Inchworm Effect: Study on Strategic Re-orientation of Pharmaceutical and Biotechnology Firms Based on Grounded Theory Building

Abstract

Abstract:

This paper studies how Chinese pharmaceutical and biotechnology firms change their strategic orientation and what factors in-fluence this process. Strategic re-orientation means firms change their strategic path. It is a strategy selection process in which firms switch from the original strategic orientation to a new one. We establish a research framework from the context, process and content per-spective. We use grounded theory method to build our model. The study finds that the strategic re-orientation of domestic pharmaceutical enterprises is not only affected by institutional environment, market environment and corporate resources. Managers' cognition is a medi-ator between the environment and the re-orientation. Organizational inertia has a moderator role. Institutional enforcement is an important part of the institutional environment. There is an inchworm effect of strategic re-orientation which means pharmaceutical and biotechnology firms swing between technology orientation and market orientation because of the characteristics of emerging economies and the special nature of the industry. The research opens the black box of the process of strategic re-orientation and explains why there exists a lagged effect between the completeness of institutional and market environment and the strategic re-orientation in the pharmaceutical sector of e-merging economies.

Key words: strategic re-orientation, grounded theory, managers' cognition, organizational inertia, institutional enforcement

Yang Zhangbo, Gao Shanxing, Hao Zhiyang. Inchworm Effect: Study on Strategic Re-orientation of Pharmaceutical and Biotechnology Firms Based on Grounded Theory Building[J]. , 2016, 28(11): 203-216.

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