Fading Memories: A Process Study of Strategic Business Exit in Dynamic Environments

The comparative study of the evolution of Intel Corporation’s strategic position in two semiconductor memory businesses and in the microprocessor business provides insight in the forces that drive the strategic business exit process in dynamic environments. Inertial forces caused distinctive competence to diverge from the evolving basis of competitive advantage in the memory business. Inertial forces also caused official 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 shifting the allocation of scarce manufacturing resources to new and more attractive business opportunities generated by the firm’s evolving distinctive competence. It thereby helped define the strategic context of the microprocessor business and dissolve the strategic context for the memory business. This, in turn, set the stage for top management to bring official corporate strategy back in line with strategic action. By offering some insights in the co-evolution of industry-level sources of competitive advantage and firm-level sources of distinctinve competence, and in the mediating role of the internal selection environment, the paper contributes to the development of an evolutionary ecological perspective on strategy.