Environmental Determinants of Generic Competitive Strategies: Preliminary Evidence from Structured Content Analysis of Fortune and Business Week Articles (1983-1984)1

Abstract

This paper seeks to determine whether the implementation of a generic competitive strategy (Porter, 1980) reflects variations in the competitive variables of customer price sensitivity and product differentiability, and whether tailor-fitting business strategy to the competitive environment is associated with a higher level of financial performance. Data on 59 companies cross-listed in the Compustat financial data base were obtained from a content analysis of Fortune and Business Week articles during the period 1983-1984. The data partially support the expectations from the Strategic Planning Associates (SPA) matrix, particularly those defining the determinants of differentiation and cost leadership. The findings further suggest the value of an environment/strategy fit to improving the firm's financial performance, particularly its long-term earnings growth.

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