Different Types of "Reactors" in High-Technology Industries: An Empirical Study

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Different Types Of "Reactors" In High-Technology Industries: An Empirical Study

The primary purpose of this study is to investigate unsuccessful firms called "reactors." These firms were named by Miles and Snow[14], who have developed a typology of strategy that includes three successful types, i.e., prospector, analyzer, and defender, and one unsuccessful type, i.e., reactor. Most studies in strategic management have been concerned with identifying successful strategies used by firms to outcompete in a given industry [4, 6, 11, 26]. They have focused on finding organizational and strategic attributes of several successful strategy types such as low cost leadership and differentiation. As a result, there has been a growing body of literature that relates to operations of successful companies.

Research on unsuccessful or declining companies, on the other hand, has largely been neglected. Research in Organization Theory, which has focused on the internal processes of the firm, has only recently turned its attention to declining organizations. But most studies are theoretical treatises, proposed frameworks, analyses of demographic trends, and case study based[3]. Also, they discuss declining organizations only in general terms. For example, some studies propose that declining companies tend to face curtailed innovativeness and little long-term planning[8, 20]. In the strategic management research field, most existing studies of low performing companies have also addressed unsuccessful strategies in only general terms. For example, Porter's "stuck in the middle" are companies unable to achieve a competitive advantage through either low cost leadership or differentiation[18].

Such general descriptions do not provide useful information and guidelines to executives in need of revitalizing their firms. To be sure, there are several taxonomic studies on unsuccessful companies[16, 17], but they have also been criticized as being general because these studies include companies from many industries and environments and thus do not incorporate a contingency approach to studying organizations[12].

This research study addresses these gaps by investigating operations of stagnating firms called "reactors." Specifically, the objective of this study is to identify types of reactor firms based on their organizational and strategy attributes. This study also focuses on reactor companies operating in one type of environment, the high-technology industry (i.e., the semiconductor industry).

The underlying proposition of this research is that reactors are not a group of homogeneous firms and that they can be further classified into a few distinct types. Identification of subtypes within the reactor strategy may reveal the causes of stagnation and thus lead to the formulation of remedial actions for a turnaround.

THEORETICAL BACKGROUND AND PAST RESEARCH

Following the tradition of Organization Theory, Miles and Snow[14] have developed a strategic typology focusing on processes of internal adaptation to environmental changes. The major thesis of their typology is that organizations tend to adopt certain internal structures and processes in pursuing particular strategies and develop consistent, adaptive patterns in dealing with their environments.

Miles and Snow have identified three successful strategy types, i.e., prospector, analyzer, and defender, and one unsuccessful type, i.e., reactor. Prospectors are entrepreneurial firms that tend to create changes in their products or markets through extensive new product or market development, while defenders are conservative organizations that attempt to maintain present products or customer base in order to secure niches in their markets. Defenders, therefore, undertake little or no new product/market development and compete primarily on the basis of price, quality, delivery or service, and operating efficiency. Analyzers are organizations that operate in two types of environment and follow both prospector and defender strategies. …