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Despite the fact that a great deal of empirical research confirms the existence of strategic groups, not enough attention has been paid to their theoretical development. This paper links the theories of spatial competition and cognitive taxonomy to the very existence of strategic groups in a competitive environment. It is shown that the concept of strategic groups is not an analytical convenience but a theoretical construct.

This paper constructs models to investigate the rationale for a multinational corporation to enter into a joint venture to serve a host market. In particular, the model examines the impact of profit sharing, cost reductions, risk reductions, and competition reductions on the profits of international joint ventures. The results may explain the ‘recent’ popularity of international joint ventures. The models show that (1) a joint venture is the dominant entry strategy when there is a formidable local competitor and the risks of operation are high, (2) a wholly owned subsidiary is preferred if a multinational corporation has a significant cost advantage, (3) a joint venture is preferred to a wholly owned subsidiary if significant cost reductions can be achieved through combining the strengths of a multinational corporation and a local firm, and (4) multiple licensing is preferred if the number of local firms is large.

This paper examines competition patterns and competitive strategies when technology changes continually. It first discusses optimal behavior for investment in technology. It is argued that although technological innovations supersede existing technologies, there are economically justifiable barriers to investing in the new technologies. These economic barriers, coupled with continuous technological change, have implications for certain aspects of strategy, such as entry by means of new technologies, timing of entry, leapfrog-type competition, vertical integration, the productivity dilemma, and escalating commitment. Finally, the industrial transformation of the steel industry is used as an example to illustrate these implications.