Testing The Applicability of Porter's Generic Strategies In The Digital Age: A Study of Korean Cyber Malls
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Keywords

E-Business
Strategic Management
Cost Leadership
Differentiation
Korea

How to Cite

Kim, E., Nam, D.- il, & Stimpert, J. L. (2004). Testing The Applicability of Porter’s Generic Strategies In The Digital Age: A Study of Korean Cyber Malls. Journal of Business Strategies, 21(1), 19–46. https://doi.org/10.54155/jbs.21.1.19-46

Abstract

Although traditional strategic management theory evolved in the context of
brick and mortar firms operating in a physical space, we propose that Porter's
(1980) generic strategy framework is still applicable, albeit in need of some
modification, to competition in the digital age. This study tests that assertion
in a sample of Korean online shopping malls. In particular, it explores the following
research question: Do Porter's (1980) generic strategies explain performance
differences across business-to-consumer (B2C) firms?
Our results suggest that Porter's generic strategies are applicable to e-business
and that they indeed explain performance differences across firms.
Contrary to conventional wisdom, but consistent with the logic of business in
the digital realm, the cost leadership strategy exhibited the lowest performance.
Firms pursuing a hybrid cost leadership/differentiation strategy exhibited the
highest performance. Interestingly, when a sub-sample of all firms pursuing the
hybrid strategy was analyzed for performance differences by firm type (pure
plays vs. clicks-and-bricks), pure plays exhibited superior performance. Our
findings suggest that cost leadership and differentiation can be combined at the
same time, and must be combined to be successful in e-business.

https://doi.org/10.54155/jbs.21.1.19-46
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