Cross-Domain Competition: Integration of Competitive Strategy and Corporate Political Strategy

Abstract

While competitive actions focus on a firm's competitive advantage and performance in the competitive domain, corporate political activities deal primarily with the firm's relationship with the government in the political domain to improve both its legitimacy and competitive advantage. Will an attack by a rival multinational enterprise in the competitive domain trigger a response in the political domain? What are the rationales and determinants of such a cross-parry between the two domains? Building on the literature of multimarket competition and corporate political activities, we examine the joint deployment of competitive strategy and political strategy and advance a theory of cross-domain competition between multinational enterprises. Specifically, we systematically examine the determinants of the attacked multinational enterprise's choice of responses to an attack in the competitive domain (i.e., no response, response in the competitive domain only, response in the political domain only, or responses in both domains simultaneously), focusing on the differentials between the attacking MNE and attacked MNE in each domain and the differentials in their cross-domain coordination, also taking into account the impact of the types and characteristics of the attacks as well as the concerns and expectations of the third-party players such as other rivals and stakeholders. Our integrative account of cross-domain competition will help enhance our understanding of how a multinational enterprise simultaneously manages its competitive actions and political actions against the same rivals and contribute to the integration of competitive strategy and corporate political strategy.