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Strategic Group Formation and Performance: The Case of the U.S. Pharmaceutical Industry, 1963--1982

Author

Listed:
  • Karel O. Cool

    (INSEAD, Fontainebleau, France)

  • Dan Schendel

    (Krannert Graduate School, Purdue University, West Lafayette, Indiana 47907)

Abstract

The focus of this paper is on three major questions: (1) what is the theoretical rationale for the strategic group concept?; (2) does strategic group membership have performance implications?; and (3) are strategic groups and membership in strategic groups stable characteristics of industries? A statistical procedure is proposed to longitudinally identify strategic groups. The empirical setting is the U.S. pharmaceutical industry over the period 1963--82. While performance differences are found in terms of market share, profitability differences between groups are not observed. Neither are differences found in terms of risk and risk-adjusted performance. These results are attributed to the existence of performance variation within each strategic group. A dynamic model of competitive repositioning is proposed which helps integrate the findings from the study.

Suggested Citation

  • Karel O. Cool & Dan Schendel, 1987. "Strategic Group Formation and Performance: The Case of the U.S. Pharmaceutical Industry, 1963--1982," Management Science, INFORMS, vol. 33(9), pages 1102-1124, September.
    • Handle: RePEc:inm:ormnsc:v:33:y:1987:i:9:p:1102-1124
    DOI: 10.1287/mnsc.33.9.1102
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