The Johns Hopkins University series on Entrepreneurship
Edited by Gideon D. Markman and Phillip H. Phan
Chapter 6: Additional Insights on Resource-based Competition
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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