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Contingency view on technological differentiation and firm performance: evidence in an economic downturn
Author(s) -
Wu HsuehLiang,
Lin BouWen,
Chen ChungJen
Publication year - 2007
Publication title -
randd management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.253
H-Index - 102
eISSN - 1467-9310
pISSN - 0033-6807
DOI - 10.1111/j.1467-9310.2007.00451.x
Subject(s) - competition (biology) , recession , linkage (software) , investment (military) , industrial organization , cost leadership , business , economics , empirical evidence , contingency , competitive advantage , marketing , macroeconomics , ecology , biochemistry , chemistry , philosophy , linguistics , epistemology , biology , politics , political science , law , gene
Although the importance of strategy for firm performance has been studied, little evidence has been offered regarding this linkage in hostile environments characterized by a lack of exploitable market opportunity and fiercer competition. This study aims to examine the viability of strategic postures of technological differentiation in such a setting using data from 1,054 samples across 32 industries in 30 countries during 2001–2002, when global economies suffered a downturn. The empirical results show that differentiation‐oriented firms underperformed efficiency‐oriented ones during this period. However, in the face of deteriorating market conditions, a strategic orientation toward technological differentiation, in concert with an internal commitment to R&D investment or external munificence toward technological opportunity, yields better performance. Finally, this study finds that firms with tight coupling between differentiation and efficiency outmaneuver those with a pure strategy or no strategy at the time of an economic downturn.