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NOTE: Since 2009 the title of the International Journal of Entrepreneurship Education (IJEE) has been changed to the title above.  ISSN numbers: IJEE 1649-2269 and IRE 2009-2822

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ISSN Number: 2009-2822. Frequency: 4 Issues per year (online only)  

Article #1529 - Testing the Validity of Blue Ocean Strategy versus Competitive Strategy: An Analysis of the Retail Industry

IRE Vol 14: Issue 2, 2016 , Pages 123-146

Author(s): Andrew Burke (Trinity College Dublin, Ireland), André van Stel (Trinity College Dublin, Ireland and Kozminski University, Warsaw, Poland), Roy Thurik (Erasmus School of Economics, the Netherlands and Montpellier Business School, France)

We investigate the nature of the competition process in retailing by contrasting blue ocean strategy and competitive strategy. We develop a methodology to test the core assumptions of both these major schools of strategic management. Applying this methodology to a large data set of shop type averages within the retailing sector, we find empirical support for blue ocean strategy in terms of creating new retail market space. At the same time we also find support for competitive forces eroding temporary profits. However, we find that these forces are sufficiently slow to enable periods of supernormal profits for retail innovators.

Acknowledgement: A more practitioner focused discussion of the results of the analysis contained in this paper appeared in the Harvard Business Review 88(5) under the title “Blue Ocean vs. Five Forces”.

Keywords: blue ocean strategy, competitive strategy, innovation, sustainable profits, retailing

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