Contingency view on technological differentiation and firm performance: evidence in an economic downturn |
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| Authors: | Hsueh-Liang Wu Bou-Wen Lin Chung-Jen Chen |
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| Institution: | Graduate Institute of Business Administration, National Cheng Kung University, 1 Ta-Hsueh Rd., Tainan, Taiwan 701.;; Institute of Technology Management, National Tsing Hua University, 101, Section 2 Kuang Fu Rd., Hsinchu, Taiwan 30013. |
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| Abstract: | Although the importance of strategy for firm performance has been studied, little evidence has been offered regarding this linkage in hostile environments characterized by a lack of exploitable market opportunity and fiercer competition. This study aims to examine the viability of strategic postures of technological differentiation in such a setting using data from 1,054 samples across 32 industries in 30 countries during 2001–2002, when global economies suffered a downturn. The empirical results show that differentiation-oriented firms underperformed efficiency-oriented ones during this period. However, in the face of deteriorating market conditions, a strategic orientation toward technological differentiation, in concert with an internal commitment to R&D investment or external munificence toward technological opportunity, yields better performance. Finally, this study finds that firms with tight coupling between differentiation and efficiency outmaneuver those with a pure strategy or no strategy at the time of an economic downturn. |
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