The value of strategic positioning and differentiation in the non-life reinsurance industry in South Africa

Abstract

Notable in strategic management research is a paradigm shift from industry/market factors as determinants of competitive strategy to a resource-based view. This study focuses on the extent to which firms in the reinsurance industry use resources for strategic positioning and differentiation. A qualitative case study approach has been adopted for this study. On the basis of open-ended questions, interviews were conducted with 6 executives of the 6 chosen non-life reinsurance companies. In addition to interviews, company annual reports were used. Results obtained point to similarities in broader categorisation of resources, namely human capital, financial resources, information systems and organisational culture. Despite similarities in the broader grouping of resources, uniqueness in resources and competitive advantage derived therefrom is in the attributes of each of the resources that a reinsurance firm own. The main driver for basing positioning and differentiation strategies is that resources are controllable and manipulative compared to industry factors. Though the results support the underlying principles of the resource-based view, it is notable that its prescriptive nature with regard to resource characteristics, does not hold for some of the resources such as human resources, which are not perfectly immobile.