big three.However, our manufacturing industry has many problems, compared withmanufacturing companies in developed countries, such as labor costs, increasingcapacity, product homogeneity competitive and profit margins declines, etc. As forthis, based on strategic group, our research studies the source of performancedifferences, has vital significance to our manufacturing industry in our China.In the first place, this study summarizes the theoretical basis of strategic group,displaying strategic group from theoretical support and the relationship betweenstrategic group and performance. After that, this paper sorts out empirical studies athome and broad related to the strategic group. Then, a study model and a researchhypothesis are put forward and tested by a sample of1342manufacturing companieson listed in China. As to the procedure, this paper first selects appropriate dimensionand variables tested by scholars before to represent company strategy, then useclustering analysis to detect whether strategic groups exist in manufacturing listedcompanies. After this question is confirmed, this paper uses4variables representingcompany long-term performance and current performance to test performancevariances between companies in different groups.Finally, through empirical study, the study draws a conclusion that strategic groups do exist in manufacturing list companies in China, as well as have a vitalsignificance to performance, variables both resource-based and industry-basedvariables affecting clustering. The outcome of groups show great relationship withmanufacturing companies on listed in China. As fore this, those companies whichwant to be the evergreen tree of the industry, should do well in the internal andexternal work.