The first type, strategy effects, is acknowledged by both perspectives; it consists in
the direct effects of strategy on performance (path v3 on Figure 15.1). Here, the model
posits that when a firm creates value for buyers, either via differentiation or cost
leadership, this will impact its performance. The second type of effects, industry effects
(paths v1 and v2) constitutes the competitive strategy perspective component of the
model. As a reflection of the central role played by industry I this perspective, the
model posits the presence of a direct effect of industry on firm performance (v2), which
would result from a defensive type of strategic positioning, that is, from strategic
choices that would aim toward protecting the firm against the competitive forces.
Industry forces are in turn impacted by the firm’s offensive strategy (v1) ; in Spanos
and Lioukas’ terms, “under the offensive type of positioning , strategy influences the
relative balance of the competitive forces the firm confronts” (Spanos and Lioukas,
2001, p.913). Industry effects (v1*v2) also exist, which result from the
combined effects of an offensive type of positioning and of the relative balance of
competitive forces.