Distinctive Marketing, IT Capabilities, and Strategic Types: A Cross-National Investigation

Distinctive Marketing and Information Technology Capabilities and Strategic Types: A Cross-National Investigation ABSTRACT Keywords: strategic typology, firm capabilities, cross-national, Japan, China The authors examine the relationship between strategic type and development of distinctive marketing, market-linking, technology, and information technology (IT) capabilities to implement innovation strategy. They hypothesize that prospectors must build technical and IT capabilities, whereas defenders develop market-linking and marketing capabilities. The authors collect data from 709 firms across the United States, Japan, and China.They find support for their capability hypotheses, as well as for some of their cross-national hypotheses that are based on cultural and business environment differences among the three countries. In particular, they find support for the hypotheses that Japanese firms have greater technology and IT capabilities than U. S. firms of the same strategic type. Th ey conclude with implications for management. The strategic typology of Miles and Snow (1978) has received much attention in the marketing and management literature over the past two decades (e. g. Conant, Mokwa, and Varadarajan 1990; Dyer and Song 1997, 1998; Griffin and Hauser 1996; Gupta, Raj, and Wilemon 1986; McDaniel and Kolari 1987; McKee, Varadarajan, and Pride 1989; Parry and Song 1993, 1994; Ruekert and Walker 1987; Song and Xie 2000; Walker et al. 2003). Almost 30 years after its initial appearance in the literature, their typology is viewed widely as having stood the test of time and is still the most popular and commonly accepted model of strategic types in the management literature, having been applied in many different industry settings (DeSarbo et al. 005; DeSarbo et al. 2006; Hambrick 2003). Miles and Snow envision strategy as the patterns in the decisions by which a strategic business unit (SBU) aligns itself with its environment, and they categorize SBUs according to these patterns. The critical underlying variable in their typology is the rate of change in an SBU’s products or markets. Using an exploratory empirical study, Miles and Snow propose four strategic types—prospectors, analyzers, defenders, and reactors—and suggest that each of the first three types chooses a different competitive strategy ith respect to products and/or markets: Prospectors will innovate technologically and seek out new markets, analyzers will prefer a â€Å"second-but-better† strategy, and defenders will focus on maintaining a secure niche in a relatively stable Michael Song, Robert W. Nason, and C. Anthony Di Benedetto Journal of International Marketing  © 2008, American Marketing Association Vol. 16, No. 1, 2008, pp. 4–38 ISSN 1069-031X (print) 1547-7215 (electronic) 4 product or service area.Miles and Snow suggest that all three of these strategic types can be successful if the SBU matches its strategy to the competitive en vironment and develops and deploys appropriate capabilities. Capabilities have been broadly defined as â€Å"complex bundles of skills and accumulated knowledge that enable firms [or SBUs] to coordinate activities and make use of their assets† (Day 1990, p. 38). In this article, we examine the relationship between Miles and Snow’s (1978) strategic type and four capability constructs: technology, market linking, marketing, and information technology (IT).Day (1994) suggests that both technology and market-linking capabilities (or â€Å"insideout† and â€Å"outside-in† capabilities, respectively) are critical to sustained competitive advantage and superior performance (see also Day 1990; Day and Wensley 1988). Technology capabilities, which enable the organization to improve production process efficiencies and ultimately reduce its costs and increase its competitiveness, include financial management, cost control, technology development, logistics, manufact uring, and other processes with an internal emphasis.Market-linking capabilities, which enable the organization to use its technology capabilities to exploit marketplace opportunities, include market sensing, channel bonding, customer linking, technology monitoring, and spanning processes such as purchasing and new product development (Day 1994). Marketing capabilities, such as customer and competitive knowledge, skill in market segmentation and targeting, and effective marketing program design, should also be related to an organization’s performance. In a ioneering study, Conant, Mokwa, and Varadarajan (1990) link marketing capabilities to the four strategic types and find that prospectors are superior in marketing capabilities. The marketing literature suggests that obtaining market and competitive information and diffusing it throughout the organization lead to better market orientation, better performance, and sustainable competitive advantage (Day 1994; Jaworski and Kohl i 1993). The literature also suggests that IT capabilities are increasingly important means to these ends.Research in both the marketing and new product streams has recognized the difficulty of communication across functional boundaries and has identified ways to improve both the quantity and quality of information (Dyer and Song 1997, 1998; Griffin and Hauser 1992, 1993, 1996; Montoya-Weiss and Calantone 1994; Parry and Song 1993, 1994; Ruekert and Walker 1987; Song, Thieme, and Xie 1998; Song and Xie 2000; Swink and Song 2007). All four capability constructs include significant marketing processes. The original, exploratory Miles and Snow (1978) research finds relationships between firm capabilities andInformation Technology Capabilities and Strategic Types 5 strategic types in a limited number of industries. A subsequent study in this research stream empirically examines the relationships between marketing capabilities and strategic types and also validates a scale for assessing a business unit’s strategic type (Conant, Mokwa, and Varadarajan 1990). Two recent studies by DeSarbo and colleagues (2005, 2006) propose and empirically test models that include a range of capabilities in addition to marketing capabilities.DeSarbo and colleagues (2005) use SBU data from three countries (the United States, China, and Japan) to derive a descriptive strategic typology that improves on the Miles and Snow typology in terms of explanatory power; this study is extended by DeSarbo and colleagues (2006) to a predictive model that examines causalities between strategic capabilities and SBU performance. The first objective of the current study is to examine the relationships between an SBU’s strategic type and its development of the four distinctive organizational capabilities technology, market linking, marketing, and IT). This research extends the previously mentioned research stream (Conant, Mokwa, and Varadarajan 1990; DeSarbo et al. 2005; DeSarbo et al. 200 6) in that we seek to quantify and to better understand these relationships. The second objective is to build and test hypotheses regarding cross-national differences and their effects on the relationships between strategic type selection and the capabilities, a topic in which no empirical work has been conducted so far. We gather empirical data from three countries: the United States, China, and Japan.As China and Japan are the two largest East Asian economies, and together with the United States make up the three largest economies worldwide as measured by purchasing power (World Bank 2000), it is important to examine how firms from these countries compare with respect to their capabilities and strategies. Although DeSarbo and colleagues (2005) use a three-country database to build their descriptive typology, the research does not use the extant international marketing and management literature to build or test hypotheses of cross-national differences.We believe that the cross-nati onal hypothesis testing constitutes a clear extension to the work of Conant, Mokwa, and Varadarajan (1990) and DeSarbo and colleagues (2005, 2006). We first propose a set of four hypotheses relating an SBU’s relative capabilities to its selection of strategic type, as well as four additional hypotheses expressing expected crossnational differences in the magnitudes of the capabilities. We then test these hypotheses using a data set of 709 managers from the United States, Japan, and China. Our empirical results largely confirm these hypotheses. We conclude by 6 Michael Song, Robert W. Nason, and C.Anthony Di Benedetto providing theoretical implications and some possible prescriptions for managers seeking to improve their organization’s strategy selection. In this section, we define the Miles and Snow (1978) typology and discuss the implication of the strategic selection. We then define the four capability constructs and develop four hypotheses relating the capability co nstructs to strategic type. The Miles and Snow (1978) strategic types differ in the rate at which they change products or markets in response to environmental change. According to Miles and Snow, prospectors are the leaders of change in their industry.They operate within a broad product-market domain that undergoes periodic redefinition (Conant, Mokwa, and Varadarajan 1990; Dyer and Song 1997). They value being â€Å"first in† in new product and market areas as market pioneers even if not all these efforts prove to be highly profitable (Robinson and Fornell 1985; Robinson, Fornell, and Sullivan 1992). They often need to respond rapidly to early signals involving areas of opportunity, and these responses often lead to a new round of competitive actions. Nevertheless, prospectors may not maintain market strength in all the areas they enter.They compete principally through launching new products and meeting new marketplace opportunities. Consequently, they devote significant res ources to new product development, market research, and other marketing expenses (Hambrick 1983; McDaniel and Kolari 1987; Shortell and Zajac 1990; Walker et al. 2003). Prospectors also rely on close ties with the channel of distribution to anticipate customer needs and environmental changes (Walker et al. 2003). Sony’s audio products SBU, which is responsible for innovations such as the Walkman, is an example of a typical prospector organization.Defenders attempt to locate and maintain a secure niche in a relatively stable product or service area. They are less risk oriented than prospectors; typically they do not look outside well-defined product-market domains for new opportunities (McDaniel and Kolari 1987; Shortell and Zajac 1990). Rather than invest time in new product or market development, they tend to offer a more limited range of products or services than their competitors, and they focus on resource efficiency and cost-cutting process improvements to try to protect their domain by offering higher quality, superior service, lower prices, and so forth (Hambrick 1983).Defenders are normally not at the forefront of developments in the industry. Walker and colleagues (2003) distinguish between two defender strategies: price cutting and competitive differentiation. Unlike Sony’s audio SBU, Matsushita’s audio division, a typical defender organization, is likely to focus not on developing products but rather on cutting manufacturing costs (Lieberman and Montgomery 1988). HYPOTHESIS DEVELOPMENT The Miles and Snow Strategic Typology Information Technology Capabilities and Strategic Types 7 Analyzers show qualities of both defenders and prospectors.They attempt to maintain a stable, limited line of products or services, while moving out quickly to follow a carefully selected set of the more promising new developments in the industry (Conant, Mokwa, and Varadarajan 1990; Dyer and Song 1997). Analyzers are seldom â€Å"first in† with new products or services. However, by carefully monitoring the actions of major competitors in areas compatible with their stable product-market base, they are frequently â€Å"second in† with a more cost-efficient product or service (Conant, Mokwa, and Varadarajan 1990; Dyer and Song 1997).For example, they might develop a new product in a stable market domain or sell established products in new geographic markets or through new distribution channels. They can operate in different domains, perhaps one stable and one more turbulent (McDaniel and Kolari 1987). Miles and Snow (1978, p. 73) characterize analyzers as â€Å"avid followers of change,† always ready to pursue a promising, emerging product or market with a later-entrant, â€Å"second-but-better† strategy (Robinson, Fornell, and Sullivan 1992).They can initiate product and/or market development, but less often than prospectors; at the same time, they can focus on stability and efficiency, but to a lesser extent than defenders (Hambrick 1983). Reactors typically lack long-term plans and any consistent strategy, instead reacting to environmental pressures as necessary (McDaniel and Kolari 1987). Empirical study has suggested that prospectors, analyzers, and defenders all perform well (Conant, Mokwa, and Varadarajan 1990; Miles and Snow 1978) and generally outperform reactors.We are interested primarily in the relative capabilities of the three potentially successful archetypal strategic types, so we do not explicitly include reactors in our hypotheses. We have gathered data from reactor organizations, however, and included them in our analysis section. To create economic value, sustain competitive advantage, and achieve superior profitability, an organization requires a wide range of capabilities. Although it would be impossible to list them all, certain categories of capabilities common to many organizations have been identified and used in prior research (e. . , Day 1994; DeSarbo et al. 2006). Technology capabilities—such as financial management, cost control, technology development, and logistics—enable an organization to keep costs down and to differentiate its offerings from those of competitors. Market-linking capabilities—such as sensing market trends, channel and customer linking, and technology monitoring—enable an organization to be responsive to changing customer needs and to use its technical capabilities effectively to exploit external possibilities (Day 1994). Marketing capabilities—such as skill in segmentation,Organizational Capabilities 8 Michael Song, Robert W. Nason, and C. Anthony Di Benedetto targeting, pricing, and advertising—enable the organization to take advantage of its market-sensing and technological capabilities and to implement effective marketing programs (Song and Parry 1997a, 1997b). Finally, IT capabilities enable the organization to diffuse market information effectively across all rel evant functional areas so that it can direct new product development. Not all organizations will have all of these capabilities (Day and Nedungadi 1994; Day and Wensley 1988).Furthermore, organizations will solidify and even develop their particular capabilities through time according to their strategic type, as Miles and Snow’s (1978) classification posits. For example, prospectors tend to compete by anticipating new product or marketplace opportunities and by implementing technological innovation; continued, successful prospecting will have the effect of strengthening inside-out and IT capabilities. The subsequent sections explore the hypothesized relationships between strategic type and organizational capabilities.Market-linking and -sensing capabilities enable the organization to compete by sensing market changes effectively, anticipating shifts in the market environment, creating and retaining durable links with customers, and creating strong bonds with channel members s uch as wholesalers and retailers. These capabilities enable the organization to sense marketplace requirements before competitors and to connect its other capabilities to the external environment (Day 1994). Organizations of all strategic types need well-developed market-linking capabilities.For defenders, however, such capabilities are particularly critical because these organizations must correctly and quickly anticipate changes in the market and their customers’ needs if they are to maintain their prominence within their existing product-market domain (Conant, Mokwa, and Varadarajan 1990). Because defenders attempt to locate and maintain a secure niche in a relatively stable product or service area, they tend to offer a more limited range of products or services than their competitors, and they try to protect their domain by offering higher quality, superior service, lower prices, and so forth.To be effective in achieving these objectives, defenders must possess a high lev el of market-linking capabilities. Walker and colleagues (2003) also note that tracking changes in customer needs and competitive behavior is especially important to a differentiated defender strategy. They note that defenders should be strongest in business functions related to their competitive strategy, such as market sensing and linking. Although prospectors should also have good market-linking capabilities, their ability to sustain competitive advantage is more closely tied to the development of new products, markets, and technologies.Therefore, although Market-Linking Capabilities Information Technology Capabilities and Strategic Types 9 market-linking capabilities are important to prospectors and analyzers, defenders will need them most. Our expectations about organizational strategy types and market-linking capabilities (relative to competitors) can be summarized as follows: H1: Along the prospectors–analyzers–defenders continuum, prospectors have the least rel ative marketlinking capabilities, nd defenders have the greatest. Technical capabilities involve the manufacturing processes, technology, new product development, production facilities, and forecasting of technological change in the industry. They are contained within the organization and activated by market, competitor, and external challenges and opportunities. By increasing efficiency in the production process, they can reduce costs and improve consistency in delivery and, therefore, competitiveness (Day 1994).Although technical capabilities are likely to be important for all strategic types, they should be most important to prospectors, which prosper in unstable, changing environments, especially those marked by rapid technological change such as biotechnology, medical care, and aerospace (Walker et al. 2003). Because prospectors use a first-to-market strategy and typically operate within a broad product-market domain that undergoes periodic redefinition (Robinson, Fornell, and Sullivan 1992), they must be able to develop new technologies, products, and markets rapidly (Conant, Mokwa, and Varadarajan 1990; McDaniel and Kolari 1987).Walker and colleagues (2003) note that prospectors require strength in product research and development (R&D) and product engineering, and they perform best when the amount spent on product R&D is high. Because defenders typically locate and maintain a secure niche in a relatively stable product or service area, they tend to be less interested in developing new products and technologies and therefore will depend less on technical capabilities. Formally, H2: Along the prospectors–analyzers–defenders continuum, prospectors have the greatest relative technical capabilities, and defenders have the least.Marketing capabilities include knowledge of the competition and of customers and skill in segmenting and targeting markets, in advertising and pricing, and in integrating marketing activity. Conant, Mokwa, and Varadaraj an (1990) find that prospector firms have distinctive competencies in marketing planning, allocation of marketing resources, revenue forecasting, and control of marketing activities. However, although both prospectors and defenders require skills in Technical Capabilities Marketing Capabilities 10 Michael Song, Robert W. Nason, and C. Anthony Di Benedetto arketing and market research to succeed (Song and Parry 1997a, b), certain marketing capabilities will be of most importance to defender firms because they are most concerned about protecting products and retaining customers (McDaniel and Kolari 1987). Walker and colleagues (2003) note that differentiated defenders must be able to communicate their products’ unique advantages so as to sustain customer satisfaction and loyalty. Low-cost defenders must be able to standardize effective marketing programs across all customer segments so as to reduce overall marketing costs.Thus, because both differentiated and low-cost defenders rely on marketing capabilities, they should develop them to a greater degree than should other strategic types. H3: Along the prospectors–analyzers–defenders continuum, prospectors have the lowest relative marketing capabilities, and defenders have the greatest. A firm active in product development must be able to gather technical and market information effectively and disseminate it throughout the organization (Jaworski and Kohli 1993; Kohli and Jaworski 1990; Narver and Slater 1990).These IT capabilities facilitate internal communication and cross-functional integration (Song et al. 2007). Better IT is associated with greater strategic flexibility and, ultimately, with better performance and greater organizational success (Bharadwaj, Bharadwaj, and Konsynski 1999; Swanson 1994). Day (1994) notes that more creative use of IT should lead to better firm performance, and other researchers have found that better information transmission across functional areas leads to m ore successful new products (Griffin and Hauser 1992, 1993, 1996; Gupta, Raj, and Wilemon 1986; Moenaert and Souder 1996).As we discussed previously, prospectors typically operate within a broad product-market domain that undergoes periodic redefinition. They also rely on the rapid development of new products and new markets (Robinson, Fornell, and Sullivan 1992). Therefore, prospectors need relatively high IT skills to respond rapidly to early signals involving areas of opportunity. Miles and Snow (1978) note that prospectors tend to have the most complex coordination and communication mechanisms.Because of the technologically advanced nature of the products they develop, prospectors are also more likely to encounter conflicts among marketing, R&D, engineering, and possibly other functional areas (Dyer and Song 1997, 1998; Walker et al. 2003). This makes even more critical prospectors’ ability to communicate as effectively as possible and to ensure the free flow of informati on throughout the organization. In addition, prospectors might need greater strategic flexibility than other strategic types because they must constantly monitor and target emerging technology IT CapabilitiesInformation Technology Capabilities and Strategic Types 11 and product opportunities; better IT contributes to greater strategic flexibility (Bharadwaj, Bharadwaj, and Konsynski 1999). Formally, we propose the following: H4: Along the prospectors–analyzers–defenders continuum, prospectors have the greatest relative IT capabilities, and defenders have the lowest. CROSS-NATIONAL HYPOTHESES The cultural differences among Japan, China, and the United States are well documented in the literature (Hofstede 1980; Tse et al. 1988). Japanese and Chinese cultures are collectivistic and long-term oriented, whereas the U.S. culture is individualistic and short-term oriented. Japan and China emphasize group harmony and cohesiveness, whereas the United States values freedom of c hoice and competition (Hofstede 1980). The business environments in both Japan and China reflect these cultural tendencies. In Japan, the Ministry of Economy, Trade, and Industry (METI) encourages investment in key technologies and fierce competition among Japanese firms in selected industries (Kagono et al. 1985). These policies have helped strengthen Japan’s competitiveness in the global marketplace. In addition, METI’s olicies have recently encouraged new initiatives, such as growth in IT and support for environmentally friendly products (Elder 2000). The keiretsu, or interorganizational business groups, also strongly support technology development in Japan (Lai 1999; Lincoln, Gerlach, and Ahmadjian 1996; Miwa and Ramseyer 2002). A major manufacturer might work cooperatively with its suppliers and distributors (vertical keiretsu) or with other manufacturers (horizontal keiretsu) to perfect a new technology; consider, for example, the consortium of Japanese firms tha t worked with Sony in the development of the global positioning system (Campbell 1999).In addition to technology and IT capabilities, Japanese firms in many industries possess formidable marketing and marketlinking capabilities. Their cultural predilection toward group harmony and cohesiveness has led Japanese firms to value long-term relationships with their suppliers, distributors, and customers (Kagono et al. 1985; Kotabe et al. 1991; Smith, Peterson, and Wang 1996; Tse et al. 1988). These relationships enable Japanese manufacturers to link with their customer markets effectively and to develop appropriate marketing strategies and programs.Since the end of World War II, Japanese firms have closed the gap between themselves and their U. S. competitors in terms of marketing capabilities, in some industries surpassing them. As an example, Japanese carmakers are renowned for their excellence in customer research. Use of observational research techniques has enabled Toyota, Nissan, an d Honda to develop cars that are 12 Michael Song, Robert W. Nason, and C. Anthony Di Benedetto ideally suited to the unique demands of the U. S. marketplace (Shirouzu 2001).Japanese carmakers were also among the first to use Quality Function Deployment techniques (e. g. , the House of Quality; see Hauser and Clausing 1988), which ensure that market needs drive all the subsequent steps in product development and manufacturing processes, including product engineering, process planning, and production (Griffin 1992). It was the U. S. carmakers that had to learn these techniques from Japanese carmakers to catch up (Dyer 1996). This literature suggests that Japanese firms are at least equal to their U. S. ompetitors in terms of marketing capabilities and, because of their cultural tendency toward group harmony and cohesiveness, could possess even stronger market-linking capabilities. The Chinese business environment differs from that of Japan, though the two countries share some cultural traits. Despite recent economic reforms, many Chinese firms remain state-owned enterprises, characterized by shared government and firm authority (Schermerhorn and Nyaw 1991). Since the 1970s, investment in technology and innovation has been supported strongly by government policy to stimulate Chinese economic growth and to boost global competitiveness.As decentralization has occurred, stateowned enterprises have increased their decision-making authority on issues such as products and prices (Henley and Nyaw 1986; Laaksonen 1988; Schermerhorn and Nyaw 1991), and smaller collective enterprises with even less government control have become more prevalent (Parry and Song 1994). Nevertheless, Chinese government policy continues to prioritize technology capability investment. However, our review of the literature on Chinese state-owned enterprises reveals little evidence that the Chinese government has prioritized or funded marketing, market-linking, or IT capabilities.In summary, the l iterature suggests that Japanese government and keiretsu policy favor technology and IT capability development, whereas Chinese government policy favors technology development. In addition, the marketing and marketlinking capabilities of Japanese firms are well established, whereas Chinese governmental policy has not supported the development of these capabilities On the basis of this evidence, we propose the following: H5: Japanese firms have greater market-linking capabilities than U. S. and Chinese firms of the same strategic type.H6: Japanese and Chinese firms have greater technology capabilities than U. S. firms of the same strategic type. Information Technology Capabilities and Strategic Types 13 H7: Japanese and U. S. firms have greater marketing capabilities than Chinese firms of the same strategic type. H8: Japanese firms have greater IT capabilities than U. S. firms of the same strategic type. Note that H5–H8 can be tested for each of the four strategic types separa tely—thus the qualifier â€Å"of the same strategic type. † RESEARCH DESIGNInstrument Development and Cross-Cultural Validation Process Our constructs are defined using competitive capability theory (Conant, Mokwa, and Varadarajan 1990; Day 1994) and must be operationalized using valid, reliable measures (Churchill 1979). We used a four-step instrument development procedure to develop new scales for market-linking, technical, marketing, and IT capabilities and to ensure crosscultural validity. (For a fuller discussion of the instrument development procedure, see DeSarbo et al. 2005. ) Step 1: Measurement Items for Each Capability Type.We identified relevant measurement scales from the marketing literature. We grouped the scale items derived from these scales into the four capability types. To this initial pool of items for each capability type, we added new items in instances in which we believed that not all the dimensions of the construct had been sufficiently covere d. To ensure content validity and appropriateness of items, we refined the scales through in-depth focus interviews in two SBUs. Managers at these SBUs were asked their opinions about salient issues in SBU capabilities.They were also asked to evaluate whether the theoretical model described their own experiences adequately. Next, managers commented on their perceptions of the relevance and completeness of the scale items drawn from the literature review and previous case studies. Finally, we tested and validated the Conant, Mokwa, and Varadarajan (1990) strategic typology scale. Step 2: Scale Development. Following Churchill (1979), we assessed construct validity of the scales being developed and corrected any scale items that might still be ambiguous.Seven judges (two professors and five doctoral students with background in measurement development) sorted the items from the first step into the four capability scales, following Davis’s (1986) procedure. Construct convergence and divergence were examined by assessing interrater reliability (for assessment statistics, see DeSarbo et al. 2005). Step 3: Instrument Pretesting. Using the judges’ comments, we reexamined all scale items and eliminated inappropriate or ambiguous items or any that were inconsistently classified.We then combined the four scales into an overall instrument 14 Michael Song, Robert W. Nason, and C. Anthony Di Benedetto for additional pretesting. We distributed the instrument to 32 managers in the two SBUs to further assess scale reliability and validity; two problematic items were deleted. Then, the instrument was distributed to 41 executive MBA students taking a new product development class. We subjected the results to factor analysis and assessment of reliability. (Factor loadings and reliability test results are available on request. We deleted two more items, which resulted in a questionnaire including all items judged to have high consistency and face validity. Step 4: Cr oss-Cultural Validation of the Research Instrument. To ensure that the translation was accurate and that the question meanings were not altered, we used a double-translation method to translate the questionnaire into Japanese and Chinese (Adler 1983; Douglas and Craig 2006; Sekaran 1983). After translation, we conducted field research in six Japanese firms and two Chinese firms in which we examined SBU capabilities and innovation strategies.The purposes of the field research were to establish the content validity of the concepts and the hypothesized relationships among the constructs; to establish equivalence of the constructs, concepts, measures, and samples; and to assess the possibility of cultural bias and response format bias (Douglas and Craig 2006). The field research studies were conducted over a ninemonth period with multiple visits to the companies. The field research studies were important for several reasons. First, they facilitated an assessment of construct (conceptual , functional, and category) equivalence.Second, they indicated that the measurement scales were appropriate for studying capability and strategic types in Japanese and Chinese context. Third, the field research results suggested that it is more appropriate to ask the respondents to rate their SBU on each of the capability scale items relative to their major competitors (for exact wording, see Appendix A). Appendix A provides a list of the final measure measurement items and the response format employed in the questionnaire. The following sections briefly summarize the four scales.Market-Linking Capabilities. We measured market-linking capabilities using several scale items derived from Day (1994). The items measure relative capability in creating and managing durable customer relationships, creating durable relationships with suppliers, retaining customers, and bonding with channel members. Technical Capabilities. We also measured technical capabilities according to a set of scale i tems derived from Day (1994). These items measure relative capabilities in the prediction ofInformation Technology Capabilities and Strategic Types 15 technological change, technology and new product development, manufacturing processes, and production facilities. Marketing Capabilities. We measured marketing capabilities using a set of scale items derived from Conant, Mokwa, and Varadarajan (1990). These items measure knowledge of customers, knowledge of competitors, integration of marketing activities, skills in segmentation and targeting, and effectiveness of pricing and advertising programs. IT Capabilities.We defined IT capabilities as the relative capabilities that help an organization create technical and market knowledge and facilitate intraorganizational communication flow. We developed items to measure the possession of IT systems for new product development, cross-functional integration, technology and market knowledge creation, and internal communication. We subjected th ese items to the measurement development procedure described previously. We obtained the data from a large-scale mail survey of the companies listed in Ward’s Business Directory, the Directory of Corporate Affiliations, and the World Marketing Directory.We drew a proportionate-stratified random sample of 800 firms from each country, using each industry as a stratum. The data collection consisted of three stages: presurvey, data collection on SBU strategies, and data collection on relative capabilities. In the first stage, we sent a one-page survey and an introductory letter requesting participation to all the selected firms and offered a list of available research reports to participating firms. The letter requested each firm to select an SBU/division for participation and provide a contact person in that SBU/division.Of the 2400 firms contacted, 392 in the United States, 429 in Japan, and 414 in China agreed to participate and provided the necessary contacts at the SBU/divis ion level. In the second stage, on strategic types, we contacted the designated SBU managers directly and mailed a questionnaire and personalized letter to each manager. We employed a three-wave mailing on the basis of the recommendations of Dillman (1978). We received data on the multi-item measures of the strategic types from 308 firms in the United States, 354 firms in Japan, and 352 firms in China.Two items at the end of the instrument assessed respondents’ confidence in their ability to answer the questions. Respondents with a low level of confidence (less than 6) were excluded from the final sample. In the third stage, on the four capabilities, we sent another questionnaire to the SBU managers, followed again by a three-wave mailing. This time, we received data on the rela- Data 16 Michael Song, Robert W. Nason, and C. Anthony Di Benedetto tive capabilities from 216 U. S. firms, 248 Japanese firms, and 245 Chinese firms.These sample sizes represent response rates of 27. 0% in the United States, 31. 0% in Japan, and 30. 6% in China. The final sample includes the following industries: computer-related products; electronics; electric equipment and household appliances; pharmaceuticals, drugs, and medicines; machinery; telecommunications equipment; instruments and related products; air conditioning; chemicals and related products; and transportation equipment. The majority of participating SBUs/divisions had annual sales of $11 million–$750 million and 100–12,500 employees.Appendix A presents all of the measures used in this study. We asked respondents to rate their SBU on each of the capability scale items relative to their major competitors. We used an 11-point scale to elicit levels of agreement, with values ranging from 0 (â€Å"much worse than our competitors†) to 10 (â€Å"much better than our competitors†). We used the data collected in the second phase of the collection process to classify the SBU/division into the four strategic types. We adopted the 11-item scale from Conant, Mokwa, and Varadarajan (1990).We classified the SBU’s strategic type (prospector, analyzer, defender, or reactor) using the â€Å"majority-rule decision structure† (for details, see Conant, Mokwa, and Varadarajan 1990) with the following modification: For an SBU to be classified as a prospector or a defender, it must have at least seven â€Å"correct† answers. Before testing our hypotheses, we performed principal factor analyses with Varimax rotation on all the variables measuring the four relative capabilities for all three countries. To assess measurement invariance, we examined factor structure similarity (Mullen 1995).We retained variables using the following criteria: (1) Each factor must contain the same scale items across all three countries, (2) each item’s factor loading must be comparable across all three countries, and (3) for each factor, the factor loading must exceed . 40. This procedure produced four factors and reduced the total number of variables to 21. We made comparisons among the factor structures of the three countries using visual inspection, the salient similarity index, and Pearson correlation of the factor loadings across the three countries. The factor loadings appear in Table 1.As indicated, all factors are distinguishable and well defined for all three countries. The percentage of the variance explained by the four factors is 72% for the United States, 71% for Japan, and 69% for China. The examination of the diagonal of the factor score covariance matrix indicates that all factors for the three Measures ANALYSIS AND RESULTS Factor Analysis of the Capability Scales Information Technology Capabilities and Strategic Types 17 Table 1. Principal Component Factor Analysis: Rotated Factor Patterns United States Market-Linking Capabilities Market-sensing capabilities Customer-linking (i. e. creating and managing durable customer relationships) capab ilities Capabilities of creating durable relationships with our suppliers Ability to retain customers Channel-bonding capabilities (creating durable relationships with channel members such as wholesalers, retailers) Eigenvalue of this factor % variance explained by this factor Technical Capabilities Manufacturing processes Technology development capabilities Ability of predicting technological changes in the industry Production facilities New product development capabilities Eigenvalue of this factor % variance explained by this factor Marketing Capabilities Knowledge of competitors Effectiveness of advertising programs Integration of marketing activities Skill to segment and target markets Effectiveness of pricing programs Knowledge of customers Eigenvalue of this factor % variance explained by this factor IT Capabilities IT systems for facilitating crossfunctional integration IT systems for new product development projects IT systems for internal communication (e. g. , across diff erent departments, levels of the organization) IT systems for facilitating technology knowledge creation IT systems for facilitating market knowledge creation Eigenvalue of this factor % variance explained by this factor . 71 . 80 . 90 . 58 . 86 . 85 . 62 . 89 4. 22 20. 1 . 97 . 93 . 90 . 92 . 91 6. 10 29. 1 . 85 Japan .81 China .88 .80 . 81 . 79 .77 . 71 . 57 .79 . 66 . 70 .65 3. 04 14. 4 .44 1. 68 8. 0 .67 2. 64 12. 6 .79 . 78 . 78 . 77 . 71 2. 51 12. 0 70 . 81 . 69 . 73 . 78 4. 36 20. 7 .95 . 95 . 94 . 95 . 90 . 86 5. 69 27. 1 .95 . 86 . 94 . 93 . 83 . 83 5. 39 25. 7 .90 . 89 .83 . 80 .75 . 66 . 74 1. 66 7. 9 .85 . 65 . 57 5. 08 24. 2 .46 . 67 . 63 1. 75 8. 3 18 Michael Song, Robert W. Nason, and C. Anthony Di Benedetto countries are internally consistent and well defined by the measurement items. We provide the final set of included measurement items in Appendix A and the construct reliabilities (as measured by Cronbach’s ? ) and item-to-total correlations in Appendix B. All 12 construct reliabilities (three countries ? four constructs) exceeded the . 70 level that Peter (1979) recommends.To test H1–H4 in each of the three country settings, we performed multivariate analyses of variance (MANOVAs) to compare the scores on each of the four multi-item relative capability scales across all four strategic types using SAS general linear model procedure. For each capability scale, we obtained a multiple-item scale by a simple average of the items. As Table 2 shows, the MANOVA F-statistic was significant for all four relative capabilities and in all three countries, so we computed pairwise comparisons to examine the nature of the differences in relative capabilities among the four strategic types. We also include the t-test results of the pairwise comparisons in Table 2.The results in Table 2 provide support for H1–H4 in all three countries. (A hypothesis is supported if at least one pairwise comparison is significant and the direction is in t he hypothesized direction. ) As H1 hypothesized, the relative marketlinking capabilities of defenders and analyzers are significantly greater than those of prospectors in all three countries, though the difference between defenders and analyzers is not significant. For example, in the United States, mean scores on market-linking capabilities are 2. 69, 2. 35, and 1. 67 for defenders, analyzers, and prospectors, respectively. The F-statistic from the analysis of variance is 3. 52, which is significant at p < . 05.T-tests of the paired comparisons showed that both the defender mean and the analyzer mean were significantly larger than the prospector mean (D > P; A > P) at the p < . 05 level. We obtained similar results for the Japanese and Chinese samples. These findings are consistent with H1. Prospectors have lower market-linking capabilities than defenders and analyzers because the latter two strategic types rely primarily on their market-sensing and -linking abilities to serve thei r current markets with their current products and technologies. The results also support H2 (prospectors have greater technical capabilities than defenders) in all three countries.For the United States, the prospector and defender means were 3. 42 and 2. 25, respectively, significantly different at p < . 05. Both prospectors’ and analyzers’ technical capabilities are greater than those of defenders in Japan. The means for prospector, analyzer, and defender were 8. 75, 8. 47, and 7. 84, respectively; both prospector and analyzer means were significantly Tests of H1–H4: Possession of Capabilities by Different Strategic Types Information Technology Capabilities and Strategic Types 19 20 Table 2. Analysis of Variance Results: Relative Capabilities and Strategic Types Strategic Type Prospector 1. 67 (1. 67) 3. 42 (2. 70) 1. 75 (1. 50) 7. 5 (1. 49) 6. 72 (1. 79) 5. 48 (1. 09) 5. 05 (1. 72) 2. 37 (1. 75) 3. 26 (1. 99) 1. 98 (2. 38) 2. 78 (2. 46) 2. 25 (2. 59) 2. 46 (2. 90) 2. 16* 7. 47** 31. 96** 2. 35 (1. 82) 2. 69 (1. 79) 2. 46 (2. 01) 3. 52** Univariate Defender Reactor F-Value Paired Comparisons Hypothesis (t-Tests)a D > P; A > P P>D D > A; D > P; D > R; A > P P > A; P > D; P > R; A > D; A > R Countries/Relative Capabilities Analyzer Supportedb Yes Yes Yes Yes United States Market-linking capabilities Technical capabilities Marketing capabilities IT capabilities Japan 1. 03 (. 91) 8. 75 (1. 23) 3. 58 (2. 36) 9. 48 (. 87) 9. 00 (1. 01) 3. 9 (2. 88) 8. 47 (1. 20) 7. 84 (1. 35) 3. 68 (2. 73) 8. 72 (1. 09) 1. 96 (1. 12) 2. 07 (1. 19) 2. 51 (1. 56) 7. 42 (1. 42) 4. 82 (2. 29) 8. 46 (1. 28) 19. 17** 12. 02** 2. 24* 11. 28** D > P; A > P; R > D; R > A; R > P P > D; P > R; A > D; A > R R > D; R > A; R > P P > A; P > D; P > R; A > R Yes Yes No Yes Market-linking capabilities Technical capabilities Marketing capabilities Michael Song, Robert W. Nason, and C. Anthony Di Benedetto IT capabilities Strategic Type Prospector 1. 21 (1. 28) 8. 53 (1. 27) 2. 9 2 (2. 20) 8. 96 (1. 10) 8. 58 (1. 13) 7. 94 (1. 33) 7. 59 (1. 60) 13. 38** 3. 37 (2. 52) 3. 9 (2. 82) 4. 13 (2. 45) 2. 30* 7. 81 (1. 28) 7. 43 (1. 19) 6. 79 (1. 85) 15. 69** 2. 17 (1. 52) 2. 22 (1. 49) 2. 71 (1. 74) 11. 21** Univariate Defender Reactor F-Value Paired Comparisons Hypothesis (t-Tests)a D > P; A > P; R > A; R > P P > A; P > D; P > R; A > R; D > R D > P; R > P P > A; P > D; P > R; A > D; A > R Countries/Relative Capabilities Analyzer Supportedb Yes Yes Yes Yes China Market-linking capabilities Technical capabilities Marketing capabilities IT capabilities Information Technology Capabilities and Strategic Types *p < . 10. **p < . 05. aSignificant differences at p < . 0 are reported. bA hypothesis is supported if at least one pair is significantly different in the hypothesized direction. Notes: Each cell shows the mean; standard deviations are in parentheses. P = prospector, A = analyzer, D = defender, and R = reactor. Table 2. Continued 21 higher than the defender mean at p < . 05. In China, prospectors scored higher than analyzers and defenders on this capability (prospector, analyzer, and defender means were 8. 53, 7. 81, and 7. 43, respectively; the prospector mean was significantly higher than the other two means at p < . 05). H3 was supported in the United States and China samples. For the U. S. ample, defenders had significantly greater marketing capabilities than analyzers, and analyzers had significantly greater marketing capabilities than prospectors. The defender, analyzer, and prospector means on relative marketing capabilities in the United States were 3. 26, 2. 37, and 1. 75, respectively, all significantly different from one another at p < . 05 according to the pairwise t-tests. For the Chinese sample, the only differences are the pair between defenders and prospectors and the pair between reactors and prospectors. However, for the Japanese samples, the hypothesis was not supported. The three â€Å"archetypal† strategic types we re insignificantly different and, notably, rather low.The reactors had significantly greater marketing capabilities than all other three strategic types. Finally, H4 was also supported in all three countries. Almost without exception, prospectors had greater IT capabilities than analyzers, which in turn had greater IT capabilities than defenders. For example, in the U. S. sample, the relative IT capabilities for prospectors, analyzers, and defenders were 7. 95, 6. 72, and 5. 48, respectively, all significantly different from one another at p < . 05. Similar results were found in Japan and China. In summary, our expectations, expressed in our hypotheses, were that prospectors would be strongest in technical and IT capabilities and defenders in market-linking and marketing capabilities.We find support for all these hypotheses in all three countries, and all significant findings were in the hypothesized directions. The next set of hypotheses involves expected cross-national differences in terms of the relationship between capabilities and strategic types due to cultural or business environment differences. Before discussing the direct empirical testing of these hypotheses, however, we explain some preliminary findings regarding cross-national differences using data from Table 2. Market-Linking Capabilities. Reactors had significantly greater relative market-linking capabilities than did other strategic types in both Japan and China, but not in the United States. Market-linking capability = 2. 51 and 2. 71 in Japan and China, respectively; in each case, this is the highest capability mean. ) Miles and Snow (1978) find that reactors Tests of H5–H8: Cross-National Similarities and Differences 22 Michael Song, Robert W. Nason, and C. Anthony Di Benedetto did not implement strategies consistently and therefore did not fully develop internal capabilities that would enable them to compete successfully. Our results suggest that this expectation is not borne out in Japan or China, possibly because some firms in these countries have well-developed market-linking capabilities but choose to compete as reactors rather than defenders.That is, superior market-sensing skills enable these firms to act successfully as prospectors in certain markets and as adapters or defenders in others. This finding appears to be supported by the H3 results, at least for Japanese firms. Reactors in Japan have significantly greater relative marketing capabilities than all other strategic types. Leaders of a multinational organization doing business against a Japanese competitor should keep in mind that a firm apparently lacking a consistent strategy (i. e. , displaying reactive behavior) may be nonetheless highly skilled in marketing and market linking and, therefore, a surprisingly formidable opponent. Technical Capabilities.Although H2 was largely supported, it is worthwhile to note that across all four strategic types, managers from U. S. firms rated their technica l capabilities (relative to competitors) substantially lower than did their Japanese or Chinese counterparts. The means for the United States were 2. 2–3. 4 on a ten-point scale, and comparable means in Japan and China were 7–9. This finding suggests that in Japan and China, all strategic types (including defenders and reactors) have well-developed relative technical capabilities. Again, a U. S. firm in competition against, for example, a Japanese defender should not infer low technical capabilities from its competitor’s defensive posture. Marketing Capabilities.Finally, it was surprising to note that H3, which involves relative marketing capabilities, was not supported in Japan and only partially supported in China. As we noted previously, Japanese reactor firms have the greatest relative marketing capabilities; all other firms are insignificantly different on this capability. In China, defenders rate significantly higher than prospectors in this (as hypothesiz ed), but we found no other significant differences among the archetypal strategic types. Cross-National Differences. To test the cross-national hypotheses (H5–H8), we performed additional analyses to compare the means on each relative capability construct across countries for each of the four strategic types using SAS general linear model procedure.We used the same procedure described previously: a MANOVA followed by a series of pairwise t-tests to identify significant differences. As Table 3 shows, the F-statistic was significant for 13 of the 16 possible comparisons. Information Technology Capabilities and Strategic Types 23 Consider first the technology and IT capability hypotheses (H6 and H8). Table 3 shows that across all four strategic types, Japanese and Chinese SBUs rate significantly higher than U. S. SBUs in relative technical capabilities. As an example, technical capabilities for prospectors were rated as 8. 75, 8. 53, and 3. 42 for Japan, China, and the United St ates, respectively (significant at p < . 05).This is directly supportive of H6. Japanese and Chinese SBUs also rated significantly higher than their U. S. counterparts in relative IT capabilities across all four strategic types; therefore, we find only partial support for H8. For prospectors, IT capabilities were 9. 48, 8. 96, and 7. 95 for Japan, China, and the United States, respectively (significant at p < . 05). High relative IT capability among Japanese SBUs was expected according to H8, but the high relative IT capability among Chinese SBUs was unanticipated and is worthy of further research. We found less support for the market-linking and marketing capability hypotheses (H5 and H7).Cross-national differences are not very pronounced in the case of relative marketlinking capabilities. As Table 3 shows, U. S. prospector SBUs rate significantly higher than their Japanese and Chinese counterparts, and U. S. defenders rate significantly higher than their Japanese counterparts. The se findings are contradictory to the expectations of H5. Given the evidence of Japanese market-linking expertise, it is surprising that Japanese SBUs rate significantly higher than U. S. or Chinese competitors in market linking only in the case of reactors. In addition, H7 is only partially supported. Japanese and Chinese prospectors and analyzers rate significantly higher than their U. S. ounterparts on relative marketing capabilities. For example, in the case of prospectors, marketing capabilities are rated as 4. 58, 2. 92, and 1. 75 for Japan, China, and the United States, respectively (significant at p < . 05). Although we expected high relative marketing capability for Japan, we did not expect the significantly lower marketing capabilities among U. S. SBUs. Nevertheless, consistent patterns appear with respect to the cross-national hypotheses and suggest directions for further research. DISCUSSION AND CONCLUSION According to the Miles and Snow (1978) typology, organizations ado pt certain mechanisms to respond to environmental changes.That is, they choose to be pioneers in product or market development or to protect existing positions within their niches, or they seek some kind of intermediate position between these two extremes. As a result, firms exhibit relatively consistent strategies, or patterns of product-market innovation decisions, in response to environmental shifts. Furthermore, a firm that pursues a given strategy develops certain capabilities that help it implement that strategy, thus increasing the likelihood that it will continue to use the same strategy in response to future environmental shifts. As Ham- 24 Michael Song, Robert W. Nason, and C. Anthony Di BenedettoStrategic Types/ Relative Capabilities United States 1. 67 3. 42 1. 75 7. 95 9. 48 8. 96 33. 14** 3. 58 2. 92 13. 91** 8. 75 8. 53 202. 00** 1. 03 1. 21 4. 74** Country Japan China Univariate F-Value Cross-Country Comparisonsa U. S. > China; U. S. > Japan Japan > U. S. ; China > U . S. Japan > China; Japan > U. S. ; China > U. S. Japan > China; Japan > U. S. ; China > U. S. Prospectors Market-linking capabilities Technical capabilities Marketing capabilities IT capabilities Analyzers 2. 35 2. 78 2. 37 6. 72 9. 00 8. 58 3. 59 3. 37 8. 47 7. 81 230. 38** 5. 46** 58. 07** 1. 96 2. 17 1. 16n. s. — Japan > China; Japan > U. S. China > U. S. Japan > U. S. ; China > U. S. Japan > China; Japan > U. S. ; China > U. S. Market-linking capabilities Technical capabilities Marketing capabilities IT capabilities Defenders 2. 69 2. 25 3. 26 5. 48 8. 72 3. 68 3. 69 7. 94 7. 84 7. 43 2. 07 2. 22 2. 70* 163. 99** . 54n. s. 121. 94** U. S. > Japan Japan > U. S. ; China > U. S. — Japan > China; Japan > U. S. ; China > U. S. Market-linking capabilities Technical capabilities Marketing capabilities Information Technology Capabilities and Strategic Types IT capabilities Table 3. Analysis of Variance Results: Cross-National Comparisons 25 26 Table 3.Continued Country Un ited States 2. 46 2. 46 1. 98 5. 05 8. 46 7. 59 4. 81 4. 13 7. 42 6. 79 2. 51 2. 71 . 17n. s. 38. 68** 7. 99** 28. 82** Strategic Types/ Relative Capabilities Japan China Univariate F-Value Cross-Country Comparisonsa Japan > U. S. ; China > U. S. Japan > U. S. ; China > U. S. — Japan > China; Japan > U. S. ; China > U. S. Reactors Market-linking capabilities Technical capabilities Marketing capabilities IT capabilities Michael Song, Robert W. Nason, and C. Anthony Di Benedetto *p < . 10. **p < . 05. aSignificant differences at p < . 10 are reported. Notes: n. s. = not significant. brick (1983, p. ) notes, â€Å"prospectors tend to want to continue prospecting; defenders tend to want to continue defending. † Among the capabilities Miles and Snow investigate are technology, structure, management processes, and power distribution. As we noted previously, the Miles and Snow (1978) typology is, above all, a typology of innovation strategies. In this study, we mapped four ca pabilities of interest to innovating firms (market-linking, technical, marketing, and IT capabilities) onto the Miles and Snow strategic typologies. We hypothesized (in H1–H4) that prospectors, which typically pursue a first-mover strategy through product-market innovation, would need to build up technical and IT capabilities.Similarly, defenders, which are most concerned with preserving protected market segments with existing technology, must develop market-linking and marketing capabilities. We found supporting evidence for all these hypotheses in firms from all three countries. We then developed and tested a set of cross-national hypotheses (H5–H8), based on cultural and business environment differences existing among the United States, Japan, and China. Our development and empirical testing of these hypotheses represent a significant advance of the literature beyond the contributions of DeSarbo and colleagues (2005, 2006). We found clear support for one of the four hypotheses (H6), partial support for two others (H7 and H8), and no support for the last (H5).In general, the cultural and business environment prevalent in Japan and China has given SBUs in those countries relative advantages in technology and IT capabilities (H6 and H8), yet we did not observe anticipated advantages in market-linking and marketing capabilities (H5 and H7). This study has some implications for theory development and further research. In general, the results support the hypotheses that relative to other organizations, prospectors develop greater technical and IT capabilities so that they can pursue first-to-market initiatives and that defenders develop greater market-linking and marketing capabilities so that they can respond effectively to marketplace changes.These findings lend support to the Miles and Snow (1978) typology and to the contention that organizations tend to respond in certain, consistent ways to environmental change. Therefore, our findings can be i nterpreted as further empirical support of the Miles and Snow typology, originally conceived after an exploratory study of a limited number of industries but empirically supported in other settings (Hambrick 2003). Our findings are also consistent with Hambrick’s (1983) contention that prospectors want to keep prospecting and consequently develop the capabilities most closely related to Information Technology Capabilities and Strategic Types 27 prospecting more than do other firms. Because IT has evolved only in the past few years, further research should explore the impact of IT on strategic choices.Because no existing theories are sufficient to enable us to predict a priori the nature of cross-national differences in the relationship between the four capabilities and strategic types, further research also should examine further our preliminary results regarding cross-national differences in relative capabilities. In addition, note that our model provides evidence of the val idity of Conant, Mokwa, and Varadarajan’s (1990) 11-item scale for assessing strategic type in both Japan and China. We believe that this is the first application of this scale in China and one of the first in Japan (for an earlier Japanese application, see Dyer and Song 1997). There are several notable managerial implications. The Miles and Snow (1978) typology suggests that organizations must do a sincere internal and external assessment when planning strategic moves for future competition.The external assessment should include analysis not only of likely opportunities or developments in product, market, and technology but also of past moves by primary competitors classified by strategic type. In the internal assessment, the organization’s leaders must identify honestly the firm’s strengths and recognize its weaknesses in light of external challenges. They must then choose a strategic stance, deciding how it can best capitalize on the strengths and overcome th e weaknesses. Although this recommendation is hardly new, it is important in this context to recognize that there is a mutually complementary relationship between capabilities and strategies.Relative strengths in technology and IT capabilities might suggest that a prospector (or even an analyzer) strategy could be a more appropriate choice than a defender strategy. Consistent, successful pursuit of a prospector strategy over time should help a firm develop these relative strengths and enable it to retain its competitive advantage. This implicitly suggests also that a firm that recognizes itself as a reactor type should use its internal assessment to decide which â€Å"archetypal† strategic type it should strive to become. Cross-national differences in strategic type also carry managerial implications. Previously, we noted several