Dynamic analysis of the strategic group membership-performance linkage under conditions of fundamental environmental transformations: The case of the Spanish private banks (1983-1997)

The main focus of this study is to answer the following question: Do performance differences exist among strategic groups and are these differences stable over time in a population of firms which has undergone fundamental environmental changes? Two alternative theoretical approaches are provided to answer this question, namely, the Industrial Organization Theory (IOT) and the Resource-Based View of the Firm (RBVF). The empirical setting to test the proposed hypotheses is the Spanish private bank population which has experienced continuous and dramatic environmental shifts over the period 1983-1997. In this context, a new cluster technique is used to longitudinally identify strategic groups –the MCLUST–. The results generally indicated that significant performance differences among strategic groups only existed in three years –1991, 1992 and 1997– in all performance indicators used in this research (return on assets, return on equity, growth in share market, growth in assets and solvency), as the IOT states, but such differences did not exist in other years, as the RBVF predicts. These findings seem to be in line with the conclusions of more recent longitudinal and dynamic studies in this field which show consistent evidence to support both theoretical approaches. Therefore, in the light of these results, in future studies it may be necessary to consider both perspectives as complementary in order to explain properly the performance consequences of strategic group membership over time.