A critical examination of the central contributions of Michael Porter to the development of management thought
helps management to focus on value for their customers.
Porter’s third major contribution to strategic management was his book ‘The competitive advantage of nations’. By the 1990’s Porter’s theories were regarded highly across both institutions and the industry and his contribution to global competition was welcomed. This again provided management with another tool, the diamond model, toward implementing and maintaining a competitive advantage. The diamond model relates firm strategy, structure and rivalry, factor conditions, relating and supporting industries and demand conditions. Porter believes these attributes shape the information firms have available to perceive opportunities, the pool of inputs, skills and knowledge they can draw on, the goals that condition investment, and the pressure on firms to act (Porter, 1991, p. 101)
Criticisms of Porter’s contributions
Porter was the first to attempt to create a management strategy from economics; this did not come without its criticisms. It is felt that Porter pays far too much attention to the environment facing the firm and to how it should position itself in that environment – and almost no attention to the firm itself (Langlois, 2000, p.1) it would appear that Porter’s organisation would be quite hollow relying heavily on an unpredictable environment.
Porter’s 1980 text proposes that for a company to sustain competitive advantage they needed to stay significantly different to their competitors. While Porter’s generic strategies received considerable support there has also been doubt that these strategies can be separate. There have been a number of studies done by people such as Hill (1988), Murray (1988), Wright (1987) and Miller (1992) that disagree with Porter’s one generic strategy method (Rubach, 1998, p.1). These studies suggest that a combination of strategies can achieve superior performance, especially within mature industries that are experiencing technological change. The greatest complaint of Porters generic strategies model is that it does not fit all industries. A study done by Pitelis and Taylor suggests that they use of a variety of strategies combined is far more effective in the retail industry (Rubach, 1998, p.1).
This leads to Porter’s ‘stuck in the middle’ concept. As some of the above studies have shown, a combination of generic strategies can work this suggest that Porter’s ‘stuck in the middle’ theory is not consistent with these results. Porter believed a company that was ‘stuck in the middle’ would last or get ahead in its field, the above study by Pitelis and Taylor had shown that this is not so in the retail industry (Rubach, 1998, p.1).
Another criticism of Porter is a study done by Dawes and Sharp reassess Hooley’s interpretation of the Generic Marketing Structures clusters using the dimensions upon which Porter based his strategy scheme (Dawes, 1996, p. 36). The study was done to provide insight into strategy clusters using a mapping technique; the results were designed to show whether or not similar strategies would result in similar performances or if unknown factors were influencing results (Dawes, 1996, p. 36). Hooley felt the results of his research could lead managers to take a very different approach. Dawes and [next page]