Maneuvering multimarket competition: The effects of multimarket contact and strategic alliances on performance of single-market firms

Abstract

Research on multimarket competition has focused on how multimarket contact shapes competitive behavior of firms that face each other in multiple markets. To date, there has been little attention to how multimarket contact affects single-market firms nor how single-market firms cope with multimarket competition. In this study, we examine the effects of multimarket competition and strategic alliances on single-market firms’ market share. Our analysis shows that the degree of multimarket contact firms had outside of a single-market firm’s market negatively affected the single-market firm’s market share. Yet, the number of strategic alliances a single-market firm had and having alliances with multimarket firms helped the single-market firm to cope with competitive pressure derived from multimarket contact and enhance its market share.