Analysing Technology Strategies: Some Issues

A firm’s technology strategy is influenced by the ‘technology regime’ in which it operates. The regime is broadly defined by a combination of variables capturing industrial structure, nature of technical knowledge and the policy environment. Together, these variables determine the opportunity and appropriability conditions faced by a firm in a well defined industry. Given these broad relationships, firms’ technology strategies may differ across industry groups. In addition, differences in technology strategies within an industry group may be induced by some form specific characteristics like size, nature and level of diversification, technological and other capabilities. Analyses of strategy using the modified the Strucutre-Conduct-Performance paradigm at the industry level have been unsatisfactory; industry heterogeneity gives rise to significant differences in the strategies of firms within the same industry. Dissatisfaction with the definition of industries has resulted in the use the concept of strategic groups, which differentiate a group of firms from others within a given industry in terms of their strategic choices. The value of the concept of strategic group lies in its role as a meaningful explanatory variable between the level of the firm and the industry. It should be capable of delineating extant structures and explaining (or predicting) conduct of firms within an industry. The major research problem with the strategic group approach is how to identify the different strategic groups in practice and how to allocate firms within an industry to the different groups which make up the industry’s industrial structure. The present paper attempts a selective review of studies pertaining to technology strategy to explore parameters which can be used to define strategic groups within an industry. It is argued that nature of technology, industry and firm characteristics have major implications for theory and action related to the content of technology strategy and for the processes through which it is developed and implemented.