Keeping Both Eyes on the Competition: Strategic Adjustment to Multiple Targets in the UK Mobile Phone Industry
Strategic Organization, Vol. 8, No. 4, pp. 347-376, November 2010
Posted: 11 Jun 2011
Date Written: November 1, 2010
Research suggests that firms avoid excessive differentiation or conformity by using industry competitors as reference targets in a process that Snow and Hambrick (1980) call "strategic adjustment." To date explanations of strategic adjustment have focused on the influence of only one of two sources: a) firms base targets on the collective strategic decisions of other firms in the industry; and b) firms base targets on the strategic decisions of the market leader. In this paper we explore how both these sources influence strategic adjustment by looking at the product portfolio strategies of firms in industries where competitive positions depend on periodically launching models with multiple features and functionalities. We develop hypotheses on when firms use targets based on collective industry product decisions and/or the market leader product decisions. We test these hypotheses using data on 570 mobile phone models launched in the UK by fourteen firms from 1997 to 2008.
Keywords: multiple reference targets, strategic adjustment, product decisions, mobile phone industry
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