An Original Contribution to Understanding Strategic Group Dynamics and Competitive Behaviour in the Nigerian Banking Industry

Strategic groups, clusters of firms pursuing similar competitive strategies within industries, structure competitive behaviour in important ways, and their dynamics in the Nigerian banking industry, a concentrated and regulated oligopoly, have not been theoretically or empirically investigated, creating a gap this study fills with original contributions. This study develops an original theory of strategic group dynamics in the Nigerian banking industry, drawing on the strategic group paradigm, competitive dynamics theory, and institutional theory to explain how Nigerian banks form strategic clusters, interact competitively within and across clusters, and how these dynamics evolve over time in response to regulatory and macroeconomic disruptions. An original Strategic Group Mapping Methodology is developed for Nigerian banking, using multidimensional scaling of competitive strategy data from 22 commercial banks for the period 2015 to 2023. Strategy data are extracted from annual reports, product catalogues, branch network data, and executive statements using content analysis. Three stable strategic groups are identified: Digital Leaders (technology-first, high metropolitan coverage), Diversified Nationals (broad product range, national distribution), and Niche Market Specialists (sector or geographic focus). Panel data analysis assesses intra-group versus inter-group competitive intensity using rivalry indicators. Event study analysis captures strategic group membership changes following major regulatory events. Results confirm that intra-group competitive intensity is significantly higher than inter-group intensity (F = 9.47, p < 0.001), consistent with strategic group theory. Regulatory events (the 2023 recapitalisation directive) induced significant group boundary dissolution effects, with 5 banks migrating across group boundaries within 12 months. The study produces original strategic group theory applications for the Nigerian banking context. Keywords: strategic groups, competitive behaviour, Nigerian banking, competitive dynamics, strategic group mapping