Cointegration relationships of strategy variables among firms within strategic groups

This study examines the long-term, dynamic equilibrium relationship for strategy variables of firms in strategic groups by conducting a cointegration analysis. Replicating the Nair and Filer (Strateg. Manage. J., 24: 145–159, 2003) methodology and extending it to four industries listed on the Taiwan Stock Exchange, we find that not all of non-stationary strategy variables have the cointegration relationships, and that only the strategy variables of strategic groups in our traditional industries (as compared to our high-tech industries) should have a long-term competitive equilibrium (cointegration relationship). In other words, we can proceed with an error correction model in some traditional industries to map out the relative positions of rival firm strategies and subsequently implement appropriate reactions.

Hsin-Hong KangEmail:

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Shun-Jen Hsueh   is a lecturer in the Department of Finance at Cheng Shiu University, Kaohsiung County, Taiwan. Meanwhile he is a PhD student in the Graduate School of Business Administration at National Cheng Kung University, Tainan, Taiwan. His research interests include strategic management, financial management, and the theory of incentives. Hsin-Hong Kang   is a Professor of the Department of Business Administration at National Cheng Kung University, Tainan, Taiwan. His research interests include in the fields of managerial economics, international trade and investment, and international finance.