Strategic Management Journal. Antecedents of temporary advantage, страница 5

Some have suggested that more fine-grained theories from Austrian economics—that emphasize entrepreneurs, action, and disequilibrium—offer hope for competing in rapidly changing conditions (Grimm et al., 2005). Indeed, the competitive dynamics stream of research has been built upon this assumption (Smith et al., 1992). The principle argument in this stream of research is that the firm strategy/performance relationship is very much dependent on the behavior of both a focal firm and its competitors or the level of rivalry. Competitive dynamics research, thus, focuses on the specific actions that a firm takes and how rivals react to these actions: the action/reaction relationship. Furthermore, competitive dynamics research emphasizes the temporary advantages that result from a single action or a stream of actions over time. For example, the research has established that different kinds of actions promote faster or slower responses depending on the characteristics of the action (Chen, Smith, and Grimm, 1992). The research has also connected with the resource-based view by finding relationships between the stock of resources of the acting firm, such as the amount of organizational slack and the level and speed of competitive response (Smith et al., 1991). Importantly, there have been a number of studies that connect actions and responses to organizational performance (Derfus, et al.2008; Lee et al., 2000; Ferrier et al.1999, Young, Smith, and Grimm, 1996). Many of the studies that emphasize competitive dynamics have roots in RBV or industrial organizational economics, a problem that has limited the insights of this stream. Consequently, there is a need for new dynamic theory focusing on the action/reaction level of analysis that is more revealing of these dynamics.

Smith and Cao (2007) introduced a model of entrepreneurial action that explains how firms build value in dynamic, rapidly changing markets. The model is based on four separate processes. First, managers search their environments in a desire to find opportunities for new action. Second, they undertake new entrepreneurial action that creates a market disruption because of novelty (newness). Third, the disruption leads to market discourse, whereby the newly created actions are evaluated by market participants (potential customers) and other interested stakeholders. Fourth, actions lead to performance results which can be compared to goals. Interestingly, this model does not assume that actions directly impact performance (either positively or negatively), but that such actions are first evaluated by market participants, which is a sensemaking process that helps reduce the uncertainty (leading to positive, neutral, or negative opinion). Firms and their rivals are active participants in this process, learning from their actions and adjusting such actions based on feedback from the market discourse process. Importantly, this approach does not require a definition of industry structure in order to identify rivals, as any stakeholder within or outside the industry definition may participate and attempt to influence the discourse process.

New methods

As we think about the consequences of rapidly changing turbulent environments and the management of temporary advantage, one must also consider the appropriate unit of analysis for research study. For example, much of the research in industrial organization economics and RBV was largely developed using longitudinal panel data based on public archival annual company or industry/environment data. But what if changes in firm, environment, and performance relationships are more dynamic, varying more frequently than can be captured with annual data? What if such relationships are moving by the month or even by the week? If such dynamics occur, important relationships might be masked with annual data.

The competitive dynamics research stream focuses on the specific actions of firms, which may occur at multiple times within a given year, month or week. As noted, such actions have been linked to rival reactions and to more coarse-grained measures of firm capabilities, such as top management characteristics and excess slack resources. Still, it is fair to conclude that the competitive dynamics research has suffered from aggregating actions over a given year so as to link such actions to firm capabilities and annual performance data only available at the year/firm unit of analysis. One exception is the study by Lee et al. (2000) where the authors linked new product introduction actions occurring on a given announcement date to rival imitation and the firm's stock prices immediately after. The authors found that new product introductions had a positive significant impact on stock prices immediately after the introduction for the introducing firm, but that stock prices were also negatively affected by rival imitation. The use of daily stock prices allowed the authors to capture the Schumpeterian creative destruction effect: the positive effects of innovation and the negative effects of rival response.