The Competitive Dynamics of Entrepreneurial Market Entry

The Competitive Dynamics of Entrepreneurial Market Entry

The Johns Hopkins University series on Entrepreneurship

Edited by Gideon D. Markman and Phillip H. Phan

Research on general market entry usually focuses on large enterprises. Often, however, small entrants can alter the competitive dynamics of an industry. This volume brings together the most prominent thought leaders and the best research on the asymmetric entrant-incumbent dynamics. The ideas presented offer a more nuanced perspective on how, when, where and with what consequences small, single-product firms enter markets that are dominated by large, multiproduct and multimarket incumbents.

Chapter 6: Additional Insights on Resource-based Competition

Gideon D. Markman, Peter T. Gianiodis and Ann K. Buchholtz

Subjects: business and management, entrepreneurship, economics and finance, industrial economics


6. Additional insights on resourcebased competition Gideon D. Markman, Peter T. Gianiodis, and Ann K. Buchholtz Understanding an industry’s landscape and market dynamics is vital for a firm’s short-term performance and long-term resilience. Competitive dynamics research contributes to this understanding because it offers a conceptual framework of competition, mainly by explaining and predicting how opponents engage each other. Such a theory of organizational conflicts is essential for shedding light on how, when, why, and where firms enact their strategies, defend their positions, execute their incursions into markets, signal their toughness, and test their opponents’ mettle and capabilities. Competitive dynamics research has advanced our understanding of hostile encounters, but several lacunae remain. Perhaps because of its product-market view, earlier competitive dynamics research tended to assume that rivals have the same profiles. In that view, players were classified as a threat only when they operated in the same industry segment, used the same or similar assets and resource-capability mixes, or provided similar or substitutable offerings to the same customers. Put differently, because prior rivalry theory was bounded by strategic group, geo-product view, and industry-related designations, the domain has overlooked hostility among players of asymmetrical profiles—firms of dissimilar size, corporations from different industries, or players who pursue conflicting missions (e.g., hostility between non-market players such as non-profit firms and for-profit firms). Not only did this limit the scope of competitive dynamics research, it perpetuated managerial action, which merely exacerbated blindsiding effects of hostile encounters. We developed a theory of factor-market rivalry (a.k.a....

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