walter j. ferrier university of kentucky

WALTER J. FERRIERUniversity of Kentucky

Competitive Dynamics: Evaluation, Evolution, and Future Direction

What is Competitive Dynamics?Where is it headed? …a paradigm? …a theory? …a pre-theory? …a view? …a reasoning? …a lens? …a method?

– Research design element– Observational mechanism– Measurement technique

Integrated/Contributing Theories Info processing Social networks Managerial cognition Multi-market competition Prospect/Threat rigidity First-mover Institutional theory Complexity Communication Knowledge Signaling

Resource-based view Real option theory Game theory Strategic groups Structure-conduct-perform. Dynamic limit pricing Austrian economics Corporate entrepreneurship Dominant firm/Oligopoly Force field (from psychology) Population ecology

What do they explain?– Competitive behavior?– …its antecedents, contexts?– …processes?

Does competitive dynamics enable these other theories explain, observe, conceptualize, measure:– “behavior”– “competition”– “events”– “dynamic interactive processes”– “change”– other things?

Integrated/Contributing Theories

Actor relativity/interdependence• The firm relative to:

– Itself (over time)– Dyadic partners– Groups– Industry members– Other non-rivals

• On factors/dimensions such as:– Competitive actions– Resources/capabilities– Firm characteristics– Outcomes

A Pre-Theory of Competitive Inter-Action:Some Boundary Conditions

Dynamic• Explicitly accounts for:

– Time– Change– Evolution– Contingencies– Processes

Pre-Theory of Competitive Inter-Action

Has impact/consequences on:• Performance

– Relative– Absolute

• Behavior of other firms• Supply chain members

– Customers– Suppliers

• Regulators• Investors• Society

Pre-Theory of Competitive Inter-Action

Other• Uncertainty, unknowability• Imperfect information• Thought, intent, purpose• Not costless

Pre-Theory of Competitive Inter-Action

Awareness• Alertness• Vision• Scanning• Filtering

Motivation• Intention• Valence• Emotion

Ability• Organizational enablers/constraints• Contextual enablers/constraints

Theoretical Scaffolding/Fulcrum

Theoretical Integration Required:“Other theories” supportand explain logic when integrated with this AMA theoretical scaffolding – e.g.:• TMT demographics• Institutional theory• Social network theory• RBV

Awareness

Motivation Ab

ility

Firm 1Strategy

Firm 2Strategy

CompetitiveInter-Action

OrganizationalDrivers

Industry StructureDrivers

InstitutionalDrivers

Socio-Relational

Drivers

Other?

Perf

CognitiveDrivers

Pre-Theory of Competitive Inter-Action

Q: What is an action? A: “An externally-directed, observable competitive move ….” Resource-action “cloud chamber” (Barney, 1994)

OrganizationalRoutines/Culture

Knowledge/Technology

Reputation/Image/ Brand

Leadership

Marketing

Price Product

Distribution

The Competitive Marketplace

Levels of Analysis

Firm Dyad Triad

GroupNetwork Industry(or Population)

Wal-Mart

Sears

Macy’s

Macy’s

Penny’s

Wal-Mart Sears Wal-Mart Sears

Wal-Mart

Target

Wal-Mart

K-Mart

Sak’sNordstrom

Sear’s

Macy’s

Penny’s

Wal-Mart

K-Mart

Sak’sNordstrom

Sear’s

Macy’s

Penny’s

Target

Levels of Aggregation

Mkt

Mkt

Prod

Price

Mkt

Mkt Price

Prod Price

Individual Action(or response)

Action-ResponseDyad

CompetitiveRepertoire

6 × Price

1 × Prod

4 × Mkt

2 × Signaling

1 × Legal

Competitive Attack

Signal LegalPriceBoeing

Airbus

time

Prod

attack

counter attack

Potential/Challenging Avenues for Future Research

Network embeddedness Cognition Decision-making Resource/capabilities

Network Evolution, Competitive Actions and Performance

MktMkt Prod PriceMkt Mkt PriceProd Price

FocalFirm

A

B

C

DE

t1 t2 t3

FocalFirm

A

B

CFocalFirm

A

B

Performance

time

Cognitive/Emotional/Personality-basedDrivers of Competitive Inter-Action

Research Question

How the interaction of information and CEO/TMT traits, beliefs, experiences, perceptions, and/or emotions gives rise to patterns of competitive inter-action.

Level of Analysis

1. CEO & TMT members; Focal firm competitive strategy; Rivals’ competitive strategy

2. Experimental subjects (simulation; Chess players, boxers)

Theory Managerial cognition; Emotion; Personality; Information processing; Neurology

Constructs Cognitive breadth; Decision stress; Revenge orientation; Need for achievement; Apathy-action orientation

Data

1. CEO personality traits; Coded video of top-level meetings; Face-recognition technology

2. Brain scans of decision-makers3. Competitive actions

Strategic Decision-making Drivers of Competitive Inter-Action

Research Question

How the inputs and processes of decision-making gives rise to patterns of competitive inter-action.

Level of Analysis

1. CEO & TMT members; Focal firm competitive strategy; Rivals’ competitive strategy

2. Experimental simulation participants

TheorySocial identity theory; Group interaction theory; Dialectical inquiry/devil’s advocacy; Power; Culture; Information processing

ConstructsDecision comprehensiveness, quality, complexity, speed; Strategic consensus; Power dispersion; Positive/negative affect; TMT heterogeneity; Agreement-seeking behavior;

Data

1. CEO/TMT demographics; Questionnaires; Coded video of top-level meetings; Recording devices/microphones attached to decision-makers

2. Experimental decision challenges with task, group membership, and/or decision process manipulations

Capabilities and Actions:Competitive “Spectroscopy”

OrganizationalRoutines/Culture

Knowledge/Technology

Reputation/Image/ Brand

Leadership

MktPrice Product

Competitive Forces

ActualPerformance

IntendedTarget

What is the next “big thing”?

Phenomena Constructs Measures Levels of analysis or aggregation Data Unobservables Analytical techniques Theory

Non-Organizational/Economic Theories Physics

• Physical• Optical• Quantum mechanics

Biology• Molecular/DNA• Virology

Medicine• Neurology• Psychiatry• Kinesiology

Music• Perception/appreciation• Composition theory

Experimental Aesthetics• Perception• Interpretation• Subjective judgment

What is Competitive Dynamics?

Coaching a basketball game Training a hunting dog Conversation/argument

between husband & wife

Phenomenon

A Z

K

time

Rivalry: Airbus vs. Boeing Negotiating a raise Writing an operatic duet

Competitive Dynamics:Instrumentality and Application

An (any?) open-system process that: Is interactive

– Contains multiple actors– Behavior and outcomes relative among actors

Contains distinct, observable elements, events, or happenings

Contains some perceptual and actual uncertainty or unknowability

Requires some thought, intent, purposefulness on behalf of actors

Is not costless

Your comments and conclusions?

Unresolved issues?