Strategic Group Dynamics: A Behavioral Perspective

This paper investigates the behavioral foundations of strategic group dynamics by analyzing the strategic repositionings of 1,221 U.S. insurance firms over the period 1999 to 2008. Our results provide insights on (1) the factors that motivate firms to leave their own strategic groups, (2) the directions firms take when they reposition, (3) the role of slack resources and (4) how environmental uncertainties moderate the firms' repositionings. We find that underperforming firms are particularly inclined to diverge from their strategic groups and move towards better performing groups within close proximity. In contrast to well-performing firms, they also do not seem to become discouraged by environmental uncertainties from their ambitions to change their strategic group membership.