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Strategic roads that diverge or converge: GM and Toyota in the battle for the top

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  • Chowdhury, Shamsud D.

Abstract

General Motors (GM) and Toyota competed in the global automobile industry for many decades. While GM hung on to the Number 1 position longer than any other automaker, it lost this position to Toyota in 2008. It took Toyota 71 years to beat GM but only 2 years for GM to regain the top spot in 2011. Through a brief analysis of the history of these two rivals, I explain why GM and Toyota demonstrated different ways of falling from the Number 1 spot. I argue that the reason for the reversal of leadership positions for these two automakers can be understood by examining executive hubris and the way it either facilitated path dependence or promoted a departure from an established path for the perpetuation of market leadership. I then demonstrate how GM and Toyota acted contrastingly with respect to path dependence and how their CEOs injected hubris almost the same way in their decisions to hold on to the top position. Contrary to the longstanding myth, I also demonstrate that it was hubris—as opposed to humility—that characterized executive leadership in Toyota in its last 15 years. Recommendations for practicing or budding executives of large corporations are given.

Suggested Citation

  • Chowdhury, Shamsud D., 2014. "Strategic roads that diverge or converge: GM and Toyota in the battle for the top," Business Horizons, Elsevier, vol. 57(1), pages 127-136.
    • Handle: RePEc:eee:bushor:v:57:y:2014:i:1:p:127-136
    DOI: 10.1016/j.bushor.2013.10.004
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    References listed on IDEAS

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    1. Masaru Yoshimori, 2005. "Does Corporate Governance Matter? Why the Corporate Performance of Toyota and Canon is Superior to GM and Xerox," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(3), pages 447-457, May.
    2. Liebowitz, S J & Margolis, Stephen E, 1995. "Path Dependence, Lock-in, and History," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 11(1), pages 205-226, April.
    3. Shamsud D. Chowdhury & J. Michael Geringer, 2001. "Institutional Ownership, Strategic Choices and Corporate Efficiency: Evidence from Japan," Journal of Management Studies, Wiley Blackwell, vol. 38(2), pages 271-292, March.
    4. Rehder, Robert R., 1988. "Japanese transplants: A new model for Detroit," Business Horizons, Elsevier, vol. 31(1), pages 52-61.
    5. Arnaldo Camuffo & Davide Riccardo Weber, 2012. "The Toyota Way and the Crisis: A New Industrial Divide?," Palgrave Macmillan Books, in: Luciano Ciravegna (ed.), Sustaining Industrial Competitiveness after the Crisis, chapter 3, pages 57-103, Palgrave Macmillan.
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    1. Arménio Rego & Miguel Pina e. Cunha & Ace Volkmann Simpson, 2018. "The Perceived Impact of Leaders’ Humility on Team Effectiveness: an Empirical Study," Journal of Business Ethics, Springer, vol. 148(1), pages 205-218, March.
    2. Janina Sundermeier & Martin Gersch & Jörg Freiling, 2020. "Hubristic Start‐up Founders – The Neglected Bright and Inevitable Dark Manifestations of Hubristic Leadership in New Venture Creation Processes," Journal of Management Studies, Wiley Blackwell, vol. 57(5), pages 1037-1067, July.

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