Strategic groups and performance: The U.S. insurance industry, 1970–84

TLDR

Strategic groups are widely recognized as a key analytical unit for competitive strategy. This study develops a general framework for forming strategic groups based on core firm strategy elements. The framework is applied to the U.S. insurance industry from 1970–84, yielding strategic implications and informing competitive positioning and dynamic group movement theories.

Abstract

Abstract The concept of strategic groups has been accepted as an important unit of analysis in understanding competitive strategy (Porter, 1980; McGee and Thomas, 1986; Hatten and Hatten, 1987). This study builds upon previous research (Hatten et al., 1978; McGee and Thomas, 1986; Harrigan, 1985; Cool, 1985; Cool and Schendel, 1987, 1988) and provides a general framework for the formation of strategic groups based upon important aspects of firm strategy. This framework is applied to the insurance industry over the 1970–84 time period and strategic implications are drawn. The empirical findings demonstrate that some performance differences exist among strategic groups, and also indicate that the structure of strategic groups (both in terms of the number, and the membership) changes over time. The use of this framework for understanding competitive positioning and developing dynamic theories of strategic group movement is also discussed.