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02Feb '12

Higher Growth Through the Blue Ocean Strategy: Implications for Economic Policy

Science Direct

Theme: Empirical evidence reporting a correlation between blue ocean strategy and rapid growth, using data from 512 fast-growing companies in Slovenia and, as well as an analysis of online retail giant Amazon.

Summary: To stimulate economic growth, many economic policies focus on support to companies of a specific size, generally small and medium enterprises (SMEs), new start-ups, and to specific sectors, such as IT and other high-tech industries. Such policies also incentivize specific activities, such as R&D and technology innovation, and measure success by the number of patents filed and approved. The authors discuss the shortcomings of this approach to policy making and propose another based on blue ocean strategy. The authors empirically test four propositions derived from the blue ocean strategy frameworks, using data from 2007 consisting of 512 companies that satisfy the criterion of extreme growth, known in Slovenia as Gazelles. Their discussion also includes an analysis of swiftly growing online retailer Amazon. The findings provide empirical evidence of a correlation between rapid growth and blue ocean strategy, that in fact all companies that grew fast demonstrated blue ocean strategy, confirming that creating and exploiting new market spaces leads to higher growth. Moreover, the authors also show that fast growth is independent of both company size and industry. Companies achieve high growth through value pioneering (or what Blue Ocean Strategy’s authors call value innovation), not only through technology pioneering. The authors challenge some well-established premises of economic policies and argue that their findings call for a shift in focus to include value innovation, creation of uncontested market spaces, and intra-industry cooperation and collaboration between companies of different sizes.

Reference: Lindič, Jaka, M. Bavdaž, and H. Kovačič. "Higher Growth Through the Blue Ocean Strategy: Implications for Economic Policy." Research Policy 41 (June 2012): 928–938.
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