FADING MEMORIES - A PROCESS THEORY OF STRATEGIC BUSINESS EXIT IN DYNAMIC ENVIRONMENTS

This comparative study of the evolution of Intel Corporation's strategic position in two semiconductor memory businesses and in the microprocessor business provides insight into the forces that drive strategic business exit in dynamic environments. Inertial forces caused Intel's distinctive competence to diverge from the evolving basis of competitive advantage in the memory business. Inertial forces also caused Intel's corporate strategy to diverge from strategic actions taken by middle-level managers. Intel's internal selection environment played a key role in the strategic business exit process by causing it to shift the allocation of scarce manufacturing resources from the memory business to the emerging microprocessor business before corporate strategy was officially changed. The paper contributes to the development of theory about the role of strategy in firm evolution by offering insight into how the internal selection environment mediates the coevolution of industry-level sources of competitive advantage and firm-level sources of distinctive competence and into the link between corporate strategy and strategic action.