Identifying Sources of Heterogeneity for Empirically Deriving Strategic Types: A Constrained Finite-Mixture Structural-Equation Methodology

Management Science, Vol. 52, No. 6, pp. 909-924, June 2006

16 Pages Posted: 28 Feb 2012 Last revised: 7 Jun 2016

See all articles by Wayne S. DeSarbo

Wayne S. DeSarbo

Pennsylvania State University

Anthony Di Benedetto

Temple University

Kamel Jedidi

Columbia Business School - Marketing

Michael Song

Barclays Investment Bank

Date Written: 2006

Abstract

The resource-based view (RBV) of the firm suggests that strategic deployment of capabilities allows strategic business units (SBUs) to exploit distinctive competencies and create sustainable competitive advantage. Following the RBV, we propose a new predictive methodology for deriving typologies of SBUs that accommodates heterogeneity among SBUs with respect to their strategic capabilities how effectively they are employed, and performance. Statistically, we devise a constrained finite-mixture structural-equation procedure that simultaneously accounts for firm capabilities, performance outcomes, and the relationships between them. Using data from 216 US SBUs, the results show that our derived four mixed-type solution dominates the four group Miles-Snow classification as well as a number of other nested model solutions, suggesting a more contingency-driven strategic stance adopted by these SBUs.

Keywords: competitive strategy, strategic types, effectiveness performance, structural-equation models, finite mixtures, latent class models

Suggested Citation

DeSarbo, Wayne S. and Di Benedetto, Anthony and Jedidi, Kamel and Song, Michael, Identifying Sources of Heterogeneity for Empirically Deriving Strategic Types: A Constrained Finite-Mixture Structural-Equation Methodology (2006). Management Science, Vol. 52, No. 6, pp. 909-924, June 2006. Available at SSRN: https://ssrn.com/abstract=2012613

Wayne S. DeSarbo

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Kamel Jedidi

Columbia Business School - Marketing ( email )

New York, NY 10027
United States

Michael Song

Barclays Investment Bank ( email )

5 The North Colonnade
London, Canary Wharf E14 4BB
United Kingdom

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