Performance improvements seen through the lens of strategic trade-offs

Abstract

Performance improvement and competitive advantage are closely related but different concepts. However, the strategic operations management field has often used them interchangeably/equivalently in previous investigations involving Wickham Skinner’s strategic trade-offs model and related theories. In this study, the relationship between these concepts is clarified by means of thought experiments, which are developed on the basis of methodologies, approaches and rationales used in previous studies. It is logically established that utilising measures of improvement along individual performance criteria is inadequate when testing the trade-offs model’s core implications, because these, as per Skinner, only apply in comparisons involving market-leading performance in those criteria (realisation of competitive advantage). The incompleteness of approaches such as linear regression/correlation analysis and like methodologies for such studies is also demonstrated. In short, our research attempts to clarify some misconceptions that are prevalent when performance improvements, market-leading performance and strategic trade-offs are investigated and debated. Venues for future research are offered.

Keywords:

• strategic trade-offs
• cumulative capabilities
• competitive advantage
• regression analysis
• thought experiments

Notes

1. With respect to thought experiments, Kuhn 1964 (as quoted by Brown and Fehige 2011), comments that ‘…. thought experiments can disclose nature’s failure to conform to a previously held set of expectations. In addition, they can suggest particular ways in which both expectation and theory must henceforth be revised’. Moreover, Folger and Turillo (1999) affirm that ‘… the actual practice of thought experiments illustrates how theorising can proceed from no data at all’.