High Profit Strategies in Mature Capital Goods Industries: A Contingency Approach

Posted: 17 Nov 2009

See all articles by Donald C. Hambrick

Donald C. Hambrick

The Pennsylvania State University - Smeal College of Business

Date Written: 1983

Abstract

Compares and analyzes the strategies for success for two categories of mature industrial-product environments. The two categories considered are the disciplined capital goods makers and the aggressive makers of complex goods. Data used in the analysis were drawn from the PIMS database. Six position attributes were identified for examination, including market share and capital intensity, while eleven choice attributes were used including value added and current assets. The results are presented in terms of clusters of high profit firms and low profit firms. These results support the proposition that the primary strategies pursued by the high performers in the two groups considered closely resemble Porter's three strategic types – cost leadership, differentiation, and focus. Interestingly, not all three of these strategic types were found in each setting. In fact, none of the high profit aggressive makers demonstrated the cost leadership strategy. In this attempt to contribute to the medium-grain contingency view of strategy, this analysis demonstrates that there are various strategies that lead to high profitability within an industry, but the effective strategies used differ by industry. (SRD)

Keywords: Product differentiation, Capital goods, Mature industries, Firm efficiency, Firm performance, Market strategies, Profit strategies, Firm strategies, Costs, Market share

Suggested Citation

Hambrick, Donald C., High Profit Strategies in Mature Capital Goods Industries: A Contingency Approach (1983). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1504483

Donald C. Hambrick (Contact Author)

The Pennsylvania State University - Smeal College of Business ( email )

University Park, PA 16802
United States
814-863-0917 (Phone)
814-863-7261 (Fax)

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