Rivalry and the Industry Model of Scottish Knitwear Producers

Abstract

The authors thank all of the managers who gave freely of their time in helping to complete this study. Ian Watson was particularly helpful. Thanks also go to Peter Grinyer of St. Andrews Management Institute, Roy Payne, Tony Berry, Pam Lewis, and to Manchester Business School. This research was partially funded by an Economic and Social Research Council grant to the Manchester Business School and by a grant from the Hewlitt Foundation to the first author. In this paper we argue that market boundaries are socially constructed around a collective cognitive model that summarizes typical organizational forms within an industry. This model is produced when firms observe each other's actions and define unique product positions in relation to each other. Our study examines the question of how firms define a reference group of rivals when market cues are ambiguous and interorganizational variety is high and identifies the industry model underlying rivalry among Scottish knitwear producers. The data suggest that a six-category model of organizational forms best describes the common sense of competition in the industry and that an ensemble of attributes involving size, technology, product style, and geographic location forms the foundation for this ordering. The results also show how this industry model is reproduced within the rivalry network structuring imperfect competition in the industry.'