Japanese Firm Response to Changing Regulations: A Dynamic Strategic Group Analysis
Sabine Reddy, Devanathan Sudharshan, Thomas Roehl
Firms must repeatedly respond to changes in the regulatory environment. Rather than focusing only on the response of the industry as a whole, we investigate the variation in response at the firm level. We postulate and find that the firm level response will be contingent on the resource base of the firm and the firm’s degree of isomorphism to past regulatory and competitive conditions. Firms that are most isomorphic appear less able to adjust strategically to drastic environmental shifts. Using dynamic strategic group methodology, we demonstrate this response variation in a sample of Japanese pharmaceutical firms.