The Johns Hopkins University series on Entrepreneurship
Edited by Gideon D. Markman and Phillip H. Phan
Chapter 3: A Retrospective on ‘Hypercompetition in a Multimarket Environment’
3. A retrospective on “Hypercompetition in a multimarket environment” Javier Gimeno The paper “Hypercompetition in a Multimarket Environment: The Role of Strategic Similarity and Multimarket Contact in Competitive Deescalation” (Gimeno and Woo 1996) reflected a transition moment in the competitive strategy literature. During the 1970s and 1980s, the general endeavor, both from the strategic management and industrial organization perspectives, had been in relaxing the homogeneity assumption embedded in traditional economic models of rivalry and industry structure. In both disciplines, this was done under the banner of the “strategic group” concept (Hatten and Schendel 1977, Caves and Porter 1977). For strategy scholars, strategic groups were a mechanism to categorize the diverse strategies within the industry into more homogeneous sets (Hatten and Hatten 1987), which could explain variance in firm-level performance. For industrial economists, strategic groups were a mechanism to model differences in intra-industry structure, which could complement industry structure measures (such as concentration or barriers to entry) in explaining rivalry and industry-level performance. Despite the flourishing of an empirical literature on strategic groups during the 1980s, there were substantial concerns about the robustness and completeness of this concept as a foundation for competitive strategy (Barney and Hoskisson 1990). First, the resource-based view emerged as an alternative explanation of interfirm performance differences, which focused more on strategic uniqueness rather than strategic similarity. Second, most studies focused on explaining performance differences, even though the theoretical mechanisms hinged on the impact of strategic groups on competitive dynamics and rivalry (Cool and Dierickx 1993, Peteraf...
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