Strategic groups, exit barriers and strategy decision constraints in high-tech companies

Abstract

Intensified global competition and advances in technology are shortening the life cycles of products and process innovations. As a result, firms have to reposition themselves in more profitable industries more frequently. However, exit barriers that result from the firm's technology decisions can constrain the firm's ability to make these decisions in a timely manner. There has been little prior research on the firm's decisions concerning technology and its relationship to strategy and timeliness. This paper addresses the issue of strategic group exit barriers as a moderating variable in the relationship between strategy and performance. Firm performance is hypothesized to be a function of strategic group exit barriers created by investments in product technology, process technology, and plant and equipment. Six strategic groups, defined previously by Miller [ Strateg. Manage. J. 9 (1988) 239] provide the basis for seven testable propositions that explain firm performance and timeliness as a function of strategic decisions related to investments in technology and capital equipment.