Strategic management and regional industrial strategy: cross-fertilization to mutual advantage

ABSTRACT

This study critically revisits extant perspectives and theories on strategic management (SM) and regional industrial strategy (RIS) and considers the scope for cross-fertilization to mutual advantage. Despite an extensive literature on value capture/creation and co-creation strategies in SM, few attempts have explored their relevance to building, and capturing value from, advantages at the regional level. Advocates of place-based approaches to RIS acknowledge the need for commercial potential, hence the need not only to create value but also to capture it in the region. The aim is to go further by exploring the relevance and scalability of SM value-capture strategies to RIS, and by showing how the focus of RIS on sustainability and value creation can benefit SM.

KEYWORDS:

• strategic management
• regional industrial strategy
• sustainable competitive advantage
• Smart Specialisation
• sustainability

JEL:

• L52
• O25
• O30
• R58

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the authors.

ORCID

David Bailey http://orcid.org/0000-0002-1956-0556

Christos Pitelis http://orcid.org/0000-0001-9033-6357

Philip R. Tomlinson http://orcid.org/0000-0001-6292-3204

Notes

1. ‘Sustainability’ is widely used in SM and social science, yet the concept has several interpretations. In ecological perspectives, it relates to sustainable environmental management to safeguard biological ecosystems and/or sustainable business practices to reduce carbon footprints (Johnston, Everard, Santillo, & Karl-Henrik, 2007). In economics and SM, the concept more often than not refers to delivering sustainable/ongoing socioeconomic development and/or business growth fostered through better resilience to (economic) shocks/disturbances and adaptability to changing economic conditions (Christopherson, Michie, & Tyler, 2010). Another dimension to sustainability is where satisfaction of an objective in the short term (such as short-term profit maximization) can undermine the same objective in the future (long-term profit maximization) or where the satisfaction of the objectives of one economic agent (or group thereof) undermines the objectives of other groups, that is, where business growth harms the natural environment (Mahoney et al., 2009; Pitelis, 2012). For us, sustainability involves economic, social and environmental dimensions (Pitelis, 2012); hence, sustainable regional economic development is not inimical and instead involves also delivering on sustainable environmental goals.

2. See Pitelis (2016) for a more extensive account of these literatures.

3. Indeed, for many firms achieving short-term success by exploiting existing assets is often a prerequisite to provide the resources for exploratory and (radical) innovation-led activities. In the long term, exploration is critical to ensure firms can compete in the face of structural change (March, 1991). For a full review of the extant SM literature on (the types of) ‘organisational ambidexterity’, see O’Reilly and Tushman (2013).

4. If the cognitive distance (between sectors) is too wide, it may preclude any form of useful knowledge exchange and/or cross-fertilization, while if it is too close, there are likely to be few opportunities for cross-sectoral learning (Boschma, 2005).

5. As Hausmann and Rodrik (2003) note, a lack of innovators engaged in successfully adapting technologies and production processes developed elsewhere limits innovation capacity in non-frontier regions.

6. The requisite conditions for achieving these are not easy, and are arguably becoming more stringent in developing countries (Stiglitz, 2001, pp. vii–xvii). At the same time, specialization in segments of global value chains can provide some scope for smart, agile and effective industrial policy (United Nations Conference on Trade and Development (UNCTAD), 2012).

Additional information

Funding

The writing of this paper was supported by the EU Horizon 2020 project ‘MAKERS – Smart Manufacturing for EU Growth and Prosperity’, a project funded by the Horizon 2020 Research and Innovation Staff Exchange Programme, which is a Research and Innovation Staff Exchange under the Marie Sklodowska-Curie Actions [grant agreement number 691192]. The secondary data used in the paper were collected before the MAKERS project. The paper was also supported via the Economic and Social Research Council UK (ESRC) in a Changing Europe Programme's UK in a Changing Europe programme [grant reference number ES/T000848/1].