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Summary articles & lecture notes - Strategy and Nonmarket Environment
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This is a very extensive summary of all the articles of SNME 2023 and the additional lecture notes.
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TABLE OF CONTENTSLecture 1 ..........................................................................................................................3
1. Porter (1985). Competitive Strategy: The Core Concepts ........................................................ 3
2. Hu (1995). The internatinoal transferability of the firms advantages...................................... 9
3. Tallman & Cuerva-cazurra (2021). Global strategy ................................................................ 18
4. Baron (1995). Integrated strategy: Market and nonmarket components ............................... 25
Lecture 2 ........................................................................................................................35
5. Dunning (1980). Toward an eclectic theory of international production: Some empirical tests
.............................................................................................................................................. 35
6. Zaheer (1995). Overcoming the liability of foreignness ......................................................... 43
7. Meyer et al. (2009). Managing knowledge in foreign entry strategies ................................... 48
8. Hill et al. (1990). An eclectic theory of the choice of international entry mode ...................... 57
Lecture 3 ........................................................................................................................65
9. Flores & Aguilera (2007). Globalization and location choice: an analysis of US multinational
firms in 1980 and 2000 ............................................................................................................ 68
10. Porter (1998). Clusters and the new economics of competition .......................................... 76
11. Goerzen et al. (2013). Global cities and multinational enterprise location strategy ............. 85
Lecture 4 ........................................................................................................................95
12. Gereffi & Lee (2012). Why the world suddenly cares about global supply chains ................. 97
13. Verbeke (2020). Will the covid-19 pandemic relaly change the governance of glboal value
chains? ................................................................................................................................. 103
14. Strange & Humphrey (2019). What lies between market and hierarchy? Insights from
internalization theory and global value chain theory ............................................................. 105
15. Krause et al. (2007). The R between supplier development, commitment, social capital
accumulation and performance improvement ....................................................................... 112
Lecture 5 ...................................................................................................................... 118
16. Vermeulen & Barkema (2002). Pace, rythm and scope: process dependence in building a
profitable multinational corporation ..................................................................................... 122
17. Koster et al (2010). Resuming internationalization at starbucks ........................................ 131
Lecture 6 ...................................................................................................................... 141
18. DiMaggio & Powell (1983). The iron caeg revisited: Institutional isomorphism and collective
rationality in organizational fields ......................................................................................... 145
, 19. Voinea & Kranenburg (2017). Nonmarket strategic management ..................................... 153
Lecture 7 ...................................................................................................................... 178
20. Voinea & Kranenburg (2017). Nonmarket strategic management ..................................... 189
21. Dorobantu et al. (2017). Nonmarket strategy research through the lens of new institutional
economics ............................................................................................................................ 210
22. Mellahi et al. (2016). A review of the nonmarket strategy literature: toward a multi-
theoretical integration .......................................................................................................... 224
Lecture 8 ...................................................................................................................... 234
23.Lawrence (1999). Institutional strategy. ............................................................................ 234
24. Navis & Glynn (2010). How new market categories emerge: temporal dynamics of legitimacy,
identity and entrepreneurship in satellite radio. .................................................................... 244
25. Tracy et al. (2011). Bridging insitutional entrepreneurship and the creation of new
organizational forms: a multilevel model .............................................................................. 254
Lecture 9 ...................................................................................................................... 263
26. Aldrich & Fiol (1994). Fools rush in? The insitutional context of industry creation ............. 263
27. Lux et al. (2011). Mixing business with politics ................................................................. 274
,LECTURE 1
1. PORTER (1985). COMPETITIVE STRATEGY: THE CORE CONCEPTS
Competitive strategy is the search for a favorable competitive position in an industry, the fundamental
arena in which competition occurs. Competitive strategy aims to establish a profitable and sustainable
position against the forces that determine industry competition.
Two questions for the choice of competitive strategy:
1. Attractiveness of industries for long-term profitability.
a. Not every industry offers equal opportunities for sustained profitability
2. Determinants of relative competitive position within an industry
a. Some firms are much more profitable than others, regardless of what the average
profitability of the industry may be.
These questions/positions are dynamic: industry attractiveness and competitive position change. Both
can be shaped by a firm through competitive strategy.
Porter made an analytical framework understanding industries and competitors and formulating an
overall competitive strategy.
- 5 competitive forces that determine the attractiveness of the industry
- 3 broad generic strategies for achieving competitive advantage
- How to analyse competitors and to predict and influence their behaviour
- How to map competitors into strategic groups and assess the most attractive positions in an
industry.
- Apply the framework to a range of important types of industry environments → structural
setting.
- Important strategic decisions that occur in the context of an industry
Competitive advantage grows out of value a firm is able to create for its buyers that exceeds the firms
cost of creating it.
- Value: what buyers are willing to pay
- Superior value: offering lower prices than competitors for equivalent benefits or providing
unique benefits that more than offset a higher price.
, 2 types of competitive advantage:
1. Cost leadership
2. Differentiation
Competitive advantage not only on individual industry level but also corporate strategy for the
diversified firm. Competitive advantage in one industry can be strongly enhanced by interrelationships
with business units competing in related industries. That is why interrelationships among business
units are the principal means by which a diversified firm creates value.
The structural analysis of industries
The first fundamental determinant of a firms’ profitability is industry attractiveness. Rules of
competition are embodied in 5 forces. In industries where the forces are favourable, many
competitors earn attractive returns. Less attractive forces, fewer firms have attractive returns.
The five forces determine industry profitability because they influence the prices, costs, and required
investment of firms in an industry—the elements of return on investment. Buyer power influences the
prices that firms can charge, for example, as does the threat of substitution. The power of buyers can
also influence cost and investment, because powerful buyers demand costly service. The bargaining
power of suppliers determines the costs of raw materials and other inputs. The intensity of rivalry
influences prices as well as the costs of competing in areas such as plant, product development,
advertising, and sales force. The threat of entry places a limit on prices, and shapes the investment
required to deter entrants.
The strength of each of the five forces is a function of the industry structure. This is relatively stable,
but can evolve over time. Structural change shifts the overall and relative strength of the competitive
forces, and can thus positively or negatively influence industry profitability. A firm is not a prisoner of
it’s industry structure. Through their strategies, they can influence the five forces. It can shape
structure and change an industry’s attractiveness. Or the other way around and destroy industry
structure. A new product design that undercuts entry barriers or increases the volatility of rivalry, for
example, may undermine the long-run profitability of an industry, though the initiator may enjoy
higher profits temporarily. Or a sustained period of price cutting can undermine differentiation.
Industry wreckers are often second-tier firms that are searching for ways to overcome the competitive
disadvantage they have.
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