reconceptualizing competitive dynamics: a...

Strategic Management JournalStrat. Mgmt. J., 36: 758–775 (2015)

Published online EarlyView 18 April 2014 in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/smj.2245Received 20 July 2012; Final revision received 17 November 2013

RECONCEPTUALIZING COMPETITIVEDYNAMICS: A MULTIDIMENSIONAL FRAMEWORK

MING-JER CHEN1* and DANNY MILLER2,3

1 Darden Graduate School of Business, University of Virginia, Charlottesville,Virginia, U.S.A.2 Department of Management, HEC Montreal, Montreal, Quebec, Canada3 Department of Strategic Management and Organization, Alberta School ofBusiness, University of Alberta, Edmonton, Alberta, Canada

Competitive dynamics research, despite progress, lacks a conceptual framework that can extendthe field’s reach to address today’s environment. Increasing stakeholder power and globalizationare but two of the organizational and economic forces compelling a broader conceptualizationof competition. Our framework expands competitive dynamics along five dimensions—aimsof competition, mode of competing, roster of actors, action toolkit, and time horizon ofinteraction—that prove useful for contrasting the rivalrous and competitive-cooperative modesand a new approach we call relational competition. We draw conjectures about the moderators,such as industry and culture, that determine the appropriateness of these forms of interaction, andconclude by relating our method to three discrete perspectives: the configurational, transactioncost, and stakeholder views. Copyright © 2014 John Wiley & Sons, Ltd.

INTRODUCTION

The study of competitive dynamics has flourishedin recent years for a variety of reasons. It offers afine-grained approach to understanding what a firmdoes when it competes with specific rivals, and itstudies measurable actions that are subject to rig-orous examination and therefore yield cumulativefindings (Ferrier, Smith, and Grimm, 1999; Sirmonet al., 2010; Smith, Ferrier, and Ndofor, 2001). Itallows multilevel investigations that link micro andmacro organizational research (Kilduff, Elfenbein,and Staw, 2010) as well as studies of competi-tion and cooperation (Gnyawali and Madhavan,2001). It also has forged links with other areas of

Keywords: competitive dynamics; competition-coopera-tion; strategic management; stakeholder theory; competi-tive strategy

*Correspondence to: Ming-Jer Chen, The Darden School, Univer-sity of Virginia, Charlottesville, VA 22906-6550, U.S.A. E-mail:[email protected]

Copyright © 2014 John Wiley & Sons, Ltd.

strategy and organization such as entrepreneurship(Markman and Phan, 2011), social identity theory(Livengood and Reger, 2010), executive cognition(Marcel, Barr, and Duhaime, 2011), and temporaryadvantage (D’Aveni, Dagnino, and Smith, 2010).

However, potent organizational trends and eco-nomic forces such as growing stakeholder power,pressures to adopt sustainable business practices(Aguilera and Jackson, 2010), the advance ofglobalization, and the rise of Eastern economieshave begun to expose the limitations of tradi-tional competitive practices, where much of theemphasis has been on rivalry, head-on competition,and attack and response among players withinan industry. Today, key initiatives often comefrom players outside a given industry and fromnon-competitors or non-governmental organiza-tions at home and abroad (Markman, Gianiodis,and Buchholtz, 2009), thereby transforming thenature of competition. Such broader competitiveengagement has grown in relevance since the 2008global financial crisis, which elevated the saliency

Reconceptualizing Competitive Dynamics 759

of corporate social responsibility (Freeman et al.,2010). Although the field has surfaced possibil-ities of cooperation versus head-on competition,multiple stakeholders rather than just rivals, andnonfinancial objectives versus returns, it has doneso in a piecemeal manner; rarely have scholarsstepped back to apprehend the dimensions ofinteraction that demand such extensions.

Indeed, a failure to devise a basic structure for thefield has created the gap between today’s challengesand the core orientation of competitive dynam-ics. Scholars have yet to delineate a framework ofthe dimensions that broadly characterize “terms ofengagement” among players, an essential compo-nent in the theoretical foundations of competitivedynamics. Without such a structure, we risk fore-going opportunities to contextualize and discerndifferent varieties of competitive dynamics. Morecritically, we lack a basis for conceptualizing thefield’s boundaries and expanding its scope.

Our premise is that a more conceptually encom-passing and empirically powerful theory of compet-itive dynamics may be developed, and the level ofanalysis elevated by identifying, defining, and por-traying more generously its core dimensions. Defin-ing these dimensions will take us beyond the field’sunitary elements, uncover a broader array of actionoptions, and, consequently, widen its theoreticalscope.

Our reconceptualization offers an encompassinglevel of analysis to provide insight into issues thatare less apparent at lower levels (Lewis and Grimes,1999). Our understanding of competitive dynamicsis enriched when we enlarge our notions of compe-tition, actors, and events, and characterize them ina more expansive and contextualized interplay. Theconsequence of this process is to open up new waysof theorizing that enrich our views of engagement toincorporate interactions that are more common andessential in global, institutionally embedded com-petitive environments (Chen and Miller, 2011).

Our paper makes three related contributions.First, it identifies and defines the fundamentaldimensions of competitive dynamics that arecritical for its theoretical refinement and expansion.Specifically, it proposes a set of core dimensionsthat structure the field, thus providing a moreexplicit and systematic conceptualization of theaims and means of interaction and of the actorsinvolved. Second, it widens the theoretical scope ofcompetitive dynamics by offering alternative views

of interfirm competition that involve more stake-holders, place greater emphasis on value creationfor the community at large, and are more sustain-able; in so doing, it extends the intellectual promiseof the field and enriches its connection to sister dis-ciplines. Finally, in contrast to previous applicationsof the awareness-motivation-capability (AMC) per-spective at the individual action level, we extend thisperspective to the study of the multidimensionalconstruct of relational competition, advancingpropositions for its drivers and performance con-sequences. This initiative reveals how the AMCmodel could be used to study macro strategy issuessuch as international alliances and partnerships.

THEORETICAL FOUNDATION

Competitive dynamics: a study of firm actionsand interactions

Derived from the Austrian School of economics(Jacobson, 1992; Schumpeter, 1934), competitivedynamics considers competition to be interactive or“dynamic,” thus the building blocks of competitioncomprise action/reaction dyads (Smith et al., 2001)and streams of actions or “repertoires” (Ferrier,2001; Miller and Chen, 1996; Rindova, Ferrier,and Wiltbank, 2010). This emphasis on individualactions and repertoires of actions is a defining fea-ture of competitive dynamics and provides the foun-dation for multilevel and multifaceted investigationof the field (Chen and Miller, 2012). The interaction(or engagement) between firms lies at the heart ofstrategy and competition and is arguably the mostessential theoretical thrust in competitive dynamics,undergirding many of its core ideas and premises.The pairwise comparison of firms or rivals’ posi-tions, resources, and perceptions is central to com-petitor analysis, which in turn is an integral part ofcompetitive dynamics (Chen, 1996). Thus, relativ-ity is a key premise, and the idea of interdependenceis stressed through the study of action/reaction andmarket-commonality/resource-similarity betweenfirms.

The awareness-motivation-capability (AMC)framework provides an integrative platform foridentifying key behavioral drivers of interfirmcompetition (Chen, 1996; Yu and Cannella, 2007).Simply stated, a competitor will not be able torespond to an action unless it is aware of the action,motivated to react, and capable of responding. TheAMC perspective is central to our understanding of

Copyright © 2014 John Wiley & Sons, Ltd. Strat. Mgmt. J., 36: 758–775 (2015)DOI: 10.1002/smj

760 M.-J. Chen and D. Miller

the sources and consequences of both competitiveactions and a wide range of other types of firmactions (Gnyawali, He, and Madhavan, 2006),including cooperative and nonmarket moves.

Until now, competitive dynamics has emphasizedrivalrous aspects of competition, such as “attack,”“retaliation,” and “dethronement” (Ferrier et al.,1999). Indeed, the captivating language of combathas dominated, and perhaps restricted, the scope ofthe field (Ferraro, Pfeffer, and Sutton, 2005).

To achieve theoretical parsimony, competitivedynamics has limited its focus to specific and mea-surable elements of competition such as actionsand responses, speed and magnitude of reaction,and interaction among a few direct rivals. Analysishas tended to be within a single industry, usingU.S.-centric samples (Smith et al., 2001). As thefield has grown, researchers have devoted moreeffort to building a coherent body of literaturerather than creating novel theories or extendingtheoretical boundaries. The research has also beenconfined in its characterization of the nature andtime horizon of competition, the range of actorsinvolved, and the consequences of their interactions(Chen and Miller, 2012).

Reconceptualizing competitive dynamics

Several topics in the management field have posedintellectual challenges to competitive dynamics.Among these are stakeholder theory (Freemanet al., 2010), game theory (Brandenburger andNalebuff, 1996), and cooperation research (Dyerand Singh, 1998), each representing very differentviews on competition. In taking a normative view,stakeholder research considers a broader set of mar-ket players, including competitors, with which afirm interacts, and such interactions are argued to beinstrumental to sustained performance (Donaldsonand Preston, 1995). Scholars of inter-firm coop-eration have examined related options, such asalliances and joint-venture partnerships (Silvermanand Baum, 2002). Other studies have consideredcooperation among direct competitors (Gimeno,2004) and shown how cooperative networks shapecompetitive actions (Gnyawali and Madhavan,2001); moreover, they have pioneered hybrid formsof interaction such as co-opetition (Brandenburgerand Nalebuff, 1996), relational strategy (Dyer andSingh, 1998), and competition-cooperation (Chen,2008). Going a step further, an “ambicultural”perspective of competitive dynamics, based on the

notion of integrating opposites, suggests anotherpromising vein of research (Chen, 2014).

Integrative competitor analysis—one of the keycontributions of competitive dynamics—takes anexpansive view to examine how firms comparealong market-resource dimensions (Chen, 1996).Since the emphasis is on the relationship betweentwo firms (Ring and Van de Ven, 1994), rather thanon rivalry per se, this approach has been applied tomultiple types of partners (e.g., in joint ventures andmergers and acquisitions) both within (Haleblianet al., 2012) and outside an industry, to customers(Peteraf and Bergen, 2003), and to non-competitorsand NGOs (Markman et al., 2009). Such anexpansive notion of competitors gives rise to anopponent- or other-centric perspective (Tsai, Su,and Chen, 2011) and to competition-cooperationinterdependence. Each of these mostly independentcontributions has provided new insights to thefield. At the same time, they demonstrate the field’sfragmented nature and point to the need to takeinto account developments in a more synthetic andintegrated fashion.

Core dimensions for reconceptualization

As noted, scholars of competitive dynamics havedeveloped a coherent set of theoretical thrustsand premises that hold promise for expanding theresearch. Unfortunately, little effort has been madethus far to devise a basic structure of the domain,and researchers have yet to specify core dimen-sions that define competitive dynamics or inter-action. Our review of the field suggests that thefollowing defining dimensions are essential: (1)aim, or the objectives of engaging in a competitiveinteraction; (2) mode, or the nature of the inter-action; (3) actor, or the number and type of play-ers involved in the engagement; (4) action toolkit,or the repertoire of competitive moves; and (5)time horizon, or the temporal length of an engage-ment (Table 1). Although these dimensions can beused to characterize former studies of competitivedynamics, they have been implicit, and have tendedto lean toward the pole of rivalry. Explicit con-sideration of the dimensions provides a basis forreconceptualization.

A MULTIDIMENSIONAL FRAMEWORK

Structuring the field along the five defining dimen-sions reveals an array of options and varieties.



Table 1. Three prototypical views of competitive dynamics

Dimension Rivalrous Competitive-cooperative Relational

Aim Appropriation Competitive advantage Raise all boatsMode Attack, retaliate, avoid

attackCooperate or co-opt Compete and cooperate simultaneously

in the same act, dependent on rivals’reactions

Actors Competitors Also alliance partners Inclusive set of stakeholders, e.g.,clients, public, suppliers, government

Toolkit Largely economic,generally withinindustry andtechnologicalboundaries

Political as well aseconomic, sometimesspanning industryboundaries

Also social and ideological, allowingfor significant redefinitions ofindustry and technologicalboundaries

Time horizons Short term Intermediate Short term to build for long term, andvice versa

Each of the dimensions broadens the orientationsof the domain—precepts that have caused compet-itive dynamics scholars and practitioners to ignoreimportant business challenges, intellectual oppor-tunities, strategic options, and relevant players.These orientations suggest that competitive dynam-ics mostly concerns (1) gaining advantage over (2)competitors, who are (3) rival companies; (4) thatvictories can be achieved by taking a limited rangeof actions, and (5) be measured in market shareor profit; and (6) that rewards are pursued mainlyfor the short-term advantage of firm owners, (7)who are the key players and main focus of analy-sis (Smith et al., 2001). We shall argue that gainingadvantage is not always the most sensible objec-tive, that actors other than competitors are criticalto competitive outcomes, and that the most impor-tant outcomes may extend well beyond economicgain for owners.

The aims of interaction: from valueappropriation, to advantage, to lifting all boats

Implicit or explicit in the discourse of most con-ventional competitive dynamics scholars is thatthe ultimate aim of competition is to appropri-ate value from rivals—to disrupt, “outcompete” or“dethrone” (Ferrier et al., 1999) them, to augmentmarket share (Chen and MacMillan, 1992), or todefend one’s turf (Livengood and Reger, 2010).According to this rivalrous mode of thinking, thegoal of competitive dynamics is to discover whichactions best enable a firm to overcome or defendagainst rivals; competition is often viewed as azero-sum game.

By contrast, there is a literature oncompetition-cooperation1 in which it is argued thatmany firms are willing to cooperate with their rivalsas long as these initiating firms benefit eventually(Hamel, Doz, and Prahalad, 1989). In other words,the aim is not to destroy the enemy and there is noobjection to helping a rival, as long as the focalfirm comes out ahead of its competitors in theend (Brandenburger and Nalebuff, 1996; Dyer andSingh, 1998).

A third, emerging view of competitive dynam-ics is manifested by firms whose objective is to“lift all boats.” By embracing this more relationalperspective (Chen and Miller, 2011), firms aim tobenefit many kinds of market players, includingcompetitors. The goal is not to damage or beat arival but to do well by contributing to and creat-ing value for many players, even one’s rivals: forexample, by contributing helpful standards, opensource-designs, or infrastructure. This competitiveorientation is consistent with much of the stake-holder literature (Freeman, 1984; Freeman et al.,2010).

The aims of these different views of competitivedynamics reflect a shift in emphasis on value appro-priation from rivals, to competitive advantage, to

1 There exists a stream of research on cooperation between firmsthat examines topics such as strategic alliance (Gulati, 1995) andinterfirm linkages (Ahuja, 2000). We focus on a subset of thisline of work that devotes its attention to the interface betweencompetition and cooperation. Chen (2008) classified this broadlydefined “competition-cooperation” research into “co-opetition”(e.g., Brandenburger and Nalebuff, 1996), “competition-orientedcooperation” (e.g., Khanna, Gulati, and Nohria, 1998), and“cooperation-oriented competition” (e.g., Gnyawali and Madha-van, 2001).



value creation for multiple stakeholders. Patagonia,the outdoor apparel company, epitomizes a blendof these competitive aims. The company’s behav-ior is shaped by its stated mission to “build thebest product … and use the business to inspire andimplement solutions to the environmental crisis.”The firm willingly shares with its direct rivals itsbest practices in high-quality, resource-conservingmanufacturing. In so doing, it sacrifices some of itsoperational competitive edge but it gains throughenhanced reputation with its “green” clients andin the motivational climate of its workforce. Thepurpose then is not only to interact in a way thatachieves a beneficial social outcome and that ben-efits the firm and its employees, but to cooperateor compete with rivals with the goal of a win-winexchange.

The mode of interaction: attack, cooperate,or manage relationships

Rivalrous, competitive-cooperative, and relationalperspectives differ in how they characterize modesof interaction, or the nature of the engagementbetween principal actors. Scholars of the conven-tional rivalrous approach are drawn toward basicforms of competition: those of devising effectivedirect or indirect attacks and avoiding retaliation.Numerous studies have analyzed direct competi-tion: for example, Young, Smith, and Grimm (1996)examined the drivers of firm competitive activ-ity, which, in turn, were found to contribute tomarket-share gains from early attack and earlyresponse. Others, however, have studied stealthy orlow-profile competitive tactics that avoid retalia-tion (Chen and Hambrick, 1995). Moving still fur-ther from the head-on rivalrous mode, McGrath,Chen, and MacMillan (1998) proposed that a firm’sresource allocations across its business units ormarkets can affect its rivals’ allocations, therebyenhancing its sphere of influence without precipitat-ing an all-out competitive war. An early example ofextension beyond the rivalrous mode is mutual for-bearance (Gimeno and Woo, 1996), by which firmsoperating in similar markets tacitly collude to tailortheir competitive interactions to minimize risks ofescalation.

The competitive-cooperative view representsa different approach to gaining advantage. Itstipulates that firms may cooperate in a varietyof ways, from sharing patents, technologies, andeven key personnel with rivals, to price signaling,

establishing a technical standard, and colluding onprice (Brandenburger and Nalebuff, 1996). Despitethe range of competitive-cooperative interactions,all are designed ultimately to achieve a self-servingend: one interacts in a way to gain the upperhand, “learn from competing partners” (Dussauge,Garrette, and Mitchell, 2000), or “cooperate andwin” (Hamel et al., 1989).

A third mode of relational interaction hasrecently surfaced in the literature. Relational com-petitive actions are complex, their consequencesvarying for different stakeholders such that thesame actions may elicit different responses fromdifferent parties, or even from the same partyat different times. Thus, an action may have thepotential to be both competitive and cooperative(Chen, 2008), depending on its relationship to theparty in question and the perceptions and goals ofthat party (Tsai et al., 2011). Such an expansiveapplication of competitive dynamics embraces anopponent-centric or “other-centric” perspectivethat does not simply engage a rival to achieveadvantage, but to find new paths leading to mutualbenefit. Relationships are examined “in context”by taking into account the intentions and needs ofall parties involved.2

Google’s engagements with its “frienemies”illustrate the relativity of competitive interac-tion. The Internet search giant’s video-sharingsubsidiary, YouTube, attracts an immense dailyvolume of entertainment and news content uploadsfrom the public. Some traditional media com-panies, such as television networks, have takendirect competitive measures—threats, lobbying,litigation—to prevent Google from “giving away”their proprietary products. Others have parlayedlinks to YouTube video clips to attract more viewersto their regular programming. Thus, through nego-tiations with Google, some firms have converted athreat into a powerful opportunity both to promotetheir product and to increase advertising revenue,while at the same time siphoning ad revenue awayfrom Google. In short, only the specific interactionsbetween parties and the resources and preferencesin question determine whether Google’s YouTubeinitiatives constitute aggressive rivalry or anopportunity for cooperation.

2 The notion of ambicultural integration mentioned previouslyfits within this stream of research with its premise that oppositeparties such as competitors or rivals may benefit from seeking totranscend their differences and reap strengths from one another(Chen, 2014; Chen and Miller, 2010).



Actors in interaction: competitors versuspartners versus stakeholders

Rivalrous, competitive-cooperative, and relationalperspectives of competitive dynamics have verydifferent “casts of characters.” The conventionalrivalrous view has concerned itself with directand sometimes indirect rivals. Direct rivals tendto be similar in their market focus and size (Chenand Hambrick, 1995), whereas indirect rivals aresomewhat more distinct in those respects (McGrathet al., 1998).

The competitive-cooperative perspectiveexpands the roster of interaction partners to includethose with which an organization forms alliances:typically, competitors in the same or related indus-tries (Gimeno, 2004). The focus is on firms thatare direct or, more often, indirect rivals that maybecome parties to a business agreement, alliance(Ahuja, 2000), or even merger (Haleblian et al.,2012). The option to cooperate, however, alsobroadens the scope of possible interaction partnersto include suppliers of factors of production (suchas raw materials and labor unions) and/or partnersin upstream and downstream industries whosecooperation might enable firms to compete moreeffectively (Markman et al., 2009).

The relational approach, borrowing from thestakeholder view, enlarges the roster of actors stillfurther to embrace a range of parties that are rele-vant not merely to an organization’s success, but tothe well-being of many affected by an organization:employees, clients, customers, and broader society(Freeman et al., 2010). As the aim now is to liftmultiple boats, and because win-win outcomes aresought, potential partners may include such publicinstitutions as universities that might be funded totrain experts in a firm’s specialization, communityorganizations with which a company might work toreduce pollution, consumer protection agencies toimprove product quality, and employees to enhanceworking conditions.

The relational view also considers stakeholdersas having influence upon an organization (Freemanet al., 2010; Hillman and Keim, 2001). Competitiveacts that injure these parties may in the longrun compromise an actor both economically andethically. Many organizations compete not just formarket share and customers (Peteraf and Bergen,2003) but for employees (Gardner, 2005) andpolitical support (Caeldries, 1996); each of thesestakeholders may serve as a source of advantage

(Dyer and Singh, 1998). More importantly, a firm’scompetitive positions are enhanced by assortedforms of collaboration—for example, with partnersto develop core competencies, with universitiesto fund research, with competitors to developtechnologies or common industry standards(Brandenburger and Nalebuff, 1996). Even rivalsmay introduce useful new challenges and ideas thatawaken a firm to opportunities (Porter, 1998).

The relational perspective acknowledges thatengagements with any one party may well affect theresources and reputation of a company and henceits interactions with others (Saxenian, 1994). Thepremise is that a firm can thrive in the long runonly by taking into consideration all its stakehold-ers. Thus, a key competitive “dynamic” here is thatfirst-mover sacrifice may precede by a significantinterval any pecuniary reward—especially in assetsthat can be grown together to the benefit of multiplecompetitors. Balancing the interests and concernsof stakeholders is central to the relational notion ofinteraction, and thus it is necessary to understandtheir needs, preferences, and interdependencies.

A critical dynamic introduced by the considera-tion of a broader set of actors is the choice of how tosequence cooperative and competitive relationshipswith the different stakeholders to minimize unfavor-able responses and promote cooperative ones. Forexample, should firms first develop complementary“supply side” relationships with factor suppliers(Markman et al., 2009) and providers of human andintellectual capital to build up core capabilities andexpand the cooperative network? Or should theywork on the “demand side” (Peteraf and Bergen,2003) to collaborate with community, regulatory,and standard-setting industry associations to cre-ate demand for a product and pre-empt retaliation?Typically, an organization’s resources for formingsuch associations will be limited. Firms must there-fore choose which stakeholders to appeal to, andwhen, depending on both the nature and availabil-ity of key resources and the effectiveness of theparticular stakeholder relationships in deterring orneutralizing competitive reactions. These dynami-cal considerations have been neglected to date bymost stakeholder scholars, with noted exceptionssuch as Mitchell, Agle, and Wood (1997).

Action toolkit: from economic to politicalto social and ideological

We define action toolkit as the repertoire of movesa firm may take in its engagements with other



actors. There are two critical aspects to a toolkit: thetype of actions deployed, and their geographic andindustry boundaries. Again, the differences amongrivalrous, competitive-cooperative, and relationalperspectives illustrate collectively a more expansiverange of economic, political, and social and ideo-logical competitive options.

The rivalrous view has concentrated oneconomic means of competition: those typicallyinvolving the traditional levers of strategy, withthe balance leaning toward economically targetedtactics more than strategic initiatives. The emphasisof the early research was on economic leversof action such as price changes and promotions(Smith et al., 2001). Other studies examined theimpact of irreversible strategic investments onthe propensity of rivals to respond (Miller andChen, 1994). Although the toolkit was confinedmostly to economic actions—tactics and strategicinitiatives—within an industry, a few multimarketcompetition studies spanned several industries andgeographies (Gimeno and Woo, 1996).

The competitive-cooperative perspectiveexpands the toolkit to include actions that areclearly cooperative. In our discussion of interactionmodes, we referred to such actions as combiningwith partners and competitors to set industry stan-dards, to collocate, to lobby, and to collude (Gimenoand Woo, 1996). Here, the toolkit progresses fromone that is quintessentially economic to one that isin many ways political. Kingsley, Vanden Bergh,and Bonardi (2012) provide a framework thatdescribes when and how firms carry out nonmarketactions in an effort to mitigate regulatory uncer-tainty. Capron and Chatain (2008) explicitly view afirm’s political actions as a vital, but underexplored,element of a firm’s competitive repertoire, buildingon the notion of political markets—parallel toproduct and resource markets—in which firmscompete strategically to shape the regulatoryenvironment in their favor (Bonardi, Hillman, andKeim, 2005). The emphasis is now on empathyor intelligence—on understanding the priori-ties of one’s potential partners, forming fruitfulalliances or agreements, and bargaining to achievean outcome that bestows competitive advantage(Ahuja, 2000). The industry and geographic rangeof partners tends to be broader than that embracedwithin the conventional perspective.

The relational perspective further enlargesthe toolkit to consider not merely economic andpolitical vehicles for competing but social and

ideological ones as well. The emphasis is onunderstanding all of the stakeholders in a firm’senvironment in order to most effectively gain theirsupport and cooperation (Donaldson and Preston,1995; Freeman et al., 2010). A powerful devicemay now take the form of building an excellent rep-utation for socially responsible behavior, compilingan impressive record as a superb employer, oracting as a fine citizen in the community. Throughsuch strategic actions a firm strives to enhanceits reputational status relative to rivals and thusgarner access to superior financial and humanresources (Pfeffer, 2010). The result is a strongerand more sustainable presence in the marketplace.The dynamic aspects conveyed by the relationalperspective include first-mover advantage and atolerance for short-run sacrifice in order to buildlong-run strength. It is also possible that amassinga solid set of partners and resources through suchproactive behavior will discourage rivals andpotential rivals from challenging the firm.

The time horizon of interaction: short-termismversus sustainability

The rivalrous literature concentrates on competi-tive exchanges of brief duration, consistent with theSchumpeterian notion that competitive advantage isephemeral (Smith et al., 2001). Due in part to itsrestricted conception of competition, early researchon dyadic interchanges between firms focused ontactical moves and countermoves (Yu and Cannella,2007). Other conventional literature considered thedrivers and performance implications of inertia orsimplicity in a firm’s strategic repertoire, typicallyover the course of a single year (Miller and Chen,1996). Later scholars began to look at longer-termevolution in competitive repertoires (Ferrier, 2001),but the focus was still on an interval of a year or two.

The competitive-cooperative perspective tooembraces a shorter-term focus, but it also looks atconsequences for a longer horizon. The study ofcooperation opened the way to consider alliancesand agreements that could pay off only in the longrun (Ahuja, 2000), as parties coordinate better andgradually come to trust one another (Gulati, 1995).

The relational view holds that actions taken atany given time may well have long-term repercus-sions (Ferrier and Lee, 2002): Thus, it is quite pos-sible for a firm to take actions that in the short runare advantageous but in the more distant future mayharm its reputation and resilience, and ultimately



Aim

Mode

Actors

Toolkit

Time Horizon

Appropriation

Attack

Competitors

Economic

Short-Termism

Raising all Boats

Manage Relationships

Stakeholders

Social and Ideological

Sustainability

Rivalrous View Relational View

Hybrid View

Figure 1. A multidimensional structure of competitive dynamics: three contrasting views

its market position (Chen and Miller, 2011). Thereverse is also true: the exclusive pursuit of the longrun may bring about dire short-term circumstances.The relational view embraces a multi-temporalview of competitive sustainability— outcomes thatimprove, rather than compromise, future prospects.The focal dynamic involves trading off short- andlong-term initiatives and tailoring each to the com-petitive situation facing a firm.

For many decades Corning, the glass tech-nologies giant, pre-empted competition viapath-breaking innovation and a long-term mindset.It pioneered the first radio tubes for Marconi, thefirst TV tubes for General Sarnoff at RCA, and thefirst fiber optic cable. The last invention required17 years of unrewarded investment. By pursuingthis long-run orientation, Corning kept ahead of thecompetition, funding its innovation projects withrevenues from its older products, to stay ahead ofthe game (Miller and Le Breton-Miller, 2005).

Figure 1 compares rivalrous, competitive-cooperative, and relational views along our fivedefining dimensions.

Contrasting views of competitive dynamics:rivalrous versus relational

At the two poles of our five dimensions lie the rival-rous and relational views. Compared with rivalrouscompetition, relational competitive dynamicsstresses “lifting all boats” over appropriation, manystakeholders over rivals only, political, social, andideological competition over that which is purely

economic, and multi-temporal over short-termrivalry. These views have some common ground.As with rivalrous dynamics, the focus of relationalcompetition is on interaction; the latter may occurat different levels and be influenced by micro andmacro industry, cultural, and organizational factors,as discussed below (Chen and Miller, 2012).

On the one hand, the five dimensions may beinterconnected. That is, firms may have a tendencyto gravitate toward either relational or rivalrouspoles along multiple dimensions (see Figure 1).For example, competing socially and ideologicallyis difficult in the absence of a longer-term per-spective. On the other hand, at least in theory, thetotal number of possible multidimensional “con-figurations” even from our simplified frameworkis large (3 to the 5th power). Figure 1 providesa diagrammatic representation of the possibili-ties. At the two extremes are the rivalrous andrelational perspectives. Between the two poleslie a variety of possible hybrids, including thecompetitive-cooperative view.

PROPOSITIONS CONCERNINGTHE DRIVERS AND CONSEQUENCESOF RELATIONAL VERSUS RIVALROUSCOMPETITION

The relative prevalence and utility of the rela-tional versus the rivalrous perspective are expectedto vary according to context. In this section, weshall propose several features of an organization



Table 2. A framework for relational propositions

Awareness Motivation Capability

Organization Organizational structure andsystems

Firm governance, culture,incentives

Strategic resources and corecapabilities

Industry Physical proximity Crisis and birth Resource-rich environmentsCulture Upbringing and socialization Values and mores Experience and practice

that may both predispose and enable a firm to pur-sue relational modes of competition, followed bypropositions concerning the conditions under whichrelational competition is most likely to enhancefirm performance. In deriving these propositionswe shall treat relational and rivalrous competitionas integrated constructs or archetypes (Miller andFriesen, 1984) characterized by all five dimensionalpolarities described in the previous section. Wedo so for purposes of illustration and brevity, andbecause, as we will argue, there are natural interde-pendencies among these dimensions that give rise torelational and rivalrous archetypes (Miller, 1996).We acknowledge, however, that different dimen-sions may have different relationships with thedrivers we propose, as some firms will blend aspectsof rivalrous and relational approaches. Further the-orizing and empirical validation will be requiredbefore we are able to draw dimension-specificpredictions.

We use the AMC model (Chen and Miller, 2012)to formulate propositions regarding the tendencyof actors to engage in relational competition. Anumber of dimensions contribute to the aware-ness of opportunities to compete relationally, andto the motivation and capability to do so. Wehave organized these into three generic categories,according to increasing levels of aggregation: orga-nization, industry, and culture. According to ourmodel, the choice between relational and rival-rous competition will be driven contingently byactors’ awareness of the opportunities and threatssurrounding these respective modes—be they mademanifest by organizational processes and structures,industry characteristics, or factors relating to cul-tural socialization. Actors’ motivations for a givenchoice will be driven by organizational incentives,industry crises and transformations, and culturalmores. Finally, actors’ capabilities will be a func-tion of organizational (or industry) resources andexperience, as well as cultural and social connec-tions. A multiplicative effect among awareness,

motivation, and capability components is expected,such that when any are lacking, the selection of therelated competitive mode will be suppressed (Chenand Miller, 1994). That interdependence should beborne in mind when considering our propositions.Table 2 presents an overview of our model.

Organization-level factors: governance, culture,and stakeholder relations

Awareness: organization structure and systems

Relational competition requires an especially astuteawareness of the competitive landscape as moreis demanded and also at stake in many competi-tive exchanges. Such cognizance must encompassnot only threats from rivals and their competitiveattitude, but also rivals’ resource advantages andgaps, and their potential for collaboration (Chen,1996). Relational competition also necessitates thatfirms understand the interests and strengths of otherkey stakeholders or potential partners, which mightinclude trade associations, university research labs,and government trade agencies (Freeman et al.,2010). The acquisition of knowledge concerningthese parties relies on organizational systems andprocesses responsible for boundary-spanning activ-ities, for example, decentralized and encompassingefforts at scanning the environment and bringingimportant information quickly to key decision mak-ers (Smith et al., 1991; Tushman, 1979). Much ofthe most revealing information should be qualitative(Aguilar, 1967). However, information gathering isof little benefit unless the right information comesto the appropriate decision makers at the righttime. Typically, flat organization structures in whichpeople have broad job definitions are best at accom-plishing that (Galbraith, 1995). Centralized, formal-ized, hierarchical, and bureaucratic structures oftenwill impede relational competition.

Proposition 1a: Under similar industry con-ditions, firms with distributed, encompassing,



and qualitative information processes and flatorganizational structures are more likely tohave the knowledge needed to engage in rela-tional competition than firms with more hier-archical, bureaucratic structures.

Motivation: organizational governance, culture,and incentives

The priorities of those who govern an organiza-tions shape its mission and its culture. Many pub-licly traded Western firms are dominated by ownerswho hold their shares briefly and favor quick returns(Jacobs, 1993). These organizations often have “upor out,” pecuniary cultures in which top execu-tives are rewarded for short-term gains (Sorkin,2010). Given the time it takes to form relationships,such firms are apt to reject the idea of competingrelationally.

Things are quite different where owners andmanagers take a longer-term view and value thesubstantial contributions of a firm and its sustain-ability; they realize that, in order for their firms tosucceed in the long run, they must satisfy most oftheir key stakeholders. Corning and Li & Fung, bothof which are family-owned and managed, enjoyrelationships with suppliers and partners that havelasted more than a century (Graham and Shuldiner,2002). A priority for both firms has been to builda motivated workforce eager to forge mutuallybeneficial relationships with clients and resourceproviders. The firms pursue exacting hiring andpromotion practices to ensure that those appointedshare firm goals and values (Pfeffer, 2010). More-over, they craft reward and incentive schemes basedon adding value to stakeholders rather than pro-ducing short-term financial results (Lumpkin andBrigham, 2011).

Proposition 1b: Firms whose owners and topmanagers adopt a long-term perspective andpromote inclusive, cohesive, and nurturingcultures are more likely to be more willing toengage in relational as opposed to rivalrouscompetition. Many such firms are closely heldby individuals or families.

Capabilities: strategic resource and corecapability development

Relational competition may benefit in exceptionalways from an emphasis on assiduous resource

building and resource management (Sirmon et al.,2010). Firms that invest deeply in capabilitydevelopment—in superior equipment and pro-cesses, in acquiring advantageous locations, and insuperior human resources—can evoke more loy-alty from stakeholders (Helfat, 2007). An emphasison selectivity in hiring talent, diligent trainingand development, and fostering a rewarding workenvironment to hold turnover to a minimum canmake a firm more attractive as a relationship partner(Pfeffer, 2010). The resulting capabilities may helpfirms attract and engage with outside partners andcompete on the basis of expertise and value-addedofferings (Dyer and Chu, 2011).

There may be bidirectionality and a virtuouscircle at work in developing relational and corecapabilities. Firms that wish to focus on the latterwill likely outsource some of their activities toconcentrate on what they do best, thereby providingthem with experience in and incentives for formingstrategic alliances. Conversely, as core capabilitiesdevelop, they make it easier for firms to be seen asattractive partners (Dyer and Chu, 2011).

Proposition 1c: Firms investing most heavilyin physical and human resources to developcore capabilities will be more likely to havethe capacity to engage in relational asopposed to rivalrous competition.

Industry-level factors

Awareness: physical proximity

Attributes of economic geography have a role toplay in enhancing awareness of opportunities forrelational conduct (Semadeni, 2006). For example,the physical proximity of actors in clusters suchas Boston’s Route 128 and in Silicon Valley cre-ates opportunities for managers and scientists fromcompeting companies to communicate and inter-act more freely (Jaffe, Trajtenberg, and Henderson,1993; Porter, 1998; Saxenian, 1994), making themmore aware of one another’s strengths and weak-nesses and therefore of opportunities for formingcomplementary alliances. These clusters also attractspecialized suppliers of resources such as scientificknowledge and venture capital. Moreover, they mayserve as breeding grounds for entrepreneurial incu-bators and trade associations that serve as forumsfor exchange of information. Ultimately, the physi-cal proximity of actors to rivals or suppliers of key



resources may generate opportunities for communi-cation, understanding, interaction, and therefore theinitiation of joint projects that can benefit an entireindustry (Glaeser et al., 1992).

Motivation: crisis and birth

The birthing crises of industries in a developingeconomy can motivate relational conduct, as can ascarcity of resources. In the early days of Taiwan’spersonal computer industry, there were shortagesof key supplies such as microchips. Acer, in orderto ensure its own supplies, funded the creation ofreliable suppliers for itself and also for its rivals(Chen and Miller, 2010), giving rise to an entirePC ecosystem—from the upstream semiconductorto the downstream peripheral components—for theindustry and for Taiwan’s national good. Similarly,when industries are facing crises, there is an incen-tive for firms to get together to set standards, renewtechnologies, and develop more appropriate busi-ness models, as in the case of American auto man-ufacturers after the recent economic crisis.

Capability: a resource-rich environment

Some industries reside in environments rich inhuman, physical, and knowledge resources, such aslarge urban centers, where there is abundant accessto a variety of resource providers. Ease of accessto resources can enhance firms’ ability to formuseful partnerships with these providers. In majorcities, for example, there is the possibility of morecontact with a diversity of actors and therefore moreopportunity to form alliances (Glaeser et al., 1992).

Paradoxically, in smaller communities whereresources are scarce due to geographic or socialisolation, necessity can drive close bonds amongorganizations with different functions and purposes.For example, Corning, which for over 150 yearshas operated in the small town of Corning, NewYork, has embraced a relational perspective evi-dent in decades-old partnerships with suppliers andother firms that have contributed to its develop-ment of important new technologies (Graham andShuldiner, 2002). Such organizations also dependgreatly on the community, and vice versa, creat-ing an interreliance that breeds emotional closeness,trust, and cooperation (Berrone et al., 2010).

Proposition 2: Firms in industries that oper-ate in dense clusters, that are nascent or in

crisis, or that are located in resource-richenvironments will be more apt to have theawareness, motivation, and capability toengage in relational as opposed to rivalrouscompetition.

Cultural factors

Awareness: upbringing and socialization

Distinctions between East and West highlight theimpact that cultural individualism versus collec-tivism may have on relational competition (Chen,Chen, and Meindl, 1998). Traditionally, the Confu-cian state was composed not of isolated individualsbut of a vast network of interconnected and interde-pendent parties. Ubiquitous socialization processesin the East ensure that there is constant moni-toring of group- or system-wide needs to meetsocial expectations. Such a “collective” mindset andits associated practices have profound implicationsfor interpersonal dealings, organizational interac-tions, and temporal considerations (Chen et al.,1998). How an organization is perceived by and fitswithin its business and social contexts is critical,and its relationships with stakeholders, competitorsincluded, are instrumental in ensuring a positiveimage and reputation (Chen and Miller, 2011).Given this more acute social awareness, firms tendto seek out opportunities that are less disruptiveor challenging to others, beneficial to themselvesand others (including competitors), and sustainableeconomically and socially.

Motivation: values and mores

In a collective culture, corporate decisions andbehaviors are often driven by concerns for the over-all benefit of the group. Well-established culturalmores, values, and taboos constitute the rewardsand punishments that motivate relational thinking(Chen et al., 1998). In the East, aggressive com-petition makes enemies, attracts adverse attention,and can sully reputation. There are strong incen-tives to avoid head-on rivalry, unlike in the Westwhere direct combat is often admired (Freeman,1984; Freeman et al., 2010; Jacobs, 1993). Becauseit takes time to build competitive assets such as trustand reputation, many firms in the East adopt a moreconciliatory and value-creating mode of competi-tion. This may involve soliciting feedback from keyparties and moving incrementally toward a solution



that satisfies a majority. Firms also attempt to oper-ate in accordance with the expectations of stake-holders who are instrumental to their legitimacy(Chen, 2008), producing in a less confrontationalmode of competition.

Capability: experience and practice

Given the well-socialized and well-practiced habitsof monitoring the reactions of others, many East-ern executives have developed the social and inter-personal skills to compete relationally (Chen andMiller, 2011). Compared to their counterparts inmore individualistic cultures, organizations andindividuals in a collective society are more accus-tomed to considering group viewpoints, or the per-spectives of others. Many firms in this culturalenvironment develop the capability to build andcapitalize on a vast web of business and socialrelationships. They cultivate cultural and socialskills that nurture mutually beneficial relation-ships among many partners and key stakeholders.For example, Acer’s global expansion strategy ofembracing local partners and taking only minorityownership in the countries it enters serves to buildorganizational capabilities for competing relation-ally. By allowing its partners to retain control, Acershows considerable goodwill and engenders mutualtrust in its relationships.

Proposition 3: Due to their higher levelsof relational awareness, motivation, andcapability, firms from the East (and fromcollective cultures) will be more likely toengage in relational as opposed to rivalrouscompetition than firms in the West (or fromindividualistic cultures).

Relational competition and performance

Competing relationally may not always meet withthe best results. Below, we propose some of the con-texts and conditions that help relational competitionto succeed.

First, it is useful to define the nature of theresults one might expect from relational as opposedto combative competition. We would not expectquick returns, rapid growth, or instant victories.Relational competition often entails competingfor the long term—making investments in ideas,capabilities, and relationships that pay off overtime. Therefore, we would expect relational

competition to show steady and enduring improve-ments in performance (James, 1999). Performancemight be reflected at first in substantive outcomessuch as better relationships with stakeholders,higher-quality or more desirable products and ser-vices, and more motivated and talented employees,followed by growth and increase in market shareand, finally, by bottom-line returns and, for publiclytraded firms, enhanced market valuations (Laverty,1996; Miller and Sardais, 2011).

Proposition 4a: Compared with rivalrouscompetition, relational competition will tendto show performance improvements over thelong run, first in substantive outcomes, thenin growth, and finally in profitability.

To succeed, relational competition requires con-stancy as well as consistency in behavior acrossdifferent parts of the organization and for multiplestakeholders (Freeman, 1984). Without persistentlydiligent conduct, the ability to develop capabilitiesand trusting relationships is absent. Without con-sistency of behavior across interactions and rela-tionships, credibility and therefore the trust of keystakeholders may be lost. The onus on the gover-nance, leadership, and culture of the organization toensure such consistency is considerable, reinforcingour arguments in the previous section concerningthe importance of cultural and organizational char-acteristics.

Proposition 4b: Compared with firms engag-ing in rivalrous competition, firms engaging inrelational competition will show performanceimprovements only when they implement theirpractices consistently over time and acrossinteractions, relationships, and stakeholders.

Firms competing in the East may well be requiredto adopt relational modes of competition in order todo well. There, many forms of head-on competitionwould be deemed socially unacceptable, whereasdeveloping legitimacy through personal connec-tions and partnerships might be essential (Chen andMiller, 2011).

Context also comes into play at the firm level.Some large companies are highly visible; confronta-tional competitive aggressiveness can get them intotrouble. Microsoft and IBM are firms whose com-petitive aggression resulted in antitrust cases and



negative publicity: perhaps a relational approachwould have been more productive. Paradoxically,the smaller firms in an industry also might bene-fit from competing relationally. Their size makes itdifficult for them to amass the resources requiredfor aggressive competition, and indirect and subtlemaneuvers are less likely to elicit dangerous retali-ation (McGrath et al., 1998).

The governance, leadership, and culture of anorganization may also influence the extent to whichit can effectively compete relationally. Organiza-tions with cultures that reward managers on thebasis of short-term achievements will be unlikelyto succeed with a relational strategy (James, 1999;Laverty, 1996). Impatience and inconsistency maybe especially common in situations in which own-ers pursue regular quarterly returns or rapid growth,and in which they reward top executives on the basisof their abilities to produce such results (Jacobs,1993).

Proposition 4c: Relational competition willproduce the best results in collective nationalcultures, in socioeconomically sensitiveindustries, and in very large organizations,relatively small organizations, and patientlygoverned and managed organizations.

DISCUSSION

In reconceptualizing competitive dynamics, wehave distilled five defining dimensions to structureand systematize the field in order to lay bare itsfoundations and further identify its varieties. Weuse these five dimensions to outline a range ofcompetitive options and to advance a relationalview of competition. Specifically, by building onprior work by Baum and Korn (1996), Chen andMiller (2012), Dyer and Singh (1998), Ferrier(2001), Gimeno (2004), Markman et al. (2009),Tsai et al. (2011), and others, we broaden and makemore concrete the theoretical foundations of com-petitive dynamics. By proposing a much-neededstructure for the field, the paper conceptualizes thefundamental elements of competitive dynamics andthe variety of terms of engagement among marketplayers. Inattention to these issues has restrictedthe dialogue between competitive dynamics andother areas of organizational and strategy research.Moreover, using the AMC model, we generatepropositions regarding the sources and performance

consequences of relational versus rivalrous compe-tition to advance the scope and precision of futurecompetitive dynamics research.

Connections to other theories

Our framework maps out a spectrum of competitiveoptions, and in so doing offers a platform both forresearch, as noted above, and for connection withuseful conceptual and practical managerial frame-works, among them the configuration approach,transaction-cost economics, and stakeholder theory.Such connections have been neglected by scholarsof competitive dynamics due to a failure to spec-ify terms of engagement, yet these links could bedeveloped using our framework to provide insightand facilitate theory building.

Gestalts and configurations

A key question underlying the multidimensionalframework is whether its five dimensions are likelyto be highly interdependent. We suspect they areapt to configure into thematic “gestalts” in which“the whole is greater than the sum of the parts”;that is, once some dimensions of an approach areadopted, others are likely to follow to achieve boththematic consistency and operational functionality(Fiss, 2007; Miller, 1996; Miller and Friesen, 1984).This is because a theme such as relational interac-tion orchestrates various components such as con-sideration of multiple stakeholders, adding value forthem, and competing using social and ideologicalweapons. Moreover, the elements of a configura-tion tend to be functionally interdependent (Mil-grom and Roberts, 1990). For example, firms thatcompete by creating value will have to enlist theiremployees’ initiative and creativity (Pfeffer, 2010).Moreover, if value creation is a priority, competingon the basis of ideas and enlisting multiple stake-holders will be required. Such linkages and inter-actions make it likely that relational and rivalrousgestalts will surface regularly, and thus are worthyof further research in competition.

Transaction-cost economics

Firms in many situations may combine rivalrousand relational modes of competing. They canremain tactical and independent in some areasof rivalry and compete relationally in others. Insome ways, the rivalrous approach of traditional



competitive dynamics evokes market-basedcompetition—transactional, short-term, and usefulwhen results are predictable to a powerful focalactor. By contrast, relational competition, becauseit brings stakeholders together in a closer, moresymbiotic, more enduring relationship, improvesmonitoring and coordination capability withina relationship and aligns incentives and trustamong parties. That relationship shares advantageswith those attributed by Williamson (1975) tohierarchy; indeed, hierarchies and thus relationalmodes do best under very different conditionsthan market-based and confrontational modes(Williamson, 1975, 1985). The former, he argues,may reduce transaction costs and therefore couldbe especially useful in uncertain situations andwhere there is intentional deception, informationasymmetries, and considerable risk of opportunism.These conditions commonly confront firms produc-ing complex products for dynamic, heterogeneousmarkets. Relational competition may overcomesome of these obstacles to the benefit of all parties.It would be useful to test these notions.

The stakeholder view

Although the relational view of competitive dynam-ics is in some ways consistent with the stake-holder and corporate social responsibility (CSR)perspectives (Freeman et al., 2010; Hillman andKeim, 2001), there are fundamental differences.The similarities, clearly, are that relational compet-itive dynamics, like CSR, considers multiple stake-holders in developing competitive initiatives, andstrives, where possible, to achieve win-win relation-ships with them. The stakeholder and CSR perspec-tives, however, are built on moral and philosophicalguidelines—on doing the right thing for the greatestnumber, which in essence is a utilitarian rationale(Donaldson and Preston, 1995).

The relational competitive view is more mod-est and less normative in its objectives than thestakeholder theory. First, it focuses on interactionsin the marketplace rather than on the completerepertoire of firm behavior. Second, it emphasizesthat contributions to stakeholders are instrumen-tal in achieving organizational aims rather thansocial objectives; ultimately, competitive initiativeshave as their primary object the long-term suc-cess of a firm rather than general social welfareor economic value creation. Most importantly, rela-tional competitive dynamics is not intended as

a normative posture. Competing relationally is apotentially useful option, but not a panacea. It maybe valuable in some situations, but less benefi-cial in others. Finally, CSR does not address thedynamics of stakeholder interactions—the need,for example, to balance different tools over timedepending upon prevailing competitive challenges,or the importance of trading off short-term sacrificesfor long-term gains, and vice versa.

Most papers investigating the relationshipbetween social and financial performance (Barnettand Salomon, 2012) implicitly assume that a firm’spolicies are enacted throughout an organization,and that stakeholders behave in predictable waysin response to these policies. The relational com-petitive view, which takes a dynamic perspectiveof firm/stakeholder interactions, might help usto better understand the conditions under whicha relational approach can be effective in achiev-ing organizational aims, and to identify certaincontextual factors that might support or impedecooperation between firms.

Co-opetition

Brandenburger and Nalebuff (1996) defined“co-opete” as “competing without having to killthe opposition and cooperating without havingto ignore self-interest.” Lado, Boyd, and Hanlon(1997) argued that the combination of competitiveand cooperative strategies will create a higheroverall “syncretic” rent for a firm. A steadystream of studies has linked co-opetition to a widerange of topics such as organizational learning(Dussauge et al., 2000) and intraorganizationalknowledge sharing (Tsai, 2002). A fundamen-tal challenge of this research domain is how totranscend the divides and dichotomies betweencompetition and cooperation (Chen, 2008; Smith,Carroll, and Ashford, 1995). What this researchlacks is a broader consideration of stakeholders,especially employees, suppliers and regulators,and an evaluation of nonfinancial objectives. Ourframework raises some interesting questions for thefurther conceptualization of co-opetition; perhapsmost critically, does co-opetition imply equaldegrees of competition and cooperation, and underwhat conditions must the balance shift betweencompetitive-cooperative, rivalrous, and relationalmodes? Also, our perspective would suggest thatthe notion of co-opetition can be extended to awider collection of stakeholders at any point along



the value chain, including all of those able to conferinstitutional legitimacy.

Future directions

A central task in furthering the relational perspec-tive will be to determine whether our propositionsare empirically valid. Does the AMC model, as wehave presented it, help to predict when firms willcompete relationally? How does the relational per-spective manifest within particular organizationalforms, such as family businesses and start-ups, andacross different cultural contexts? Do the perfor-mance consequences of our later propositions applyin the specified range of contexts? What are theperformance implications of relational versus tra-ditional competitive dynamics in different cultural,industrial, and organizational settings? Are the ben-efits financial or nonfinancial; are they broadlyshared or narrowly allocated?

Answering these questions will require someeffort. The first hurdle will be to operationalizerelational competition. One approach might be toconcentrate on each of the different componentsof that competition: the time horizons employed,the stakeholders served, the aims of the interac-tion, and the action toolkit. One could investigatewhether some of the governance, cultural, and orga-nizational factors we mentioned have an impacton each of these elements of relational competi-tion or on an overall relational configuration. Onealso might examine the various performance con-sequences of relational competition—financial andnonfinancial, short-term and long-term—and deter-mine the extent to which they surface in differentcontexts. For example, when will relational modesof competition be more apt than rivalrous modesto preclude retaliation? Can firms use short-termattacks of appropriation to achieve positive long-runresults (Young et al., 1996), or are such results onlythe product of patient, relational approaches (Chenand Miller, 2011)? How can a firm cooperate withits competitors to maximize benefit to “lift all boats”for the broader community—and what are the chal-lenges of sequencing and the trade-offs that have tobe made in the process?

It will also be useful to determine empiri-cally what the relationships are among our fivedimensions, as well as the drivers and normativeconsequences of those relationships. For example,researchers might wish to establish how thedimensions we have used to structure competitive

dynamics combine to form archetypal modesof competition. Certainly, many firms might beexpected to choose selectively among the fivedimensions and explore the intermediate range,rather than adhere strictly to either of the purelyrivalrous or relational archetypes we have pre-sented. It is important also to explore normativeimplications: are purely relational polarities acrossall five dimensions more effective than hybrids?What are their respective benefits, and how arethese shared across different types of stakeholders?

Finally, AMC, as we have suggested, can proveto be a useful framework for identifying not onlycompetitors but cooperative partners—indeed,because of the “relational” orientation of com-petitive dynamics, the AMC perspective may beused for both competitive and cooperative analysesand applications (Chen, 2014). Whereas the typesof actions in a competitive relationship differfrom those in a cooperation-seeking setting, thecausal mechanisms associated with awareness,motivation, and capability could be quite similarin both cases. How these AMC components takeeffect individually and collectively in differentcontexts, and for different types of actions, meritsfuture research.

ACKNOWLEDGEMENTS

The authors would like to thank Ken Craddock,Adrian Keevil, Adelaide King, Hao-Chieh Lin, JohnMichel, Bidhan Parmar, Ken Smith, Eric Tsang,and Wenpin Tsai for their valuable comments on anearlier draft of this paper. Financial support from theBatten Institute and the Darden Foundation of theUniversity of Virginia, and from the Social Sciencesand Humanities Research Council of Canada isgratefully acknowledged.

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