Minimizing blind men effect in strategic group research: Visualizing complex turbulent markets

• Author: Hareesh Mavoori,Philippe Rebière
• Published date: 01 May 2019
• Date: 01 May 2019
• DOI: http://doi.org/10.1002/jsc.2262

RESEARCH ARTICLE

Minimizing blind men effect in strategic group research:

Visualizing complex turbulent markets

*

Philippe Rebière

1

| Hareesh Mavoori

2

1

Strategy and Entrepreneurship Department,

ICN Business School, Nancy, France

2

Academics & Research Direction Unit;

Management of Information Systems and

Supply Chains, ICN Business School, Nancy,

France

Correspondence

Philippe Rebière, Strategy and

Entrepreneurship Department, ICN Business

School, 86 rue du Sergent Blandan, Nancy,

54003, France.

Email: philippe.rebiere@icn-artem.com

Abstract

Increasing complexity and turbulence of modern markets calls for nonstatic multi-

theoretical/empirical approaches with intrinsic triangulation and intuitive strategic

cluster visualization to minimize the “blind men effect”to offer unbiased insights for

various stakeholders: corporate strategic managers, policy researchers, and market

legislators. This study presents a refined framework for multi-time-point dynamic

analysis that integrates and superposes multiple dimensions of strategic flexibility,

agility, and orientation for cross-validated insights. It also addresses long-standing

critical debates on strategic group theory via the metaphor of the blind men and the

elephant justifying the need for an in-depth, multiperspective approach. Our

approach reveals the evolution of the market structure (strategic and competitive

dynamics) of the French pharmaceutical market over time by mapping and inter-

preting strategic movements over a turbulent time period.

1|INTRODUCTION

Although strategic group theory, to which a large body of diverse liter-

ature and research has been devoted over the last three decades,

serves as the basis for offering insights into the types and interactions

of the ensemble of strategies deployed in markets, a few dissatisfac-

tions with the theoretical underpinnings have been noted by

researchers (Barney & Hoskisson, 1990; Hatten & Hatten, 1987;

Thomas & Venkatraman, 1988). Most of these criticisms can be traced

back to two key questions raised by Barney and Hoskisson (1990)—

the ontological question: Do strategic groups really exist?, and the

utilitarianquestion: Does performancedepend on strategic group member-

ship? Barney and Hoskisson (1990) argue that the impact of strategic

group theoryresearch will be limited untilthese assertions are tested:

These key assertions in strategic group theory remain

untested for a variety of theoretical and empirical

reasons…until these testsare complete, the contribution

of the strategic groups concept will be unclear. If these

tests do not build credibility for theconcept of strategic

groups,it may be necessary to abandon this conceptand

develop models where the strategically relevant attri-

butes of firmsare those that are idiosyncratic.(p. 187)

Previously, Hatten and Hatten (1987) had taken the

extreme position of stating: “…groups do not exist and

a strategic group is not an anthropomorphized unified

competitive force of many firms. It is merely an analyti-

cal convenience”(p. 329).

These critiques and debates were fueled by differences in mea-

sures used for different studies which raised concerns whether strate-

gic groups are real or simply artifacts of cluster analysis. An

alternative approach to cluster analysis is based on cognitive maps of

industry participants and social constructionist ideas based on the

way in which leadership groups of organizations enact their strategic

competitive environment. Divisions between these competing camps

of scholars appear to have been avoided after studies showed that

these two ways to study strategic groups converge (Osborne,

The authors are thankful to Stéphane Sclison of IMS France - La Défense (Paris) for the data

and Carlo Milana for his precious feedback.

*JEL classification codes: I11, C18, C8, D22.

DOI: 10.1002/jsc.2262

Strategic Change. 2019;28:185–201. wileyonlinelibrary.com/journal/jsc © 2019 John Wiley & Sons, Ltd. 185

Stubbart, & Ramaprasad, 2001). For both these approaches, pitfalls

noted related to application of strategic group theory include the

risk of noncomprehensive or skewed selection of strategic dimen-

sions (e.g., focusing exclusively on downstream or upstream strate-

gies as illustrated by Barney and Hoskisson in the food industry)

and potentially spurious results from purely exploratory or inductive

empirical research (Hodgkinson, 1997; Barney & Hoskisson, 1990;

Leask & Parker, 2006, 2007; Reger & Huff, 1993). To avoid these

pitfalls in practice, the key challenge revolves around the “ideal”

choice of dimensions to use for the construction of the clusters and

also the epistemological positioning in terms of inductive (explor-

atory) or deductive (confirmatory) frameworks that are “most appro-

priate”in order to avoid misinterpretations of reality exemplified by

the metaphor of the blind men and the elephant (Elkiss et al., 2008).

In this metaphor, a group of blind men try to describe an elephant

based on haptic feedback by touching different parts of an elephant.

On account of their limited, skewed sampling, they arrive at diver-

gent perceptions of the form of an elephant as a pillar (leg), fan

(ear), brush (tail), wall (side), and disagree without realizing that had

they superposed their perceptions synergistically, or moved around

to sample more comprehensively, they would have been able to

arrive at a more representative understanding of the totality of the

elephant.

Very often, the presence of information asymmetry, incomplete

data, and limited a priori knowledge about the nature and type of

strategic groups (if any) that exist renders the strategic decision-

making process partly “blind”in the sense of being subj ect to omis-

sion bias. Such omissio n bias could be not only related to the strate-

gic variables themselve s but also to the very definiti on of strategic

groups needed to elucidate the specific topic and questions of inter-

est to the researcher. I n literature, “strategic groups”have been per-

ceptually or conceptual ly defined different ly by various authors

based on: interfirm strategic interactions (Dranove, Peteraf, &

Shanley, 1998), cross-ownership, close market ties, social interac-

tions (Yiu, Lu, Bruton, & Hoskisson [2007] with Hoskisson as a co-

author), similarity of strategies deployed in sp ecific markets (Cool &

Schendel, 1987), co-ordinated behavior via market signaling

(Baumard, 2000), intraindustry asymmetric rivalry (Mas-Ruiz, Ruiz-

Moreno, & Ladrón de Guevara Martínez, 2014) or competition

(Porac, Thomas, Wilson, Paton, & Kanfer, 1995), mobility barriers

(McGee & Thomas, 1986), and managerial cognitive maps (Osborne

et al., 2001; Porac & Thomas, 2002; Reger & Huff, 1993). Therefore,

to minimize the blind men effect during interpretation of findings,

the preferable strategi c group approach needs to be fle xible enough

to accommodate the broad est possible combinati on(s) of strategic

variables and definitions to offer adequate sampling coverage of the

totality of the comple x real-world strategi c space to avoid a skewed

visualization and understanding. In this article, we propose an

approach precisely intended to address this need through the ability

to superpose a multitud e of theoretically or em pirically driven

exploratory or confirm atory frameworks in a visu ally intuitive fash-

ion to permit cross-val idation and richer in sights than through a

conventional single- framework approach to te st the two primary

assertions noted earlier by Barney and Hoskisson (1990).

1.1 |Strategic group theory in the face of turbulence

In additionto the aforementioneddebates and critiques,strategic group

theory is further challenged anew by increasing turbulence and com-

plexity of modern markets. Rapid technological change, deregulation,

and globalization haveintensified competition and increased markettur-

bulence (Siggelkow & Rivkin, 2005). Effective management of modern

firms calls for flexible and agile strategies to stay abreast of the chaotic

environments in which markets emerge,coalesce, fragment, evolve, and

decline.These reduce the stability of market structures,introduce churn

in the key strategic dimensions that influence strategic group member-

ship, and potentially lead to higher cognitive divergence due to

asymmetriesin informationinputs available todifferent firms. Thesefac-

tors couldpotentially reopen theearlier debates and necessitate further

studies to show convergence between empirically extracted strategic

groups andreal-world rapidlyevolving market structures.

The imperative to quickly map a fast-morphing turbulent market

landscape based on incomplete and often asymmetric information

necessitates being able to work with data from compressed time-

periods while trying to increase the information quality through cross-

validated triangulation and broad-based multitheoretical methods

(which, in the absence of a priori knowledge about the “ideal”set of

key strategic dimensions to use for the cluster construction, allow the

simultaneous integration of different sets of “best-guess”strategic

dimensions to offer multiple perspectives).

In brief, our study seeks to achieve two objectives:

1. Propose an integrative strategic group approach with the flexibil-

ity to combine existing and/or new empirically or theoretically

driven strategic frameworks and with built-intriangulation through

their superposition in an intuitively visual manner to offer action-

able insights for industrial managers,policy makers, academics, and

other stakeholders while minimizing the omission biasor blind men

effect, that e xists even in the abse nce of turbulence.

2. Verify that strategic groups represent a relevant theoretical construct

for complex markets even under turbulent conditions (where short-

term emergent trends need to be rapidly analyzed to permit strategic

decision making) and highlight the validity of strategic groups as clas-

sification elements for better understanding of the structure of com-

petition by using the French pharmaceutical industry as a testbed to

study intragroup and intergroup strategic group movements.

This article is structured as follows. Drawingfrom foundational the-

oretical and empirical literatureon strategic groups, we begin by devel-

oping several propositions to address key critiques and challenges in

applying strategic group theory.The second part presents a visual stra-

tegic cluster mapping and analysis and interpretation of the temporal

shifts using the French pharmaceutical market as a real-life application.

The third part presents our proposed integrative multitheoretical

framework that allows superposition of multiple theoretical and

186 REBIÈRE AND MAVOORI