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The purpose of this paper is to explain how a multi-market firm develops the motivation to forbear from competition.
Abstract
Purpose
The purpose of this paper is to explain how a multi-market firm develops the motivation to forbear from competition.
Design/methodology/approach
A two-way fixed effects model with Driscoll and Kraay standard errors investigates the research question with panel data collected from the US scheduled passenger airline industry.
Findings
The results demonstrate that although the interaction of multi-market contact with strategic similarity impairs a firm’s forbearance from competition, the same interaction promotes it as firm performance deteriorates, supporting the hypotheses.
Research limitations/implications
Performance explains not only how forbearance emerges out of coincidental multi-market contact but also reconciles the mixed evidence for the impact of the two-way interaction between multi-market contact and strategic similarity on forbearance.
Practical implications
Antitrust authorities should pay more attention to low performing firms than to high performing firms in their investigations. Also, managers of multi-market firms should identify multi-market rivals with low performance as targets for the initiation of forbearance.
Originality/value
This study revises the mutual forbearance theory to align it with the accumulating empirical evidence that otherwise refutes its assumption and thereby improves theory’s descriptive and predictive power.
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Javier Gimeno, Ming-Jer Chen and Jonghoon Bae
We investigate the dynamics of competitive repositioning of firms in the deregulated U.S. airline industry (1979–1995) in terms of a firm's target market, strategic posture, and…
Abstract
We investigate the dynamics of competitive repositioning of firms in the deregulated U.S. airline industry (1979–1995) in terms of a firm's target market, strategic posture, and resource endowment relative to other firms in the industry. We suggest that, despite strong inertia in competitive positions, the direction of repositioning responds to external and internal alignment considerations. For external alignment, we examined how firms changed their competitive positioning to mimic the positions of similar, successful firms, and to differentiate themselves when experiencing intense rivalry. For internal alignment, we examined how firms changed their position in each dimension to align with the other dimensions of positioning. This internal alignment led to convergent positioning moves for firms with similar resource endowments and strategic postures, and divergent moves for firms with similar target markets and strategic postures. The evidence suggests that repositioning moves in terms of target markets and resource endowments are more sensitive to external and internal alignment considerations, but that changes in strategic posture are subject to very high inertia and do not appear to respond well to alignment considerations.
Jui‐Chi Huang and Tantatape Brahmasrene
This study examines the impact of expectations on the market share mechanism. The dynamic strategic pricing behaviors in the short‐run and the long‐run are also explored. The…
Abstract
This study examines the impact of expectations on the market share mechanism. The dynamic strategic pricing behaviors in the short‐run and the long‐run are also explored. The exchange rate expectations are incorporated into a switching cost model via the method of exchange rate pass‐through on product‐specific and country‐specific approach. By using the time series techniques, the results of the system estimations prove that the market share mechanisms are weakened by exchange rate expectations in open economies. Furthermore, not only is the degree of exchange rate pass‐through higher in the short‐run than in the long‐run but also many cases of pair‐wise rivalry are found. An improved understanding of the effects of exchange rate movements on foreign exporters pricing and pass‐through relations from this study may enhance competition in international markets.
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James Rajasekar and Mueid Al Raee
Michael Porter's Five Forces Model provides an ideal mechanism and framework to study the Oman telecommunications industry's competitive structure. The purpose of this paper is to…
Abstract
Purpose
Michael Porter's Five Forces Model provides an ideal mechanism and framework to study the Oman telecommunications industry's competitive structure. The purpose of this paper is to use this model to identify the competitive forces that affect it the most.
Design/methodology/approach
This paper is based on empirical research. The data were collected primarily from secondary sources such as published interviews of chief executive officers of the telecommunication companies in Oman, government reports, and Telecommunication Regulatory Authority of Oman (TRA). The authors then used Michael Porter's five forces model to investigate the competitiveness of the telecommunication industry in Oman.
Findings
The analysis shows that the strongest competitive forces in the industry are rivalry among competitors and threat of substitutes. While the threat of entry and power of buyers also having a significant impact, the power of suppliers is of very limited impact. Hence, the five forces model impacts uniformly on all the players in Oman's telecommunication market and have important strategy implications for them all. The results of this analysis are then used as a critical tool to formulate effective strategies for industry players in the face of the changing dynamics of telecommunication services industry in Oman.
Originality/value
This study is one of the few papers that attempted to study the telecommunication industry in Oman in depth. However, this is the first research study that investigated the competitive landscape of this industry using an established framework such as Michael Porter's five forces model. As such, the study brought to light new insights and paradigms in competing in the telecommunication industry in Oman. This study also suggests new strategic directives to the incumbents, new entrants, buyers and suppliers.
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Drawing on the contingency perspective of strategy, the purpose of this paper is to extend current understanding of fit between a differentiation strategy of the industrial firm’s…
Abstract
Purpose
Drawing on the contingency perspective of strategy, the purpose of this paper is to extend current understanding of fit between a differentiation strategy of the industrial firm’s foreign subsidiary and key contextual boundaries.
Design/methodology/approach
A conceptual framework is developed in which a differentiation strategy involves the complementary approaches of innovativeness and customer responsiveness. The key boundaries consist of local competitive dynamics and the value-adding mandate assigned to the subsidiary. Detailed features of four types of differentiation strategies are identified by analysing strategies applied by subsidiaries of industrial firms operating on the US market.
Findings
Four propositions are developed regarding alignment between strategy types and the boundaries. Relationships are proposed regarding a strategy type and a context specified by rivalry/relational competitive dynamics, and a broad/narrow value-adding mandate.
Research limitations/implications
The conceptual framework and the propositions may be tested by analysing statistical data on industrial firms’ subsidiaries operating in several host countries.
Practical implications
To increase a foreign subsidiary’s contribution to the global competitiveness of an industrial firm, an awareness of the boundaries to the subsidiary’s strategy of differentiation that may hamper the subsidiary’s performance is essential.
Originality/value
The conceptual framework, and the propositions, contributes to literature on the industrial firm’s global strategy because it focuses on subsidiary strategy and extends present understanding of the mechanisms that drive the effectiveness of a foreign subsidiary’s differentiation strategy.
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Michael Morris and Corine van Erkom Schurink
Assesses the extent to which environmental turbulence is affectingthe pricing behavior of industrial marketers. Introduces a conceptualmodel, based on a review of the available…
Abstract
Assesses the extent to which environmental turbulence is affecting the pricing behavior of industrial marketers. Introduces a conceptual model, based on a review of the available literature, in which pricing behavior is the result of changing dynamics in the external environment of firms. Assumes that price itself includes multiple dimensions which combine to form an overall strategy. Describes the results of a survey of a cross‐section of firms in South Africa. Draws a number of implications for theory and practice.
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Identifying the perception of competition between public and private providers in the national hospital market can help authorities to develop appropriate management strategies…
Abstract
Purpose
Identifying the perception of competition between public and private providers in the national hospital market can help authorities to develop appropriate management strategies applicable to the hospital sector and increase the efficiency of public hospital institutions.
Design/methodology/approach
A mixed selective descriptive study including quantitative and qualitative components was carried out on in the Republic of Moldova between 12/2021 and 03/2022. The study included all hospitals in the country. The study revealed the hospital manager's perception of the hospital's competition as respondents to the questionnaire were only the directors and managers of hospital institutions. The concept of evaluation of the perception of competition was carried out through the lens of “Porter's 5 forces” from “Competitive strategies” by Michael E. Porter. The authors used a questionnaire as an instrument for studying the perception of competition. All study participants responded to both the quantitative and qualitative questionnaire.
Findings
Interhospital competition perceived by managers using model framework of “Porter's 5 forces” reveals high danger from service providers and high perception of rivalry; hospital directors perceived as low: the patient's bargaining power; the danger of new competitors entering the market; the danger of substitution, which constitutes competitive advantages; the lack of autonomy in the selection of services and patients and legislative barriers are the main perceived dissensions. The perception of competition between public and private hospitals is one with high rivalry, especially in the country's municipalities.
Originality/value
The national public hospital system takes up to 65% of the health budget being extremely expensive, a fact that indicates a rather low competitiveness of them. The European average indicates figures of 30–40%. The private hospital sector is less developed compared to most European countries, being represented by 17 institutions, in comparison Romania has 104 private hospitals representing about 25% of the market share. Private hospitals also occupy a considerable part of the European hospital healthcare market, continuing to increase, reaching over 30% in Germany.
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The purpose of this paper is to extend the understanding of innovation research and its contextual boundaries.
Abstract
Purpose
The purpose of this paper is to extend the understanding of innovation research and its contextual boundaries.
Design/methodology/approach
The paper opts for a systematic review of literature on innovation. Based on research in the agricultural and forest industries, it analyzes differences between research conducted in a competitive context of strong rivalry and research in a context characterized by strong buyer power. In particular, the review compares types of innovation under investigation and the level at which the innovation occurs.
Findings
It was found that competitive context significantly separates the type of innovation under investigation and innovation at different levels. Thus, the findings provide insights on the importance of competitive context to innovation research.
Research limitations/implications
The findings have implications for the understanding of the sources and directions of innovation, and the formation of innovation at the firm and industry levels. The review also provides a relevant foundation for further research.
Practical implications
The review provides a ground for managerial decision-making regarding innovation. A manager wishing to innovate is advised to evaluate the competitive context. The evaluation is crucial, as the context facilitates different types and levels of innovation.
Originality/value
The review is unique in its emphasis that reviewing studies of innovation requires the consideration of competitive context.
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This chapter discusses the special case of extractive industries in relation to susceptibility to corruption, especially in states with weak institutional and governance…
Abstract
This chapter discusses the special case of extractive industries in relation to susceptibility to corruption, especially in states with weak institutional and governance structures. The systemic nature of this corruption is shown in a vicious cycle of extractive resource dependency and corruption which reinforce each other. The chapter then concentrates on the supply side of corruption, and the role of the private sector with domestic and foreign natural resources companies feeding into systemic corruption. Corruption is underpinned by a high demand, high prices for extractive resources scenario, and mitigated by a low demand, low prices scenario. Transparency oriented, anticorruption measures may not be effective in their own right, but a low demand, low prices scenario could provide an opening for such measures to take root, with accompanying benefits to the citizens of resource rich states and their environment. This suggests taking a contingency approach to dealing with corruption.
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In the original history of the socialist calculation debate (e.g., Bergson, 1948), Oscar Lange proved that bureaucrats can find the equivalent of equilibrium prices through trial…
Abstract
In the original history of the socialist calculation debate (e.g., Bergson, 1948), Oscar Lange proved that bureaucrats can find the equivalent of equilibrium prices through trial and error. In the revised history of this debate (e.g., Caldwell, 1997; Lavoie, 1985), Lange proposed an erroneous solution to the calculation problem. Dynamic entrepreneurial rivalry moves prices toward equilibrium. Lange and other “Market Socialists” allies thought only in terms of a static competitive market equilibrium that excludes the role entrepreneurs play in adjusting prices.