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Why pure strategies may be wrong for transition economy firms

Authors

  • George A. Shinkle,

    1. Australian School of Business, The University of New South Wales, Sydney, New South Wales, Australia
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  • Aldas P. Kriauciunas,

    Corresponding author
    1. Purdue University, Krannert School of Management, Krannert Center, West Lafayette, Indiana, U.S.A.
    • Australian School of Business, The University of New South Wales, Sydney, New South Wales, Australia
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  • Greg Hundley

    1. Purdue University, Krannert School of Management and Center for International Business Education and Research, West Lafayette, Indiana, U.S.A.
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Correspondence to: Aldas P. Kriauciunas,

Purdue University, Krannert School of Management, Krannert Center, Room 208, West Lafayette

IN 47907–2056, U.S.A. E-mail: akriauci@purdue.edu

Abstract

The strategy purity hypothesis argues firms will have better results pursuing a single, business-level strategy of either cost leadership or differentiation rather than a mix of both. Since this claim implicitly assumes a developed-economy context, we examine the efficacy of business strategies in transition economies. We find the benefits of a pure strategy are diminished when the institutional environment has a low degree of market orientation but are increased when the institutional environment is more market oriented. Our results indicate a boundary condition for the strategy purity hypothesis and support arguments for an institution-based view of business strategy. Copyright © 2013 John Wiley & Sons, Ltd.

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