Why are Some Organizations More Competitive than Others? Evidence from a Changing Global Market

By William P. Barnett, David G. McKendrick. 2004

183 citations recorded by the source corpus.

In this paper, we question the idea that large organizations have advantages that make them particularly potent rivals. We argue that the ability of large organizations to ameliorate competitive constraints insulates them from an important source of organizational development and protects them from being selected out if unfit. Consequently, we predict that although large organizations are likely to do well in technology contests, they also are likely to become weak competitors over time compared with small organizations. We specify this prediction in an explicit model of “Red Queen” competition, in which exposure to competition makes organizations both more viable and stronger competitors. We find support for our ideas in empirical estimates of the model obtained using data on hard disk drive manufacturers. Large organizations led the technology race in this market yet failed to develop into stronger competitors through Red Queen competition compared with their small counterparts. We also find evidence that all organizations in this market generated increasingly global competition, regardless of the competitiveness of their home markets. In these ways, our model elucidates important reasons why some organizations are stronger competitors and reveals how strategies that isolate organizations from competition may backfire. *

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/6ba26eb5096788a512e7e80ea6d17bb535463dd4

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Citations in the corpus

The Red Queen Effect: Competitive Actions And Firm Performance (2008, background): “However, Red Queen competition can also have negative consequences for an active firm (Barnett & Hansen, 1996; Barnett & McKendrick, 2004 ).”
International entrepreneurship and geographic location: an empirical examination of new venture internationalization (2008, background): “Competitive dynamics have been found to influence firm growth (Boeker, 1991), choice of product market entry (Baum & Korn, 1996) and overall organizational viability (Barnett & McKendrick, 2004).”
When do Dynamic Capabilities Lead to Competitive Advantage? The Importance of Strategic Fit (2018, unknown): “…helps inhibit imitation efforts by competitors who do not utilize dynamic capabilities or lack access to external resources, both of which could be used to upgrade the resource base (AragonCorrea and Sharma, 2003; Barker and Duhaime, 1997; Barnett and McKendrick, 2004; Sirmon et al., 2010).”
A Measure of Competition Based on 10-K Filings (2012, unknown): “Another notion of competition, labeled ‘Red Queen’ competition, describes how firms respond to innovation by rival firms with innovations of their own, resulting in a self-escalating system wherein performance is initially enhanced through innovation but later reduced by the responsive innovation of”
How a Firm's Competitive Environment and Digital Strategic Posture Influence Digital Business Strategy (2013, background): “The Schumpeterian framework suggests an approach to assessing digital business strategy by examining the extent to which firms respond to competitive moves and industry norms in their external environments (Barnett and McKendrick 2004).”
Clusters, knowledge spillovers and new venture performance: An empirical examination (2008, background): “entrepreneurs should view competition positively as it is a factor with potential to make it a more viable competitor ( Barnett and McKendrick, 2004 ).”
Resources, Environmental Change and Survival: Asymmetric Paths of Young Independent and Subsidiary Organizations (2011, background): “Prior evolutionary models implied that advantages gained through strategic position or the development of competitive abilities are primarily a function of organizational size (Barnett, 1997; Barnett and McKendrick, 2004).”
A competitive advantage from the implementation timing of ISO management standards (2015, background): “The competitive dynamics literature (Barnett and McKendrick, 2004; D’Aveni et al., 2010; Lieberman and Montgomery, 1988; Young et al., 1996) provides a theoretical explanation of the strategic benefits for the implementation timing of new standards.”