The structure of competition: how competition between one's rivals influences imitative market entry

• Autores: Kai-Yu Hsieh, Freek Vermeulen
• Localización: Organization Science, ISSN-e 1526-5455, Vol. 25, Nº. 1, 2014, págs. 299-319
• Idioma: inglés
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• Resumen

  • This paper investigates how the pattern of encounters between a firm�s competitors affects the firm�s inclination to follow its competitors into a new market. We theorize that direct encounters between a firm�s rivals lead to a herding effect, making imitative market entry more likely. Past mutual forbearance between a firm�s competitors (resulting from asymmetric multimarket competition) further strengthens this herding effect, by enhancing the firm�s expectations of market attractiveness. In contrast, aggressive past rivalry between the competitors (resulting from symmetric multimarket contact) dampens these expectations, producing a competition effect that makes herding less probable. We test our idea in two distinct contexts�the Chinese pharmaceutical industry and the Taiwanese computer hardware industry�and find consistent support in both settings. We discuss how our analysis of what we call the �structure of competition� can be extended to research on other forms of firm behavior.