Presentation to Central European University Business School

Niche Width Theory and Competitive Strategy: Exploring Polymorphism

John UsherUniversity of Lethbridge

Agenda

• Backgrounder

• Research Presentation:Niche Width Theory and Competitive Strategy: Exploring Polymorphism

• Recent Pub’s & WP’s

• Teaching

• Grad student projects

• Questions & Answers

Backgrounder

Once Upon a TimeMy Years with

General MotorsAcademia CallsEdmonton: 1988-1994St. John’s: 1994-2002Lethbridge: 2002-

Once Upon a Time

• Born Grimsby, England

• Came to Canada at 10 months of age

• Grew up in Oshawa, Ontario, Canada

• Father at GM• Brother still at GM

My (13) Years with General Motors

• G. M. I. • HR / IR• Out on the Floor:

Manufacturing, Q.C.• Forensic Accounting• Manufacturing Sales• Strategic Planning• Northwestern U.

Academia Calls

• BIA thesis• MBA research project• University of Toronto

alumni newsletter• The Great Adventure• Bob House• ABD & Away!

Edmonton: 1988-1994

• Bob Hinings and Royston Greenwood

• Edmonton: the great Gretzky bait & switch

• UofA • Strategy & Org

Theory• TIM

St. John’s: 1994-2002

• Memorial University of Newfoundland

• OB / OT / Strategy• Associate Dean of

Graduate Programs & Research

• MBA: 200 ft/pt• AACSB accreditation

drive

Lethbridge: 2002-

• University of Lethbridge

• Dean and Professor

• 2000 students / 3 campus

• Exchange partners in Argentina, Belgium, Chile, France, Germany, Japan, Malaysia, Mexico, the Netherlands, Poland, South Korea and Taiwan

• Center: Social Marketing

Research Presentation…

Niche Width Theory and Competitive Strategy: Exploring

Polymorphism

Niche Width Theory

• Hannan & Freeman (1977, 1989)

• Specialist/Generalist

• Narrow, deep resource exploitation vs. broad exploitation with some contingent capability

• Do-nut shop or steak house vs. full menu restaurant

Niche Width Theory

• Existing theory…• Makes predictions as to which strategies will be favored

under particular environmental states, but…

• Considers niche width strategies of single-unit specialism and single-unit generalism only

• Fitness of strategies is based on temporal definitions of variation (no change, small change, large change) and grain* (fine, coarse) in environmental resource flows

• * the patterning or patchiness of resources

Niche Width Strategies

• Specialist - single-unit - multiunit

• Generalist - single-unit - multiunit

• Polymorph - multiunit

Niche Width Theory… Critiqued

• Herriott (1987); Usher (1999)• Freeman & Hannan (1983) eliminate all multiunit

organizations from their sample to make the ‘problem of polymorphism’ less serious.

• Hannan & Freeman (1989) and others define generalism as participation in multiple product categories, thus blurring the distinction between generalism and polymorphism.

• Failure to consider spatial dimensioning of environmental resources limits generalizability. Spatial context is crucial to service sector, particularly chain organizations.

Niche Width Theory… Extended

• Usher (1999)• Considers niche width strategies of single-unit specialism,

multiunit specialism, single-unit generalism, multiunit generalism and polymorphism.

• Fitness of strategies based on both temporal and spatial definitions of variation in environmental resource flows. Ex: demand based on location factors plus seasonality.

• Definition of grain returned to bio-ecological roots. Experience of grain is important: ability to discriminate among states is coarse, inability to discriminate is fine.

Specialist Strategies

• Single-unit• Seeks exact fit with customer

• Deep exploitation of market

• Examples: Ferrari, Sam’s Sushi

• Multiunit• Honed efficiency of routines

• Scale economies

• Identical subunits

• Examples: AAMCO, Benihana

Generalist Strategies

• Single-unit• Single approach to average

customer at center of market• Broad exploitation with some

embedded contingent slack• Examples: L.L.Bean, Joe’s Eats

• Multiunit• Center of market but efficient

delivery emphasized• Scale economies• Identical subunits• Examples: Wal-Mart, Denny’s

What’s a Polymorph?

• Biological term: single species with locally adapted sub-species

• Example: birds of same species specialized to variations in available food along vertical gradients in habitat

What’s a Polymorph?

• Organizational term: multiunit structure (chains, franchises) with locally adapted outlets or units

• Example: Best Western hotel chain - smaller units stress local character

• More than 4,000 properties throughout North, Central and South America, Europe, Asia, Africa, the Middle East, and the South Pacific make Best Western International the world’s largest hotel chain.

• While each individual Best Western hotel reflects the charm and appeal of its local culture, every property has the advantage of the brand’s strong global presence and consumer recognition.

• © 2002-2004 Best Western International, Inc.

Best Western International

Best Western Grand Hotel Hungaria

The Polymorph Balancing Act

• Maximizing the tradeoff:

• Establishment-level advantages

• System-wide advantages

Establishment-level Advantages

• Adaptation to variations in:

• Consumer needs and desires

• Site conditions• Political / legal

structures• Social norms

System-wide Advantages

• Economies of scale in purchasing and advertising

• System-wide learning and knowledge transfer

• Cross-sectional reliability

• Reputation capital

Losing the Balance

• Over-emphasizing local adaptation blurs the benefits of the ‘species’

• Over-emphasizing system-wide factors presents a generalist response that ignores specialized needs

Polymorph Strategy

• Single-unit• Undefined: polymorphism is a

multiunit strategy only

• Multiunit• Locally adapted aspects

(ex: aesthetics, traffic flow)

• Scale economy aspects (ex: advertising, procurement)

• Differentiated subunits

• Examples: Best Western, McDonald’s

Spatial – Temporal Dimensions of Environments

• Two features:• Variance of a spatial or

temporal series about its mean

• Pattern of variation or grain

• Four conditions:• No change

• Small change

• Large Change / Fine Grain

• Large Change / Coarse Grain

No Change

• MS > S > P > MG > G• Environment is stable and

homogeneous

• Contingent capacities of generalist and polymorph are wasted, but polymorph operates as specialist at unit level

• Certainty permits scale exploitation by multiunits

Small Change

• MG > G > P > S > MS• Contingent resources of

generalist allow spanning of small changes that overwhelm specialist

• Spatial heterogeneity engages MS on multiple fronts to ill effect

• Small change doesn’t reward polymorph

Large Change / Fine Grain

• S, MS > P > G, MG• Fine grain means that

changes are not well understood which works against systematization by multiunits and adaptation by polymorphs

• Changes are too large for generalists to span, but try anyway losing fitness

• Some specialist locations are serendipitously rewarded, some not

• Temporally, specialists stay focused and ride out adverse periodicities

• Alternate multi strategy: acquisition of other blindly successful similar operations

Large Change / Coarse Grain

• P>MG>G>MS>S• Coarse grain means that

patterns of change are understood which facilitates systematization by multiunits and adaptation by polymorphs

• Size of / time spent in patches is sufficient to reward generalist changes

• Size of / time spent in patches may initially support specialists, but induce failure as too large / too long in adverse state

• Polymorph combines multiunit system advantages and local adaptation for best of both worlds

Niche-width Predictions of Favored Forms

  Fine Grain Coarse Grain

No Change MS > S > P > MG > G

Small Change MG > G > P > S > MS

Large Change S, MS > P > G, MG P > MG > G > MS > S

Empirical Test of the Theory

• Three phases:• Competitive strategies• Environments • Test of propositions

Population

• Edmonton, Alberta Canada: 1959-1988

• Population growth: 227,381=>567,446

• All retail gasoline service stations in operation during period: 638

0

50

100

150

200

250

300

350

400

1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988

Change in Diversity and Distribution of Population Forms in Gasoline Retail Edmonton 1958-1988

Gas Bar Conv Store Car Wash Service Station Other/Mixed

Phase 1: Competitive Strategies

• Categorize organizations as one of the 5 niche strategies: S, MS, G, MG, P

• Spatial coordinates (location in XY space) determined for each

Phase 2: Measure Environments

• Critical resources identified for industry sub-sector: traffic flow

• Variation and patterning of resources measured:

• 1) across space• 2) for 30 year period

Phase 3: Test of Propositions

• Dependent variables: failure / change rates of firms for each of 5 fitness strategies during each year of 30 year study period

• Independent variables: - traffic flows - car ownership by sex - import / domestic mix - self-serve adoption

Research Implications

• Add explicit spatial dimension to niche width theory

• Clarify polymorph vs. generalist distinction

• Add multiunit expressions of specialism and generalism

Managerial Implications

• Contribute to understanding of chain and franchise success

• Provide insight into best strategy for competitive context

• Identify ineffectively exploited industry sub-sectors

Major Publications• Wolfe, Richard, Karl Weick, John Usher, Jim Terborg, Laura Poppo, Audrey

Murrell, Janet Dukerich, Deborah Crown, Kevin Dickson, Jessica Jourdan, “Sport and Organizational Studies: Exploring Synergies.” Journal of Management Inquiry. 14: 2, June 2005.

• Baum, Joel, Stan Li and John Usher, “Making the Next Move: How Experiential and Vicarious Learning Shape the Locations of Chains’ Acquisitions” Administrative Science Quarterly*. 45: 4, Dec. 2000.

• Usher, John, "Dust in the Wind: A Lesson from Maslow’s Monkeys" Academy of Management Review*. 25: 4, Oct. 2000.

• Usher, John, "Monkeys to managers: A bridge too far?" Academy of Management Review*. 24: 4, Oct. 1999.

• Usher, John M., “Specialists, generalists and polymorphs: Spatial advantages of multiunit organization in a single industry.” Academy of Management Review*. Vol. 24, No 1, Jan. 1999.

• Usher, John M. and Martin G. Evans, “Life and Death Along Gasoline Alley: Darwinian and Lamarckian Processes in a Differentiating Population,” Academy of Management Journal*, Special Forum: Extending the Frontiers of Organizational Ecology. Vol. 21, No 4, Oct 1996

*Financial Times Top 40 Journal

Working Papers• Basil, Michael; Usher, John; Deshpande, Sameer; Basil, Debra. Fast

Food Business Strategies: Responding to Nutritional Concerns and Competition=> How has the fast food industry responded to public pressure over health? An analysis of 298 newspaper articles from 1984 and 2004. McDonalds & others vs. Subway

• Wolfe, Richard; Usher, John. Survival of the Fittest? Studying Multi -level Evolutionary Change Through the Lens of Sport=> Following Wolfe et al. 2005, we look in greater depth at a particular context for multi-level change research: the impact on US intercollegiate athletics of pressures to achieve gender equity under Title IX.

Teaching

• Organisational Behavior• Strategic Management• Managing Change• Human Issues in

International Management• Organization Theory• Technology & Innovation

Management• Management Skills• Managing Responsibly in

a Global Environment

Current Graduate Students

• Weijian Lin• Experiential and vicarious

organizational learning: A comparison of relative influence in the foreign entry mode decision

• Canadian post-secondary entry into mainland China

• Coercive=>Mimetic=> Exp vs. Vic critical test

• Salvador Barragan• Critiquing Porter’s

Diamond Model after ten years of NAFTA in Mexico

• Automobile vehicle and parts industry cluster in Puebla, Mexico

• Knowledge / technology transfer from MNC’s to indigenous firms

Q & A

The Experience of Grain

• (MacArthur and Levins, 1964: 1207-8):• “.... consider an imaginary habitat in which there is a

scattering of uniform units or grains of resource 1 and another scattering of uniform grains of resource 2. In such an environment we can distinguish as "fine-grained" an individual or a species which utilizes both resources in the proportion in which they occur. (If the actual grain size of the resources were so fine that the species could not discriminate and select, then the species would have to be "fine-grained," hence the terminology.) An individual or species will be "coarse-grained" if it discriminates and selects only grains of one of the resources.” (parentheses in the original)