Porter's generic strategies, discontinuous environments, and performance: a longitudinal study of changing strategies in the hospital industry

Health Services Research, Dec, 1993 by Bruce T. Lamont, Dan Marlin, James J. Hoffman

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Paired-sample t-tests were conducted to test hypotheses 2 through 5. Results from these tests are reported in Table 4. The first paired-sample t-test tested hypothesis 2: that a fit-fit combination will be associated with high performance at [t.sub.1] and [t.sub.2], but that no change in performance will occur. Results indicate that hospitals with fit-fit combinations had a significant positive change in market share but did not have any significant changes for any of the other four performance measures. These results give substantial support for hypothesis 2.

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The second paired-sample t-test tested hypothesis 3: that a misfit-misfit combination will be associated with low performance at [t.sub.1] and [t.sub.2], but that no change in performance will take place. Results indicate that hospitals with misfit-misfit combinations did not have any significant changes for any of the performance measures. These results support hypothesis 2.

The third paired-sample t-test tested hypothesis 4: that a fit-misfit combination will be associated with a decrease in performance. Results indicate that hospitals with fit-misfit combinations did not have any significant changes for any of the performance measures. Given the small size of the fit-misfit group (13 hospitals) a Wilcoxon Signed Rank test was also conducted. Results from this test (see Table 4) also indicate that hospitals with fit-misfit combinations did not have any significant changes for any of the performance measures. Thus, results from both sets of tests fall to support hypothesis 4.

The fourth paired-sample t-test tested hypotheses 5: that a misfit-fit combination will be associated with an increase, in performance. Results indicate that hospitals with misfit-fit combinations did have significant increases in net operating revenue, total revenue, and market share. Given the small size of the misfit-fit group (12 hospitals) a Wilcoxon Signed Rank test was also conducted. Results from this test (see Table 4) indicate that hospitals with fit-misfit combinations had significant increases in net operating revenue, total revenue, market share, and total margin. Results from both sets of tests give substantial support for hypothesis 5.

DISCUSSION AND CONCLUSIONS

The results of this study suggest that (1) in discontinuous environments a differentiation strategy will be associated with higher performance than will other strategy types; (2) organizations with a proper strategy-environment fit will outperform organizations without a proper fit; (3) organizations that do not alter their strategy in response to a discontinuous environment will not exhibit any changes in relative performance; and (4) organizations that do not have- a proper strategy-environment fit, but are able to alter their strategy to achieve a proper fit, will exhibit an increase in performance. The implications of these findings for research and hospital management are discussed.

First, these findings support the notion that hospitals with appropriate strategy-environment combinations will exhibit higher performance. Our cross-sectional and longitudinal examination of strategy-environment fit indicated that differentiators outperform other strategy types in discontinuous environments. These findings challenge the views of those (e.g., Porter 1980; Miles and Snow 1978) who maintain that different strategies can be followed successfully in the same industry.