Examining linkages between strategic groups capabilities and performance evidence from Indian private and public sector banks

Abstract

Causal linkage between strategic group and firm performance has remained a central and controversial theme in strategic management literature The notion of mobility barriers provides the theoretical foundation for the causal link However empirical evidence for such an association between strategic group and firm performance is both inconsistent and conflicting. Given that strategic groups are firms with similar resource configurations it becomes necessary for firms to choose their competitive position Since the performance and efficiency of a country s banking sector has a profound impact on its economic performance this study offers a comprehensive study on forty four Indian private and public banks for the period 2005-2014 Knowledge of their competitive position will be of immense use to banks in comprehending the strategic dimensions that makes them perform better. Strategic dimensions used in empirical research on banking employ resource deployment measures Resources represent strategic choices made by banks This study suggests what a firm owns resources and what a firm does capabilities are equally important. Consequently this study examines the hypothesis that strategic choices made by banks in terms of resource acquisition, coupled with capabilities could explain performance better newline