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Some companies compete in a comprehensive and multifaceted way, paying close attention to costs, quality, marketing, expansion, and innovation. Others embrace much simpler competitive strategies and concentrate on just one or two of these elements. This paper examines the causes and consequences of such strategic simplicity in two very different environments: the stable furniture industry and the more turbulent software industry. It was found that a “passive” model of organizational adaptation applied in the former industry: firms simplified their strategic repertoires unless managers felt their firms were threatened or unless the firms had built in slack resources. Thus, simplicity was inversely related to managerial discomfort and administrative slack, and positively associated with financial liquidity. By contrast, an “opportunistic” model of adaptation seemed to characterize the behavior of companies in the more turbulent computer software industry. In this setting, firms tended to expand their repertoires of competitive strategies whenever “outsiders” with new ideas were added to the top management group. In both industries, simplicity was found to increase subsequent return on assets.
Danny Miller (Mon,) studied this question.