Competing in the looking‐glass market: imitation,resources, and crowding

I examine two dominant processes of organizational interdependence—imitation and resource competition—and develop a theory that integrates predictions about firms' propensity to change market locations based on both. The cornerstone of the model is the argument that both processes operate concurrently and are driven by the departure of peer firms from a shared resource space. I also argue that the imitation effect, which reflects shared perceptions and interpretations among ecologically proximate peers, hinges on the competitive intensity faced by each individual organization in its market location. Analyses of U.S. automobile manufacturers' moves between the industry's three main market segments confirm the predictions of the theory and point to the merits of using an ecological approach to the evolution of market segmentation and the formation of industry structure. Copyright © 2007 John Wiley & Sons, Ltd.