Why pure strategies may be wrong for transition economy firms

• Published in: Strategic management journal Vol. 34; no. 10; pp. 1244 - 1254
• Main Authors: SHINKLE, GEORGE A., KRIAUCIUNAS, ALDAS P., HUNDLEY, GREG
• Format: Journal Article
• Language: English
• Published: Chichester, UK John Wiley & Sons, Ltd 01-10-2013; John Wiley & Sons; Wiley Periodicals Inc
• Subjects: Business strategies; business strategy; Business structures; Corporate strategies; Costs; Economic benefits; Economic costs; Economic growth models; Economic uncertainty; Hypotheses; Industrial market; Institutions; Leadership; Management theory; Market orientation; Mixed strategy; RESEARCH NOTES AND COMMENTARIES; Strategic management; Studies; Transition economies; Transitional economies; Work environment
• ISSN: 0143-2095; 1097-0266
• DOI: 10.1002/smj.2060

The strategy purity hypothesis argues firms will have better results pursuing a single, business-level strategy of either cost leadership or differentiation rather than a mix of both. Since this claim implicitly assumes a developed-economy context, we examine the efficacy of business strategies in transition economies. We find the benefits of a pure strategy are diminished when the institutional environment has a low degree of market orientation but are increased when the institutional environment is more market oriented. Our results indicate a boundary condition for the strategy purity hypothesis and support arguments for an institution-based view of business strategy.