Hybrid strategic groups in construction

Abstract

The aim of strategic group analysis is to question the existence of clusters of firms that implement a similar strategic perspective and performance implications of strategic group membership. Strategic group analysis is usually carried out by conducting statistical cluster analysis in which a company is assigned to a single strategic group. However, all the companies within the same group do not usually adhere to the strategic group recipe at the same degree. Hybrid firms develop their own strategic posture by blending strategic recipes of multiple groups. The objective of this research is to explore the existence of hybrid firms in the Turkish construction industry by using self-organizing maps and fuzzy clustering methods. Three pure and two hybrid strategic groups are found to exist in the Turkish construction industry. There exist significant differences between the performances of companies in different strategic groups. However, the relative performance of firms in pure and hybrid strategic groups cannot be generalized. Firms in pure strategic groups may show higher performance than firms in hybrid strategic groups as the companies that adhere to a strategic group’s recipe tightly may outperform the companies that are ‘stuck in the middle’. In contrast, firms in hybrid groups that employ the best strategies and develop significant capabilities associated with more than one strategic group may outperform the firms that are strictly connected with a low-performing strategic group.