Competitive Dynamics: Of Whom Should You Be Aware?
Published in 77th Annual Meeting of the Academy of Management, 2017
Abstract
The Awareness-Motivation-Capability (AMC) framework instructs firms to be aware of their rivals, but it offers little guidance on how to develop such awareness or whom they should be aware of. We address this gap by showing which distant, seemingly unrelated, players emerge as direct competitors. Appreciating the concept of dynamism in competitive dynamics research, we show that a network perspective captures how indirect competitors (the rivals of a one’s rivals, and their rivals, etc.) transition to become direct competitors. Studying several networks of direct and indirect competitors in the business software and services industry over six years, we reveal a competitive distance threshold below which the odds of indirect competitors turning into direct competitions becomes positive, and thus it warrants increased awareness. Though extant research identifies rivals based on their similar profiles, we show that a firm’s greatest awareness must be directed to rivals who are not only dissimilar, but mostly embedded in different network groups, not similar ones. Finally, we nuance the AMC framework by enhancing the scope of awareness from focusing primarily on current competitive intensity in a single space to also addressing the process of competition formation across domains.
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