Abstract
We describe a methodology for identifying competitors from first principles, drawing on the ecological niche theory which stipulates that competition arises from the dependence of interacting entities on the same limiting resources or, in ecological terms, from overlap in their niches. Depending on the context, the entities of interest may be species, products, firms, countries, or supply chains. We discuss the concepts of niche breadth and niche overlap and provide a mathematical expression for computing the competitive effects of interacting entities on one another from niche breadth and overlap measures. We illustrate the competitor identification procedure with simulated data mimicking a situation where supply chains compete over logistics modes on which they rely for moving goods from point to point. Competition identification is invaluable to business sustainability as it allows the entities involved to remain sustainable and persist in a competitive environment by crafting effective strategies that allow them to continuously adapt to changes and mitigate the negative impacts of competition.
Highlights
Competitor identification is essential to business sustainability and essential for gaining competitive advantage
We propose an approach to competitor identification from first principles, drawing on the ecological niche theory
We worked out a mathematical formulae for assessing the competitive effects experienced by a given entity from measures of its niche breadth and overlaps between its niche and the niches of competitors, and demonstrated the interplay of niche breadths and niche overlaps in regulating the intensity of competitive effects experienced by potential competitors
Summary
Competitor identification is essential to business sustainability and essential for gaining competitive advantage. It had been reasonably unproblematic to identify firms that compete against one another in a typical product-based or companybased competition. The notion that competition in the digital age is product- or company-based and network-based takes the competitor identification process to new levels of difficulty. As relationships between manufacturers, intermediaries and end-customers change, moving from physical locations to digital spaces, competitor identification within the business environment has become even more complicated. Approaches to identifying competitors have always been of interest to scholars and analysts and several methods have been proposed to this end [1]. We propose an approach to competitor identification from first principles, drawing on the ecological niche theory. Before delving into the details of our proposed method, a review of existing literature is in order
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