The influence of competition from informal firms on new product development

Research summary : Existing research describes a broad range of determinants of new product development (NPD), a fundamental competitive activity of firms. A considerable share of this work has occurred in the context of developed economies, raising a concern that some important determinants may remain unexamined. We suggest that one such determinant is competition from informal (unregistered) firms. Drawing from the attention‐based view, we investigate the effects of informal competition on NPD in a large sample of firms located across Eastern Europe and Central Asia. We examine not only the direct effect but also how this effect is moderated by characteristics of the competitive and institutional context. Managerial summary : The purpose of this research is to examine the relationship between competition from informal (unregistered) firms and new product development (NPD) by formal firms. We argue that NPD is an effective response to differentiate from informal firms, and our analyses of over 9,000 firms located in emerging economies across Eastern Europe and Central Asia indicate that NPD activities are more likely in formal firms who rate informal competition as a greater obstacle. The strength of this direct relationship depends on aspects of the competitive and institutional environment: it is weakened when levels of competition from other formal firms are higher, when alternative responses such as corruption are more available, and when managers are more optimistic about the regulatory environment. Copyright © 2016 John Wiley & Sons, Ltd.     

Competitive intensity and collaboration: impact on firm growth across technological environments

This article investigates the impact of competitive intensity and collaboration on firm growth across technological environments. I propose that competitive intensity determines the likelihood of firm collaboration, and that the interaction of competitive intensity and collaboration influences firm growth. These relationships are, in turn, moderated by industry‐level technological intensity. Analyzing 1,004 firms and 378 collaborations from the manufacturing sector in Singapore, I find that firms facing high or low levels of competitive intensity collaborate less often than those facing moderate levels of competitive intensity. Industry technology intensity moderates this relationship, with a stronger inverted‐U‐shaped association between competitive intensity and collaboration in more technology intensive industries. Collaboration leads to higher growth for firms facing lower levels of competitive intensity than for firms facing higher levels of competitive intensity only in more technology intensive industries. In technologically less intensive industries, collaboration leads to higher growth for firms facing higher levels of competitive intensity as compared to those facing lower levels of competitive intensity. These findings have important implications for competitive and collaborative dynamics for firm growth in different technological environments. Copyright © 2008 John Wiley & Sons, Ltd.     

Product line strategies of new entrants in an established industry: evidence from the U.S. bicycle industry

A firm's product line breadth in a given market has both benefits and costs; these effects can be more clearly seen by examining not only the number of products a firm offers, but also the degree of complexity that the product line represents. The effects of breadth are particularly important for new entrants in a relatively mature industry and I examine the breadth–survival relation on new entrants in the bicycle industry in the period 1993–98. I find that firms offering a greater number of products, those with very simple and very complex product lines, and those whose product lines have a moderate degree of overlap with rivals have the highest survival rates. Copyright © 2006 John Wiley & Sons, Ltd.     

Cross-Functional collaboration,competitive intensity,knowledge integration mechanisms,and new product performance: A mediated moderation model

This study draws upon the structural contingency theory to develop a mediated moderation model in order to examine how knowledge integration mechanisms mediate the impact of competitive intensity on the cross-functional collaboration–new product performance relationship. A final sample of 182 Taiwanese manufacturing firms provides the data for the analyses. The results show that (1) competitive intensity weakens the effect of cross-functional collaboration on new product performance and (2) knowledge integration mechanisms mediate the negative effect of competitive intensity on the cross-functional collaboration–new product performance relationship. These results not only provide an explanation for the inconsistent findings documented in the marketing literature but also call on managers to take relevant actions to alleviate the negative influence of competitive intensity on the performance effects of cross-functional collaboration and knowledge integration mechanisms.     

Competitive Pressure and Innovation at the Firm Level

This paper provides empirical evidence on the relationship between market competitive pressure and firms' innovation using panel data of Spanish manufacturing firms for 1990–2006. We depart from standard measures of competition, and construct variables capturing the fundamentals of competitive pressure (product substitutability, market size and entry costs) to test the theoretical predictions of Vives [2008, The Journal of Industrial Economics] for free entry. Our results line up favourably with these predictions. We obtain that greater product substitutability and higher costs of entry lead to more process innovation but less product innovation, whereas market enlargement spurs both product and process innovation.     

Intra‐industry diversification and firm performance

We study how intra‐industry product diversity affects firm performance by analyzing the implications of expanding a firm's product line within its core business. We conjecture that increases in product diversity initially undermine performance because of negative transfer effects but then improve it due to economies of scope. We further theorize that this U‐shaped effect of product diversity becomes more pronounced as the firm increases the intensity of its technology investment, yet is likely to be attenuated by the firm's accumulated experience with intra‐industry diversification. Data on 156 U.S.‐based software firms operating from 1990 to 2001 furnish support for these conjectures. Our study advances emerging research on intra‐industry diversification by underscoring some of its contingent performance effects. Copyright © 2013 John Wiley & Sons, Ltd.     

Taking industry structuring seriously: A strategic perspective on product differentiation

Given legal impediments to consolidation and collusion, firms often resort to product differentiation to attain market power. This paper provides a formal analysis of product differentiation as a tool for such industry structuring at both the firm and industry level. We examine: how industry structure differs when firms collaborate on their differentiation decisions, and when the profitability of such collaboration is greatest; how an individual firm's differentiation decisions affect subsequent market outcomes under price competition, such as margin, market share, and profit; how mere differentiation differs from a ‘differentiation advantage’; and how changing a firm's differentiation affects its rivals through both positive externalities (by restraining rivalry) and negative externalities (by shifting competitive advantage). Our results have implications for empirical research, strategy theory, and pedagogy.     

On the relation between multimarket contact and service quality: Mutual forbearance or network coordination?

Research summary : We reconsider the relationship between multimarket contact and product quality in the airline industry by arguing that multimarket contact has both a negative mutual forbearance effect on quality and a positive network coordination effect on quality. Multimarket contact increases the frequency of contact between firms, and this anticipated future interaction promotes cooperation. In network industries, especially small firms may want to cooperate in order to increase the attractiveness of the composite product. By using size as a moderating variable, we indeed find a consistent positive effect of multimarket contact on product quality for small airlines. We show that this effect can be attributed to network coordination and that this effect generally dominates the negative mutual forbearance effect in a recent period. Managerial summary : Firms with sales in multiple geographical markets likely encounter each other with mutual respect (i.e., live and let live) because aggressive behavior in one market may lead to retaliatory responses in other markets. Such responses weaken competitive pressures on price and quality. Insofar these firms sell complementary products, they may however also coordinate and improve their joint product offering, resulting in better quality for the consumer. This paper shows that this positive effect of cooperation may dominate the negative competition‐reducing effect, depending on the size distribution of firms. The reason is that small or nondominant firms have a stronger incentive to produce compatible products than large or dominant firms with already a strong position in the (global) market. Copyright © 2015 John Wiley & Sons, Ltd.     

Competitive advantage and performance: the impact of value creation and costliness of imitation

We create an industrial organization type model to relate resources to the spread between product market demand and marginal cost. We define competitive advantage as the cross‐sectional differential in this spread, and performance as the longitudinal differential between what a firm appropriates in the product market and what it paid in the factor market. With factor markets imposing different costs on the innovator and potential imitator(s), competitive advantage, performance, and high resource value do not necessarily coincide. Also, the interaction between resource value and the cost of imitation is complex and affected by the number of firms in the industry. Copyright © 2009 John Wiley & Sons, Ltd.     

Letting the market work for you: an evolutionary perspective on product strategy

Managers must choose to allocate scarce resources either to the maintenance of a range of products tailored to heterogeneous consumer preferences or to the efficient production of a small number of products. In addition, managers must choose the degree to which they periodically cull the product line. Vigorous selection removes poor performers from the product line, but this action simultaneously impairs the firm's ability to monitor changes in consumer preferences. Empirical evidence from the computer workstation industry reveals that the ideal choice of product variety depends on the competitive ecology of the industry. Product variety becomes less valuable as the total number of products on the market increases, but it increases in value as uncertainty makes the accurate prediction of demand difficult. Copyright © 2000 John Wiley & Sons, Ltd.     

Auditing product innovation activities in manufacturing firms

Increasing numbers of large firms are splitting themselves into self-standing businesses for the purpose of targeting opportunities more accurately. Based on the findings of an empirical study of product development procedures in leading UK and US manufacturing firms this article provides R&D and other managers with a checklist of the processes involved in developing products speedily and efficiently. Businesses which use product innovation successfully as a competitive weapon are shown to approach development work in a way which is far more comprehensive than aiming only at efficient technical project management. In such businesses supportive top management and efficient interfunctional teamwork emerge as key factors concerned with running a total business both now and in the future.     

New product deployment: The moderating influence of economic institutional context

We compare the determinants of new product deployment across transition and nontransition economy environments to show the importance of variance in economic institutional context. We argue that the expected positive relationships of institutional development, resource levels, and competitive pressure to new product deployment all weaken in transition economy contexts. Hypotheses are tested with survey data of over 7,000 firms in 7 industries from 33 countries. Copyright © 2013 John Wiley & Sons, Ltd.     

Playing dirty or building capability? Corruption and HR training as competitive actions to threats from informal and foreign firm rivals

Research summary : We examine why a firm takes specific competitive action in nonmarket and resource‐market spaces, particularly when it perceives threats from informal and foreign competitor groups, respectively. We address this question by combining insights from competitive rivalry, strategic groups, and nonmarket strategy literatures in an emerging economy context. Specifically, we theorize how threats from informal and foreign rival firms in an emerging market influence a firm's engagement in corruption activities and its investments in HR training, respectively. We also argue that the likelihoods of such focal firm actions against competitor group threats differ, contingent on the focal firm's market and resource profiles. Results from the empirical analyses, with survey data from the Indian IT industry, provide broad support to our hypotheses. Managerial summary : Based on a World Bank dataset on the Indian IT industry, this study finds that corruption and HR training are pursued by firms in emerging economies as mindful strategies against specific types of rivals—informal and foreign firm rivals, respectively, and are not pursued simply as culturally‐based practices. Multinational companies may need to understand that domestic firms in emerging countries will engage in corruption strategically to reduce their costs and time to market of their products/services. Therefore, multinational firms may need to devise suitable strategies other than corruption to reduce their costs and time to market if they wish to compete with firms in emerging economies for customers who don't care about ethical issues and will buy a cheaper product/service that is delivered quickly. Copyright © 2015 John Wiley & Sons, Ltd.     

The clock is ticking! Executive temporal depth,industry velocity,and competitive aggressiveness

We examine how the interplay between executive temporal depth (time horizons that executives consider when contemplating past and future events) and industry velocity (the rate at which new opportunities emerge and disappear in an industry) shapes competitive aggressiveness (a firm's propensity to challenge rivals directly and intensely in order to maintain or improve its market position) and firm performance. Based on panel data (from 1995 to 2000) from 258 firms in 23 industries, we found that executive temporal depth exhibited different patterns of relationships with competitive aggressiveness in low‐ and high‐velocity industries. Moreover, competitive aggressiveness had a positive main effect on firm performance, but this effect was stronger in high‐velocity industries than in low‐velocity industries. Copyright © 2015 John Wiley & Sons, Ltd.     

Strategic factor markets,scale free resources,and economic performance: The impact of product market rivalry

This paper analyzes how scale free resources, which can be acquired by multiple firms simultaneously and deployed against one another in product market competition, will be priced in strategic factor markets, and what the consequences are for the acquiring firms' performance. Based on a game‐theoretic model, it shows how the impact of strategic factor markets on economic profits is influenced by product market rivalry, preexisting competitive (dis)advantages, and the interaction of acquired resources with those preexisting asymmetries. New insights include the result that resource suppliers will aim at (and largely succeed in) setting resource prices so that the acquiring firms earn negative strategic factor market profits—sacrificing some of their preexisting market power rents—by acquiring resources that they know to be overpriced. Copyright © 2014 John Wiley & Sons, Ltd.     

Competition network structure and product market entry

This study proposes and tests a theory of the effects of competition network structure on product market entry. Competition networks are defined as the patterns of interdependence between rivals that emerge from direct competition. Studying networks based on competitive interdependence allows us to extend social network theory to new territory and to enhance our understanding of product market entry. We propose that the size, interconnectedness and diversity of competition networks influence subsequent product market entry in a systemic way. We test our hypotheses in a unique dataset drawn from the aircraft modification industry. Copyright © 2014 John Wiley & Sons, Ltd.     

基于企业竞争力视角的物流金融服务研究

作为顺应市场发展、实现多方共赢的创新型物流服务,物流金融不仅有利于中小企业融资和银行金融业务的创新,也是提高物流企业竞争力的重要方式。本文以我国物流企业的未来竞争力为视角,对发展物流金融服务的具体策略和路径进行深入探讨,指出物流金融服务必将推动物流企业的管理创新和业务发展,成为我国物流企业决胜未来和物流产业迅猛发展的重要手段。     

Nested identities as cognitive drivers of strategy

Research Summary: Organizations face tensions to conform to industry norms for legitimacy yet differentiate for competitive advantage when implementing strategies. We suggest this tension is due to and resolved through organizations’ cognitive negotiations of multiple levels of identity. Through an inductive study in the recreational vehicle industry, we find that organizations concurrently draw on identities at the organizational, industry, and strategic group levels to formulate and enact specific competitive actions. Specifically, we find that organizational identity relates to decisions on product offerings; industry identity relates to downstream strategy; and strategic group identity relates to upstream strategy, firm boundaries, and expansion mode. Our findings highlight the importance of strategic group identity and inform a grounded model describing how organizations draw upon different levels of identity to influence strategy. Managerial Summary: Many managers experience tensions of differentiating their firms’ competitive actions from rivals, while conforming with industry norms and practices. In this article, we argue that a manager can navigate these tensions by understanding their firm, strategic group, and industry identities and how these identities interrelate. Through a qualitative case study of the U.S. recreational vehicle industry, we show that each level of identity influences different competitive actions, with firm identity connected to product offerings, industry identity related to managing downstream distribution, and strategic group identity related to firm boundary and acquisition strategies. Overall, strategic group identity is the most critical for managers as this level filters how they view competitors and provides the rules of competition.     

STRATEGIC GROUPS AND RIVALROUS FIRM BEHAVIOR: TOWARDS A RECONCILIATION

This research examines the question of whether rivalry is greater between or within strategic groups by utilizing more direct, dynamic and fine-grained measures of rivalry. Examining the competitive actions of firms in different strategic groups to determine if competitive responses were more likely to occur from firms in the same strategic group, or from firms in different strategic groups, the research found that competitive responses cannot be predicted by strategic group membership. Importantly, however, strategic group membership is a predictor of the manner by which firms compete with one another, or the frequency with which they undertake competitive actions, cut prices, instigate warfare and imitate rivals. © 1997 by John Wiley & Sons, Ltd.