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The effects of industry growth and strategic breadth on new venture performance and strategy content

Author

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  • Patricia Phillips McDougall
  • Jeffrey G. Covin
  • Richard B. Robinson
  • Lanny Herron
Abstract
A sample of 123 independent new ventures was classified into four industry growthlstrategic breadth categories. High growth industry environments were found to provide a favorable environment for new ventures to achieve sales growth; however, the highest sales growth rates were exhibited by new ventures pursuing broad breadth strategies in high growth industries. One‐way ANOVA and contrast tests were also used to identify whether specific strategic variables varied across the four industry growth/strategic breadth combinations. New ventures in high growth industries chose to enter on a larger, more aggressive scale and placed more emphasis on new product development than those entering low growth industries. Broad breadth strategy ventures had higher levels of advertising and promotion expenses and placed greater emphasis on the dominance of marketing expertise in their top management team, developing new channels of distribution, and on brand name recognition. Ventures pursuing focus strategies emphasized specialty products and were less cost conscious.

Suggested Citation

  • Patricia Phillips McDougall & Jeffrey G. Covin & Richard B. Robinson & Lanny Herron, 1994. "The effects of industry growth and strategic breadth on new venture performance and strategy content," Strategic Management Journal, Wiley Blackwell, vol. 15(7), pages 537-554, September.
    • Handle: RePEc:bla:stratm:v:15:y:1994:i:7:p:537-554
    DOI: 10.1002/smj.4250150704
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