A tale of two paths: Performance heterogeneity driven by resource employments in the pharmaceutical industry

Based on a strategic group concept, the purpose of this paper is to examine the effects of resource employments on persistent performance in the pharmaceutical industry.

In departing from previous research, this paper takes an inverted approach to mapping firms into heterogeneous groups with distinct long-term performance trajectories, given that strategic profiles and characteristics were unknown. The methodology used is latent class growth analysis, a person-centred approach focussing on the relationships among individuals. Regression models were subsequently used to examine the strategy variables-performance relationship between groups and within groups.

First, firms were grouped into upper-performance and lower-performance trajectory subpopulations. Second, the effects of marketing and R&D on performance significantly differed within subpopulations and presented a U shape or an inverse U shape relation. Third, the employment of R&D resources was more effective in the lower-performance trajectory group, the average scale of which is smaller than in the upper-performance trajectory group. On the contrary, the employment of marketing resources had a greater benefited in the upper-performance trajectory group.

Intangible strategy features are ignored due to measure problem in the long period.

Strategic competition is more significant among intragroup members than inter groups. That the U-shape or invert U-shape effects of resource employments on performance among intragroup members reminds the researchers that the law of diminishing return or increasing return should not be ignored when test the group-performance relationship in future research.

The current study introduces an effective approach to investigate the strategic group concept.