Competitive Categorization and Networks: Cognitive Strategic Groups
| Published date | 01 October 2023 |
| Author | Tian Han,Abby Ghobadian,Andrew Yim,Ran Tao,Howard Thomas |
| Date | 01 October 2023 |
| DOI | http://doi.org/10.1111/1467-8551.12694 |
British Journal of Management, Vol. 34, 1687–1713 (2023)
DOI: 10.1111/1467-8551.12694
Competitive Categorization and Networks:
Cognitive Strategic Groups
Tian Han,1Abby Ghobadian,2Andrew Yim,3Ran Tao4
and Howard Thomas5
1Nottingham University Business School, University of Nottingham, Nottingham, NG8 1BB, UK, 2Henley
Business School, University of Reading, Henley-on-Thames, RG9 3AU, UK, 3Bayes Business School, City,
University of London, London, EC1Y 8TZ, UK, 4Bristol Business School, University of Bristol, Bristol, BS8
1PQ, UK, and 5Singapore Management University, Singapore, 188065, Singapore
Corresponding author email: tian.han@nottingham.ac.uk
Technologicaladvancement compounds the complexity of competitor identication, mak-
ing it increasingly multi-front and multi-dimensional. Strategic groups arean important
unit for competition analysis, typically delineated by rms’ characteristic similarities
or cognitive maps. Both have inadequacies – the former produces methodological arte-
facts, and the latter is subject to scale limitations, replicability and managers’ cogni-
tive blind spots. Hence, the need for alternatives supplementing the existing approaches.
We propose a novel grouping methodology based on news co-mentions, reecting fac-
tual corporate events, executives’ and journalists’ views, and environmental changes. It
yields three advantages. First, news depicts interorganizationalrelationships, alleviating
the concern that strategic groups are statistical artefacts. Second, the approach supple-
ments managers’ cognition with that of journalists. Third, the public availability of data
offers replicability. The proposed methodology is applied to a sample collected from the
US high-tech sector. Wedocument commonalities between the co-mention-based groups
and the conventionally used characteristic-based approach. However, the similarity and
groups yielded from news co-mentions go beyond characteristic similarities in explain-
ing competitive inclination, suggesting that the co-mention-based approach offers a ro-
bust alternative to identifying competitors and strategic groups. Overall, by developing
a novel methodology based on a strong theoretical foundation,this study sheds new light
on strategic group research.
Introduction
The fourth industrial revolution is reshaping the
market for competition through the emergence
of platform rms, globalization, greater inter-
dependencies and blurring traditional industry
boundaries (Rietveld and Schilling, 2021; Schwab,
2017; Stallkamp and Schotter, 2021), unsurpris-
ingly making the necessary but inherently chal-
lenging task of categorizing rms into compet-
ing groups more complex (Cattani, Porac and
Thomas, 2017; Gur and Greckhamer, 2019; Yu
and Cannella, 2013). Categorization enables com-
petitor identication and assessment of competi-
tive advantage (Cattani, Porac and Thomas, 2017;
Gur and Greckhamer, 2019). The technology-
driven changes add a layer of complexity to the
simple but essential question of who competes
with whom (Yu and Cannella, 2013). For example,
does a camera manufacturer compete with other
camera manufacturers or mobile phone manu-
facturers? A reliable answer is of signicance to
academics, practitioners,investors and policymak-
ers (Barlow, Verhaal and Angus, 2019; Gur and
Greckhamer, 2019).
Categorizing rms into comparable groups is
of interest to several disciplines (Cattani, Porac
and Thomas, 2017). We draw on the strategic
© 2022 The Authors.British Journal of Management published by John Wiley & Sons Ltd on behalf ofBritish Academy
of Management.
This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distri-
bution and reproduction in any medium, provided the original work is properlycited.
1688 Han et al.
group concept because it offers a more promising
root to understanding competition and market dy-
namics (Cattani, Porac and Thomas, 2017; Levine,
Bernard and Nagel, 2017; Rebière and Mavoori,
2019). Two broad approaches are deployed for
identifying strategic groups: characteristic-based
and cognitive-based. Both have limitations ex-
acerbated by changes in the marketplace for
competition. The theoretical underpinning of
characteristic-based approaches is criticized,
grounded on the innite dimensionalization of
rm entities and the interorganizational nature of
competition (Cattani, Porac and Thomas, 2017;
Gur and Greckhamer, 2019). The weaknesses of
cognitive-based approaches include the practical
issue of scale, replicability and competitive blind
spots (Levitt, 2017; Ng, Westgren and Sonka,
2009; Porac, Thomas and Baden-Fuller, 2011;
Prahalad and Bettis, 1986). In sum, due to the-
oretical and methodological issues compounded
by environmental change, the current methods
for categorizing rms into strategic groups have
notable shortcomings (see Cattani, Porac and
Thomas, 2017 fora review), underscoring the need
for an alternative complementary methodology
based on a sound theory.
By adopting Hunt’s (1972) denition of strate-
gic groups – a group of competitors pursuing the
same or similar strategies – we propose and test
a novel methodology for categorizing rms into
strategic groups. Network analysis, the foundation
of our approach, directs attention to rms’ struc-
tural positions, providing a promising alternative
avenue (Gnyawali and Madhavan, 2001; Gulati,
Nohria and Zaheer, 2000; Gur and Greckhamer,
2019; Thomas and Pollock, 2002). To move the
discussion forward, we ask two interrelated ques-
tions: (a) How can the structural properties of
interorganizational networks be used to identify
strategic groups?1(b) How do strategic groups
based on interorganizational networks compare
with characteristics-based groups?
In resolving the rst research question and in
line with our strategic group denition, we extend
Kennedy’s (2008) proposition by using the net-
works formed by co-mentions of rms in the same
news articles (so-called co-mention networks),
1The question echoes Gur and Greckhamer’s (2019) fu-
ture agenda for competition research, where they ask:
‘How are the structural properties of interorganizational
networks related to the identicationofcompetitors?’
along with the concept of structural equivalence
to identify strategic groups. Different from the
prior literature (see Ingram and Yue, 2008), we fo-
cus on the co-mention network shaped by actual
corporate events – outcomes of managers’ cogni-
tive process (Kaplan, 2011; Nadkarni and Barr,
2008; Porac, Thomas and Baden-Fuller, 1989), ex-
pressed views of executives and changes in the op-
erating environment, as well as journalists’ cogni-
tive embeddedness (Kennedy, 2008). The inclusion
ofjournalists’ cognitive interrelationships addsa
layer of alternative cognition to that of managers
extending collective cognitive boundaries. We rea-
son that business strategies shape rms’actions,
which determine their interactions with the exter-
nal environment (Kald, Nilsson and Rapp, 2000),
inuencing public (including journalists’) cogni-
tion regarding the related actors (Fombrun and
Shanley,1990; Kennedy, 2008; Shipilov, Greve and
Rowley, 2019). In this reasoning, we argue that
the structurally equivalentr ms in co-mention net-
works are likely to be competitors and in line with
Hunt’s(1972) denition ofpursuing similar strate-
gies, providing the theoretical basis for using co-
mentions to identify strategic groups.
To illustrate our proposed methodology and
examine the group solution empirically, we use
a sample of rms operating in the high-tech sec-
tor. Focusing on a sector rather than a specic
industry reects greater permeability of industry
boundaries. The technology sector is particularly
appropriate because its manifests industry bound-
ary permeability (Duysters and Hagedoorn, 1995).
Hence, if the methodology works for this sector
it is likely to work for other sectors with lesser
boundary permeability. In addressing our second
research question, we conduct extensive empirical
analyses to test and ascertain the level of overlap
between the co-mention-based approach and the
characteristic-based approach. The analysispoints
to some commonalities as well as observable dif-
ferences. Additionally, we ascertain the validity
of co-mention similarities and the group solu-
tion by its effectiveness in identifying corporate
rivalry, as rms within a group are considered
to be direct competitors (Carroll and Thomas,
2019; Harrigan, 1985; Hunt, 1972). We nd that
co-mention similarities and co-mention-based
groups are positively and signicantly correlated
with competitive inclination. In contrast, char-
acteristic similarities have a limited correlation
with competitive inclination. As such, we suggest
© 2022 The Authors.British Journal ofManagement published by John Wiley & Sons Ltd on behalf of British
Academy of Management.
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