Shoaling (School of Fish) As Competitive Strategy

• Author: Senthil Kumar Muthusamy
• Date: 01 November 2015
• Published date: 01 November 2015
• DOI: http://doi.org/10.1002/jsc.2036

RESEARCH ARTICLE

Strat. Change 24: 499–507 (2015)

Published online in Wiley Online Library

(wileyonlinelibrary.com) DOI: 10.1002/jsc.2036

Copyright © 2015 John Wiley & Sons, Ltd.

Strategic Change: Briengs in Entrepreneurial Finance

Strategic Change

DOI: 10.1002/jsc.2036

Shoaling (School of Fish) As Competitive Strategy1

Senthil Kumar Muthusamy

Middle Georgia State University, Georgia, USA

As rms are witnessing uncertain business conditions and more thrust is being

given to agility, speed, and market responsiveness rather than scale and size,

operating in a shoaling form is a desired strategy across many industries.

Managers of established rms as well as those of emerging industry challengers

continually seek new strategies that ensure better returns with minimal risk.

Whileincumbent industry leaders struggle to sustain innovativeness and market

responsiveness with rm size built to primarily secure cost advantages, emerging

industry challengers search for innovations to break industry barriers. A ‘shoaling

strategy’ (also referred to as disaggregation here), that will enable rms to operate

in a synchronized manner like a school of sh to concurrently achieve scale

economies as well as market responsiveness is proposed in this article. Shoaling

strategy, on the one hand, reduces the opportunity cost of not exploiting emerging

market opportunities and, on the other hand, reduces the investment risk that

accrues due to large-scale integration.

ere is a traditional saying in business that ‘big sh eats small sh,’ which

suggests that a rm’s large scale will ensure higher returns and competitive advan-

tage over rivals. A shoaling strategy, on the contrary, challenges this notion with

the contention that ‘quick sh – albeit smaller – can eat large sh.’ e main

premise of this argument is that a shoaling strategy (school of sh) to organize

the value chain will be the most eective way to accomplish competitive advantage

without large-scale investment commitment.

‘Small is beautiful,’ argued Schumacher (1973) while proposing an aesthetic

and humanistic approach for designing economic, business, and production

systems. With a similar rationale, it is suggested that the small scale has emerged

into an alternative paradigm for building ecient, innovative, and dynamic

models of business. Recent studies attest to this phenomenon, indicating the

emergence of knowledge-centered global enterprises operating as ‘dispersed

network[s] of smaller units’ and large rms being disaggregated and their boundar-

ies becoming shrunk and permeable (Birch, 1987; Contractor et al., 2010;

1 JEL classication codes: B20, D23, D24, L22, L23, M11, M21.

Shoaling can be considered a

unique business strategy, because

it enables a large rm to operate

with the nimbleness of a smaller

rm or it can allow small rms

toeffectively rally their resources

against large rivals.

A shoaling strategy, on the one

hand, reduces the opportunity

cost of not exploiting emerging

market opportunities and, on

theother hand, reduces the

investment risk that accrues due

to large‐scale integration.

A shoaling form enables multi‐

pronged competitive strategies,

permitting a rm to develop

unique or optimal strategy for

each rival it encounters in the

respective market or region.