- Elgar original reference
Edited by Giovanni Battista Dagnino
Chapter 2: What is Competitive Strategy? Origins and Developments of a Relevant Research Area in Strategic Management
Vincenzo Pisano and Michael A. Hitt INTRODUCTION Strategy matters because it provides precise directions to a firm. A competitive strategy is a set of decisions necessary to support organizational goals within a specific business. By implementing a certain competitive strategy, a firm defines its position relative to its rivals, which in turn contributes to a competitive advantage. The necessity to embark upon a work on competitive strategy is justified by the huge evolution that has characterized firms’ competitive environments since Michael Porter elaborated one of the first and most well-known business strategies’ classifications.1 Today’s industries may be viewed as complex adaptive systems that evolve through several life stages (birth, growth, maturity and death). The rate of change from one stage to the next can be slowed or amplified because of the impact of a series of factors influencing each industry’s life cycle, such as technological change, environmental uncertainty, competitive dynamics, changes in consumer preferences and so on. These factors – which we examine later in this chapter – need to be analyzed by each firm in order to organize and establish the most effective competitive behavior to adopt in their industry. Having knowledge of these factors is required for all firms because their impact can reshape the nature of the industry (i.e. the industry structure) very rapidly in today’s environment. These changes (sometimes sudden and unpredictable, sometimes slower but incontrovertible) may force firms to readapt their strategies, for instance adopting a different technology or trying to create new sources of competitive advantage....
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