Abstract
The search for competitive advantage is the defining inquiry of strategic management research. In this study, we draw on the dynamic capability lens to develop a counterintuitive view that positions competitors of a firm as an important source of competitive advantage. We argue that a firm's competitors form a competition network from which it can collect information about innovative ideas, product market, and related industries. Such information helps it calibrate market opportunities, update the resource base, and, eventually, strengthen its competitive advantage. This positive effect of competition network on competitive advantage will reasonably be contingent upon the proactive information search by the firm. The empirical results based on the survey data of 631 Chinese firms strongly support our theoretical model. This study identifies another distinctive source of competitive advantage than industry context or organizational resources as well as advancing our understanding of competition network.
Highlights
How firms obtain and sustain competitive advantage is the fundamental question in the domain of strategic management
Drawing from the dynamic capability (DC) lens (Salvato & Vassolo, 2018; Teece, Pisano, & Shuen, 1997; Winter, 2003), we argue that competition network can serve as an important source of competitive advantage
A firm exercises its DCs primarily via the process of sensing opportunities or threats from market and reconfiguring organizational processes or resources to seize the opportunities (Teece, 2007). Following this line of argument, we propose that competition network of a firm, by feeding information on critical dimensions of the environment to the opportunity sensing process, would eventually bear on its competitive advantage
Summary
How firms obtain and sustain competitive advantage is the fundamental question in the domain of strategic management. In a large competition network, a firm ties up with numerous competitors and technically gains direct access to many sources of information about the external environment It will sense the market opportunities or threats faster, positioning it among the early movers to make necessary reconfiguration in resources or processes. Equipped with a strong related industry search, a firm is capable of sensing cues from its competition network regarding the development of potential complements or substitutes This information allows it to formulate effective and timely strategies in response such as altering its resources and processes to capture or even pre-empt the market space that initially sparked by other industries (Helfat et al, 2007; Teece, 2018). These areas feature vast differences in economic development, market maturity, infrastructure, and institutional arrangements, which may shape the competitive advantage of firms
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