A Strategic Fit Perspective on the Danish Mobile Application Industry

Abstract

This research project takes a strategic fit perspective to examine the features of firms’ knowledge-intensive business services (KIBSs) and their chosen sourcing strategy. The investigation of various KIBS attributes and their potential strategic fit with certain sourcing strategies provide the foundation to hypothesize about the implications for firms’ performance. With the development of the research on enterprise sourcing performance, contingency theory has received growing attention. The main concept of contingency theory is that firms need to obtain “strategic fits” with their external environment through the implementation of a proper strategy (A. Lewin Y. & Henk, 1999). Murray et al. (2009) base their work on the conception of contingency and formulate a two-stage strategy fit model, which has been used as the main theoretical foundation of our project. This paper offers a further contribution to the research field by taking the analysis onto a more practical level. This is achieved by investigating if and how the theoretical propositions apply to small and medium-sized enterprises (SMEs) in the highly volatile Danish mobile application industry. Besides the primary focus on the first stage of Murray et al. (2009) strategic fit model, the paper explores possible linkages with the research on sourcing drivers by Roza et al. (2011) and the concept of entrepreneurial globalization by Rangan and Schumacher (2012). Interviews were conducted with company representatives from four selected case firms in order to collect firsthand data. The results indicate that the case firms possess strategic fits between most KIBS attributes and their sourcing strategies, in accordance with Murray et al.’s (2009) viewpoints. These identified strategic fits are considered as factors that could positively influence firm performance. Our interviewed data also suggest that other factors, such as “dynamic capabilities”, “firm size”, “entrepreneurial strategy” are considered to be critical for firms’ superior performance. Moreover, we noticed that the two-stage strategic fit model of Murray et al. (2009) seems to lack an industry perspective, as limited discussion can be found concerning the characteristics of the industry and we therefore propose the implementation of an industry angle in future research. An additional finding relevant to Roza et al.’s (2011) research was that offshoring can be used as a cost- and resource strategy, as illustrated in all case companies. One case firm, Phases, which belongs to the small firm category, shows a prominent focus on utilizing offshoring as entrepreneurial strategies, whereas micro- and medium-sized case firms (Designit, Vertic, InSilico Aps) are driven by cost and resource factors. Two medium-sized case enterprises (Designit and Vertic) are following a relatively conservative sourcing approach, which is consistent with the empirical findings of Roza et al. (2011). With regards to the entrepreneurial globalization concept of Rangan and Schumacher (2012), only one of the case enterprises, Phases, exhibits an extended set of entrepreneurial characteristics. The remaining investigated firms (i.e.: Designit, InSilico Aps, and Vertic) on the other hand are less entrepreneurial in terms of their sourcing strategies and thereby undertaking relatively traditional approaches to internationalize. The paper in the end highlights potential implications for future research that could expand the understanding of sourcing processes in highly volatile environments. Managerial implications from the firm’s perspective are also discussed for companies’ future sustainable business growth.