Competitive Forces and Strategic Choice Decisions: An Experimental Investigation in the United States and Japan

Strategic Management Journal, Vol. 23, No. 10, pp. 969-978, October 2002

Posted: 4 Apr 2006

See all articles by Michael Song

Michael Song

University of Missouri at Kansas City - Department of Organizational Leadership/Marketing

Roger Calantone

Michigan State University

Anthony Di Benedetto

Temple University

Abstract

Managers operate in a complex, uncertain environment and tend to form simplified models in order to cope with this environment and make competitive strategic decisions (i.e., cost-leadership, differentiation, or focus). In this study, we use an experimental design to examine the strategic choice decision-making process in firms located in the United States and Japan. We develop several main-effect propositions regarding managerial selection of competitive strategies, depending on the competitive forces (buyer power, threat of substitutes, threat of new firm entry, and high intensity of rivalry) they are facing. We propose a main effect due to country of origin: Japanese managers prefer a cost-leadership strategy more than American managers do. We also propose several interaction effects regarding cross-national differences in strategy selection between Japanese and U.S. managers. To test our propositions, we collected experimental data from 316 U.S. executives and 459 Japanese executives. We assessed relative impacts of the competitive forces on strategic decision-making using a multilevel regression analysis. The research findings indicated that high buyer power and high substitution threat were associated with a preference for cost-leadership strategies, and Japanese managers were significantly more likely to prefer a cost-leadership strategy than U.S. managers. We also found that under conditions of high buyer power, U.S. managers were less likely than Japanese managers to enter a market with a differentiation or focus strategy. We found little support for other interaction hypotheses, suggesting points of similarity between U.S. and Japanese managers. We conclude with a discussion of theoretical and managerial implications of our results.

Suggested Citation

Song, Michael and Calantone, Roger and Di Benedetto, Anthony, Competitive Forces and Strategic Choice Decisions: An Experimental Investigation in the United States and Japan. Strategic Management Journal, Vol. 23, No. 10, pp. 969-978, October 2002. Available at SSRN: https://ssrn.com/abstract=894263

Michael Song

University of Missouri at Kansas City - Department of Organizational Leadership/Marketing ( email )

318 Bloch School
5110 Cherry Street
Kansas City, MO 64110
United States
816-235-5841 (Phone)
(816)235-6529 (Fax)

HOME PAGE: http://www.entrepreneurship.bloch.umkc.edu/instituteoverview/song.asp

Roger Calantone

Michigan State University ( email )

Agriculture Hall
East Lansing, MI 48824-1122
United States

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