A Study of Industry Evolution in the Face of Major Environmental Disturbances: Group and Firm Strategic Behaviour of Spanish Banks, 1983–1997*
| Author | Julio Rodríguez‐Puerta,Juan Manuel De La Fuente‐Sabaté,JoséÁngel Zúñiga‐Vicente |
| Published date | 01 September 2004 |
| Date | 01 September 2004 |
| DOI | http://doi.org/10.1111/j.1467-8551.2004.00416.x |
A Study of Industry Evolution in the Face
of Major Environmental Disturbances:
Group and Firm Strategic Behaviour of
Spanish Banks, 1983–1997
*
Jose
´A
´ngel Zu´ n
˜iga-Vicente, Juan Manuel de la Fuente-Sabate
´w
and Julio Rodrı
´guez-Puertaz
Universidad Rey Juan Carlos, Facultad de Ciencias Jurı
´dicas y Sociales, Departamento de Organizacio
´nde
Empresas, P
o
. de Artilleros, s/n, Campus de Vica
´lvaro, 28032 Madrid, Spain, wUniversidad de Burgos,
Departamento de Economı
´a y Administracio
´n de Empresas, Facultad de Ciencias Econo
´micas y
Empresariales, Plaza Infanta Elena, s/n, 09001 Burgos, Spain and zLaboratorio de Estadı
´stica, Universidad
Polite
´cnica de Madrid, C/ Jose
´Gutie
´rrez Abascal, 28006 Madrid, Spain
Corresponding author email: jazuniga@fcjs.urjc.es
This paper examines the story of the evolution of a specific industry through the
application of dynamic strategic group analysis. In particular, we analyse the
relationship between major environmental disturbances and changes that have occurred
over time in the competitive structure of the industry regarding two closely related
central questions. First, the way in which these environmental transformations have
influenced group patterns and stability, and second, the way in which such environmental
disturbances has affected the strategic positioning of individual firms. We resort to
alternative theoretical perspectives in an attempt to answer both questions. The
empirical setting is the population of Spanish banks over the period 1983–1997. We
make use of a new grouping algorithm – the Model-based Clustering or MCLUST –
which may be enormously fruitful in future empirical works on strategic groups. This
method allows researchers to obtain the optimal number of groupings over time in a
much more objective way than the cluster techniques used until now. Compared to
previous dynamic studies that only consider the largest firms, our research illustrates
how a richer analysis of an industry dynamics can be obtained by using a dynamic
analysis of strategic groups. Our results show that while there have been no industry-
wide identical groupings year to year, there is an important strategic stability at group
and firm-level punctuated by a high degree of strategic instability at times of major
environmental disturbances.
Introduction
The primary objective of this study is to examine
the ensuing structural dynamics of a specific
industry and the strategic positioning of groups
and individual firms as the industry evolves in the
face of continuous and fundamental disturbances
in its environmental conditions. The study applies
dynamic strategic group analysis as an appro-
*
We would like to thank the two anonymous reviewers
for their insightful ideas and comments on this paper.
We also thank the Spanish Commission for Science and
Technology (Ministerio de Ciencia y Tecnologı
´a) and
FEDER (Reference: SEC2001–1756) for their financial
support for this research.
British Journal of Management, Vol. 15, 219–245 (2004)
r2004 British Academy of Management
priate vehicle for examining this industry’s story
of evolution. Although our study is clearly in line
with Mascarenhas’ (1989) research and other
longitudinal and dynamic empirical works on
industry dynamics (Bogner, Thomas and McGee,
1996; Cool and Schendel, 1987; Fiegenbaum and
Thomas, 1990, 1993; Flavia
´n and Polo, 1998;
Ma
´s, 1999; Olusoga, Mokwa and Noble, 1995;
Vikkula, 1993) it also presents some relevant
differences with all of them. The first difference is
directly associated with continuous and funda-
mental environmental disturbances undergone by
firms of the industry considered during the period
of analysis. The second one is that we consider a
whole population of firms made up of a very high
proportion of small entities. The third and final
difference is the dynamic analysis of group and
firm behaviour within an industry characterized
by changes in its composition owing to contin-
uous births and extinctions over time. In our
opinion, all these differences will enable us to
improve our knowledge and provide a new
contribution on industry evolution much more
realistic than past empirical studies. This conclu-
sion seems logical if we consider, as can be
observed, that most industries of economy have
undergone major changes in their environmental
conditions over the last two decades and they
consist of a very high proportion of small firms
and firms that are continuously appearing and
disappearing as a result of such diverse events as
mergers, takeovers, liquidations and so on.
Taking into account all the above issues, we
will try to answer two closely related central
questions on the industry’s evolution. After
casting doubt on the existence of strategic
stability time periods within the setting chosen
and recognizing the existence of strategic groups,
we firstly examine the group pattern and stability.
Specifically, we begin investigating to what extent
the groups existing in an industry can change
their strategies over time in response to new
environmental conditions. This analysis is carried
out on the group-level. Second, if we take into
account what these groupings really are –
collections of individual firms making firm-level
decisions – then we can also show the evolution
of the industry more sharply by examining the
positioning of individual firms over time. At this
point, we analyse to what extent firms can move
across different groups identified over time, by
distinguishing the behaviour of small and large
firms. For this, we asses the mobility rates across
strategic groups. The main level of analysis at this
phase is, hence, the firm. We resort to different
theoretical perspectives for answering both ques-
tions. Specifically, we concentrate on arguments
from these theoretical perspectives for elaborat-
ing a set of hypotheses associated with each
question examined. These hypotheses are tested
on the Spanish bank industry for the 15-year
period 1983–1997. As we will see below, firms of
this industry have undergone very important
technological, economic and regulatory shifts
over the period of study.
From a strictly methodological point of view,
our study makes a notable contribution to the
empirical literature on strategic groups as we
make use of a new cluster algorithm which has
not yet been employed in this research stream –
the Model-based Clustering or MCLUST. This
cluster technique offers some relevant advantages
over other grouping methods employed in all
empirical research until now. The most important
one is that it enables us to obtain the optimal
number of strategic groups over time in a much
more objective way. In other words, when using
this new grouping method the subjective judge-
ment of the researchers to determine the number
of strategic groups over time is eliminated. From
this standpoint, it also enables researchers to
reflect more accurately the evolution of every
industry.
The paper has five main sections. In the next
section a brief overview on strategic group
literature is presented in order to contextualize
our research regarding the empirical studies
carried out so far. We formulate the hypotheses
to be tested in the next section. In the third part
the research methodology is developed and the
results are presented in the following section. In
the final part, we summarize the most important
conclusions of this study.
An overview of strategic group literature
The first precursor to the concept of ‘strategic
group’ was Chamberlain (1932).
1
But it was in
the early 1970s when the strategic group concept
1
This author discussed in detail the importance of
diversity among the demand and cost curves of firms
within the same industry.
220 J. A
´.Zu
´n
˜iga-Vicente, J. M. de la Fuente-Sabate
´and J. Rodrı´guez-Puerta
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