See You in Your Backyard: Multipoint Contact, Firm’s Capacity and Capability, and Technological Expansion

Abstract

Past studies of multipoint competition have mainly focused on the effect of multipoint contact in product markets on firm competitive behaviors in those markets only. Our study advances this literature by examining how multipoint contact in product markets affects a firm’s expansion into a rival’s technological areas. We further investigate the factors that moderate the proposed effect. Our analyses suggest that the degree of multipoint contact between a firm and a rival in product markets has an inverted U-shaped relationship with the degree of the firm’s expansion into the rival’s technological areas (patent classes). Furthermore, the firm’s capacity (market share) and capability (status in terms of technological development) relative to the rival’s have different moderating effects on the relationship between multipoint contact in product markets and the firm’s expansion into the rival’s technological areas. Our findings contribute to the literatures on multipoint contact, competitive dynamics, and firm technology strategies.