This paper discusses the concept of strategic groups, focusing upon the importance of intra‐industry strategic groupings in understanding differences across firms within an industry. The problems involved in identifying strategic groups within industries are examined through a comprehensive review of recent studies. It is demonstrated that much of the research has used surrogates for elements of a firm's strategic direction, e.g. vertical integration, product range, R & D expenditure, to suggest bases by which creative and sustainable groups are formed. The authors argue that certain theoretical concepts such as mobility barriers, isolating mechanisms and controllable variablesprovide much firmer bases for identifying strategic groups within industries. Thus, taxonomies for understanding the nature of strategic group formulation can be developed. Implications of the strategic group concept for such strategic issues as the structure‐performance linkage, firm mobility, patterns of rivalry, industry evolutionand firm growthare then examined. The paper concludes by indicating fruitful directions for strategic group research in the context of the strategic management field.

In the originally published version of this article, Daniel Geiszler's last name was misspelled. This error has now been corrected in the article online.

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This paper provides an overview of strategic groups research and argues that it should be linked more closely to questions central to strategic management. Particularly fruitful directions for future research include industry evolution, competitive and industry dynamics, and linkages to resource-based theories. Specific observations and suggestions are made about the content and method of strategic groups research. These are illustrated by reference to empirical studies of the pharmaceutical industry and the food processing industry.

Over the last ten years the concept of ‘competence’ has emerged as a central concept for competitive strategy. Several rich theoretical streams have contributed an extensive array of frameworks, definitions and papers using the concept. There is now a need to integrate these many contributions. Indeed, some of the frustration expressed recently by academics may be due to the large volume of conversation and the low level of integration. A concept that is considered so useful that many writers have incorporated it in their work will be of little value if it takes on different meanings for every use. If competence is to be used to explain relationships among variables and to build richer understandings of the roots of competitive advantage, then the field needs to engage in a serious conversation that attempts to focus this concept. Competence needs to be understood in a way that is faithful to its theoretical roots, allows the multiple dimensions that underpin competitive advantage to be meaningfully integrated and is specific enough that meaningful differences can emerge when used as a variable in empirical research. This paper seeks to begin a conversation toward that end by presenting a conceptualization that meets all of these requirements. The paper builds its conceptualization around satisfying the elements of a dynamic model of the relationship between competence and competitive advantage.