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Implementation of Firm Strategies

    Picken and Dess (1997) argue that firms achieve high levels of performance only when they do the right things (as reflected by a strategy) and do things right (as shown by implementation of the selected strategy).  Oftentimes, doing things right (strategy implementation) calls for activities to be coordinated effectively, processes to be integrated properly, and the exercise of appropriate types of organizational controls (Picken & Dess, 1997).  Of  the many actions required to implement strategies effectively, none are more important than timing.  Firms must decide if they will initiate their competitive actions as a first mover, early second mover, late follower, or as one whose timing is consistent with the majority of its competitors.  A competitive action is a significant competitive move taken by a firm to gain advantage over rivals (Hitt et al., 1997).  Being the first to enter a market with a product can result in significant benefits, especially if the competitive action is difficult to imitate.  Alternatively, the risk is greater for the first mover; smaller, entrepreneurial firms may find it difficult to accept such high levels of risk (Lieberman & Montgomery, 1988).  Firms following first movers closely (these firms are known as early second movers) can avoid some of the risks and costs of being a first mover.  For example, reverse engineering the first mover’s product can result in much lower development costs for the second mover.  Additionally, the early second mover can gain competitively valuable insights by studying the market’s response to the first mover’s competitive actions and product introductions.

    There are times when firms cannot move swiftly into a market.  This situation may arise frequently for the smaller entrepreneurial firm lacking the requisite resources to be a first mover consistently with its competitive actions.  While smaller firms relative lack of bureaucracy enhances their flexibility, these firms often do not possess the resources needed to introduce new products rapidly.  Williamson (1985) suggests that small firms may be more innovative than large firms; however, large firms often have more efficient manufacturing and market distribution systems than smaller enterprises.  In general, the late follower strategy may be more descriptive of small businesses but less indicative of entrepreneurial firms as defined herein.  Furthermore, Stalk (1993) notes that merely matching the pace of one’s competitors may no longer result in high performance for firms competing in today’s dynamic and challenging environments; instead, Stalk argues, firms seeking above–average returns in technologically–intense global markets should develop the skills required to innovate quickly and continuously.  For these reasons, we expect these implementation actions to interact with the entrepreneurial firm’s strategies.

    The actions described above probably do not fit well with the LCS in that firms implementing this strategy typically do not attempt to enter markets quickly.  Thus, we anticipate no interaction effects on firm performance between firms employing a LCS and the implementation of first mover, second mover, and competitive parity actions, suggesting the following hypothesis:

            Hypothesis 4:  The implementation actions of first mover, second mover, and maintaining of competitive parity will exhibit no interaction effects with a low–cost producer strategy on firm performance.

    Alternatively, firms employing a HQS are likely to gain significant performance–related benefits when competing as a first or early second mover.  First movers, for example, may be able to derive benefits by gaining brand loyalty from customers.  Early second movers can gain advantage relative to rivals because of the reduced risk and development costs associated with following another’s market introduction.  This evidence suggests the following hypothesis:

            Hypothesis 5:  A high–quality strategy exhibits positive interaction effects with first mover and early second mover
            implementation actions on firm performance.

    Similarly, firms employing a TBS should benefit substantially when competing as first or early second movers.  By definition, the TBS suggests initiating competitive actions rapidly.  Thus, a proactive stance of moving into the market first denotes swift implementation of competitive actions.  Furthermore, an early second mover may improve its performance through time–based competitive actions because it avoids some development costs and reduces the risk of a negative market reaction.  As a result, a positive interaction between employment of a TBS and first mover and early second mover implementation actions is expected, as shown in the following hypothesis:

            Hypothesis 6:  A time–based strategy exhibits positive interaction effects with first mover and early second mover
            implementation actions on firm performance.

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