Associate Professor Anne Parmigiani, Department of Management head, wasn’t looking to research the RV (recreational vehicle) industry. But then 2008 happened. And she found herself wondering what effect the recession was having on the RV manufacturers just up the road from Eugene in Junction City and Coburg. This curiosity led to connecting with an industry expert at Monaco Coach.
Parmigiani quickly learned that the RV industry is based largely in one geographic location (Indiana) and is dominated by a handful of companies. As a researcher, that piqued her interest. Because of it manageable size and geographic scope, could studying the RV industry be a means of investigating and understanding processes and practices in other manufacturing sectors?
She jumped in to find out, working on several papers about the RV industry that provide insights to areas for further inquiry across manufacturing industries. The latest research, forthcoming in the Strategic Management Journal and titled “Nested Identities as Cognitive Drivers of Strategy,” Parmigiani coauthored with former Lundquist College PhD students Jennifer Irwin, PhD ’12, now of Lycoming College, and Brooke Lahneman, PhD ’16, now of Montana State University.
As Parmigiani explained, today, the RV industry has recovered nicely. In 2016 the RV industry, brought in $17 billion with some 430,000 units produced, according to the Recreational Vehicle Industry Association. It is projected 2017 will close out even better with 450,000 units produced.
Yet, just seven companies comprise nearly the entire RV industry. Even more interesting, those seven companies use many similar, if not identical, practices.
“Same suppliers, same dealer, same labor, same production process,” she said.
The study of strategic groups—the thought that firms within a specific sector have similar strategies and business plans—is of course not unique to the RV industry. What Parmigiani and her coauthors investigated in their new paper is the role of identity within these groups, and how it relates to product offerings.
“You would think they would all do things the same way,” Parmigiani said. “They don’t. Yet, we also didn’t find all seven were doing things differently. We found the seven fit into two clear, distinct identity groups.”
The groups are
- Assemblers: Those that are more market-oriented, buy other firms to become bigger, outsource a lot, and are openly competitive—even among divisions of the same firm.
- Crafters: Those that are more collaborative, organically grow their businesses, and are much more vertically integrated.
“Which group they are in affects a lot of things, such as vertical integration, and how they manage and determine acquisitions. Do you grow your own, or do you buy other firms?” Parmigiani explained.
Historically, the theory has been that economics determines which of these two strategic groups a manufacturer would fit into. But what Parmigiani and her coauthors found, it’s often about how managers themselves view the industry.
“It’s really those managerial perceptions of their identity that really affect firm behavior,” noted Parmigiani. “What does it mean to be this kind of a firm versus that kind of firm? Those different levels of identity drive decisions around products. How they perceive the larger industry really affects how they manage their downstream partners, like dealers.”
In the article, the authors explain that managers navigate these tensions by understanding their firm, strategic group, industry identities, and how these identities interrelate.
The research puts forth a new line of inquiry into how managerial perceptions affect a manufacturing firm’s business practices and strategic direction. Parmigiani plans to pursue these additional research opportunities and hopes others will too. Of course, the RV industry itself provides many additional avenues for research as well.
“It’s a cool industry, and there is a lot going on,” said Parmigiani.
Indeed, she is currently working on a paper about how the RV industry “went green” as a response to a tanking economy, as well as studying a newly emerged model for RV trade shows that is now competing with the more traditional trade show.