Business Firm Performance Types And The Strategic Implications

Abstract

This study reports the findings of five different performance types that exist among business firms. These types were: “Growing” firms, “turnabout” firms, “stagnant” firms, “turnaround” firms, and “declining” firms. Using multiple discriminant analysis, the strategic differences among the five types were revealed. These strategic differences were captured in three dimensions, namely, asset-acquisition, finance, and differentiation. The key results indicate that growing firms tended to emphasize differentiation; turnabout firms ranked low on almost all dimensions; stagnant firms were high on both asset-acquisition and differentiation; turnaround firms tended to focus on financial strategies, and declining firms placed little emphasis on differentiation. The promising use of multiple discriminant analysis as a tool for taxonomic research in strategic management was highlighted.