Life in the fast lane: Origins of competitive interaction in new vs, established markets, страница 4

Despite these valuable insights, several unexplored questions remain. First, there is little insight into competitive moves in new markets in which competitive dynamics and temporary advantage may be especially germane, and yet the findings from established markets may not be relevant. For example, while past performance and comparison with rivals may motivate competitive moves in relatively stable established markets, these comparisons are likely to be unclear, unreliable, or simply not available in new markets. Indeed, rivals are likely to be changing (Santos and Eisenhardt, 2009), while anticipating the consequences of moves is likely to be challenging (Katila and Shane, 2005). Second, there is little insight into origins of R&D moves that are essential in many markets, yet extant research based on highly observable moves may not be helpful. In other words, the motives to engage in less observable (and ambiguous) moves like R&D are likely to differ from those to enact observable (and unambiguous) moves such as pricing. Third, theory and evidence typically indicate that more frequent moves are high performing. Yet, high-performing firms may not always prefer to make many moves, particularly in markets where competitive retaliation is likely. Thus, it is unclear when firms would be motivated (or not) to engage in moves. Overall, the competitive dynamics literature offers an incomplete view of the origins of diverse moves in markets with varied temporary advantage. We address these gaps.

Competitive moves as evolutionary search

Recent research hints that an evolutionary search perspective in which competitive moves are conceptualized as problem-solving search in a landscape (Katila, 2002; Katila and Chen, 2008) might be a useful theoretical lens to understand competitive moves in varied markets (Smith et al., 2001; Greve, 2008). Given its focus on learning through search rather than rational optimizing (Argote, 1999) and its ability to address environmental dynamism and incorporate competition (Katila and Chen, 2008), an evolutionary perspective is especially likely to extend understanding of competitive dynamics into unstable and rivalrous settings such as new markets.

The search perspective rests on several fundamental insights. One is that managers are boundedly rational, so they avoid the need to anticipate events, optimize, and develop long-term strategies. Rather, they solve pressing problems using local responses (Cyert and March, 1963). A central characteristic of this problem solving is simplicity: search is simple minded and local in the neighborhood of the problem and current alternatives (Martin and Mitchell, 1998). As a consequence, immediate problems (such as poor performance) and proximate solutions motivate search.

A second is that managers search for a better competitive position in a knowledge space, conceptualized as a landscape. They move in search of high performance with their position on the landscape topography indicating their success. Several empirical studies confirm that representing firm behavior as search fits with how firms solve problems, such as those in R&D and innovation (Clark et al., 1987; Helfat, 1994; Katila, 2002). Thus, the evolutionary lens is especially useful for examining the origins of distinct competitive moves (R&D, market) in different market landscapes—i.e., our research context.

HYPOTHESES: ORIGINS OF COMPETITIVE MOVES

1.Top of page

2.Abstract

3.INTRODUCTION

4.THEORETICAL BACKGROUND

5.HYPOTHESES: ORIGINS OF COMPETITIVE MOVES

6.METHODS

7.RESULTS

8.DISCUSSION

9.CONCLUSION

10.Acknowledgements

11.APPENDIX

12.REFERENCES

In this section, we use evolutionary theory to develop hypotheses about the origins of competitive moves. We contrast the motivations of firms to engage in moves in markets in which advantage is likely to be moderately temporary (established market) and in markets in which advantage is likely to be highly temporary (new market).