Reference theory: strategic groups and competitive benchmarking

Abstract

PurposeThe concept of strategic groups is a central theme in the field of strategic management, and over time it has been used by a considerable body of theoretical and empirical literature to examine different aspects of competitive strategy. However, to date, there has been little systematic investigation that examines aspects associated with competitive benchmarking and the impact and effect that this has on strategy development. Thus despite the level of knowledge that has been accumulated over the years regarding the dynamics of competitive landscapes, our understanding of the impact and effect of this particular matter on decision making is limited. More importantly, studies that have addressed the topic are either theoretical alone in contents or have only used secondary data. Equally, these studies have approached the subject mostly from an impersonal mathematical perspective and practitioners' views on the issue have been overlooked. This paper aims to address these weaknesses in the literature. In doing so, it seeks to place attention on the individual, which has been overlooked by previous examinations.Design/methodology/approachThe research is cross‐sectional and it is based on primary methodology, having employed qualitative techniques for analysis. It involves face‐to‐face semi‐structured interviews combined with the repertory grid technique. The industry investigated is the UK mainstream leisure foreign package holidays. The sample size is near to the sampling frame of the research and the investigation took place between March and August 2003.FindingsIt was found that managers of firms from the same strategic group consider their group as a reference point in their decision‐making process and as a result of their benchmarking observations they adjust their firms' competitive strategies to reflect their group's strategic behaviour. It was also found that firms of the same strategic group are more likely to respond to market conditions and events in a similar manner.Originality/valueThis paper examined issues associated with benchmarking, in the context of strategic groups, having employed primary qualitative research strategies in order to add “fresh” data on a topic that so far has merely been investigated quantitatively through secondary sources alone. As such, it has initiated a much needed contents dimension on the topic to complement the activity and process‐oriented only studies in the area. The research not only tested earlier propositions in order to accumulate more evidence in the field and enable better generalisations on the subject but it has also expanded current theories in the area.