Competitive Escalation Research Articles

The Boundary of Supranational Rules: Revisiting Policy Space Conflicts in Global Trade Politics

While global value chains (GVCs) necessitate effective global economic governance in providing a stable, rule-oriented international economic order for the cross-border flow of factors, it is witnessed that there’s an inevitable decline of multilateralism in the WTO in the contemporary era of deep globalization. This empirical puzzle has stimulated various theoretical explorations, including research on the multilateral trade negotiation model, North–South structural conflicts, and the absence of great power responsibility. The increasing friction between great powers around trade policy has illustrated that policy space conflicts constitute the central challenge of global trade governance. Policy space as a concept illustrates the scope and conditionality of domestic policy instruments when framed by supranational rules. By revisiting existing research, this article clarifies the nature of policy space and categorizes its conflict modes as regulatory diffusion, regulatory differentiation, regulatory competition, and regulatory conflict. The practice of global economic governance shows that deep globalization requires the convergence of diverse domestic regulations that reduce policy space; while maintaining competitive advantage of sovereign states in the global production system requires the preservation of certain flexibilities, especially in areas like interventionism, sequential reforms, or capacity building. This inherent tension causes policy space conflicts to evolve in kind with the escalation of competition among great powers in the global division of labour. Since 2017, the WTO reform agenda, US–EU–Japan trilateral coordination, and intense Trumpian trade wars have all proved that regulatory conflict has offered the dominant model. This shift has led to the decline of multilateralism and the weakening of the multilateral trading system. policy space, multilateralism, global value chains, regulatory competition, global trade politics, convergence and de-convergence, WTO reform

Shareholder Value(s): Index Fund Activism and the New Millennial Corporate Governance

Major index fund operators have been criticized as ineffective stewards of the firms in which they are now the largest shareholders. While scholars debate whether this passivity is a serious problem, index funds’ generally docile approach to ownership is broadly acknowledged. However, this Article argues that the notion that index funds are passive owners overlooks an important dimension in which index funds have demonstrated outspoken, confrontational, and effective stewardship. Specifically, we document that index funds have taken a leading role in challenging management and voting against directors in order to advance board diversity and corporate sustainability. We show that index funds have engaged in a pattern of competitive escalation in their policies on environmental, social, and governance (“ESG”) issues. Index funds’ confrontational and competitive activism on ESG issues is hard to square with their passive approach to more conventional corporate governance questions. To explain this dichotomy in approaches, we argue that index funds are locked in a fierce contest to win the soon-to-accumulate assets of the millennial generation, who place a significant premium on social issues in their economic lives. With fee competition exhausted and returns irrelevant for index investors, signaling a commitment to social issues is one of the few dimensions on which index funds can differentiate themselves and avoid commoditization. For index funds, the threat of millennial migration to another fund is more significant than the threat of management retaliation. Furthermore, managers themselves, we argue, face intense pressure from their millennial employees and customers to respond to their social preferences. This three-dimensional millennial effect—as investors, customers, and employees—we argue, is an important development with the potential to provide a counterweight to the wealth-maximization paradigm of corporate governance. We marshal evidence for this new dynamic, situate it within the existing literature, and consider the implications for the debate over index funds as shareholders and corporate law generally.

FACTORS OF TECHNOLOGICAL DEVELOPMENT AND RE-INDUSTRIALIZATION OF TRADITIONAL INDUSTRIAL SECTORS

The factors contributing to the technological development of traditional sectors of industry, in particular the global automotive industry, are considered. It is noted that the automotive industry, which is not related to high-tech industries, by the end of 2017 entered the top 3 industries with the highest level of science among the six largest industrial sectors. The analysis of the competitive landscape and strategies of technological diversification of the traditional leaders of the automotive industry, caused by the emergence of technologies for the electrification of vehicles, was carried out. It is concluded that among the factors that lead to reindustrialisation traditional industries, are the emergence breakthrough technology; the escalation of competition for new niches formed by this technology; a sharp increase in the volume of budgets for research; increasing of investment and patent activity; removal of barriers established by intellectual property rights; cooperation with companies of related industries.

Competitive escalation and interventions

AbstractCompetitive escalation occurs frequently in managerial environments, when decisions create sunk costs and decision makers compete under time pressure. In a series of experiments using a minimal dollar auction paradigm, we test interventions to prevent competitive escalation. Without any intervention, most people, including experienced managers, escalate and lose money by bidding more than the price is worth (e.g., more than 10 € for 10 €). We test several interventions, in which we provide individuals with different types of experience: direct experience in structurally identical and in structurally similar situations, as well as direct experience in similarly competitive situations (lacking the escalation dimension). We also study indirect experience based on vicariously learning about the situation's consequences (experienced by others) and based on mental simulation by setting oneself a limit regarding where to exit the competition. In 3 experiments (N = 1,229), we find that direct experience in exactly the same or a structurally similar situation allows individuals to prevent subsequent escalation, whereas direct experience in a similar situation without escalation does not. Indirect experience based on vicarious learning successfully reduces competitive escalation, whereas a goal‐setting intervention that has proven instrumental in reducing classic escalation of commitment is not effective. This pattern of variation in the effectiveness of different interventions is consistent with the theory of a hot‐cold empathy gap that prevents people from anticipating how they will experience a competitive situation before entering it. As a methodological contribution, we developed a deception‐free computer‐player dollar‐auction for online participants and a dynamic chicken game.

Escalation of competition into conflict in competitive networks of Formula One drivers

This article investigates the factors that escalate competition into dangerous conflict. Recent sociological theorizing claims that such escalations are particularly likely in dyads of structurally equivalent people (i.e., actors who have the same relations with the same third parties). Using panel data on Formula One races from 1970 through 2014, we model the probability that two drivers collide on the racetrack (an observable trace of conflict) as a function of their structural equivalence in a dynamic network of competitive relationships. Our main hypothesis, that the likelihood of conflict rises with structural equivalence, receives empirical support. Our findings also show that the positive association between structural equivalence and conflict is neither merely a matter of contention for official position nor an artifact of inherently hostile parties spatially exposed to each other. Our analyses further reveal that this positive association is concentrated in a number of theoretically predictable conditions: among age-similar dyads, among stronger performers, in stable competitive networks, and in safe, rather than dangerous, weather conditions. Implications for future research on conflict, networks, and tournaments are discussed.

The Al Qaeda–Islamic State Rivalry: Competition Yes, but No Competitive Escalation

ABSTRACTOn June 29, 2014, the Islamic State emerged and declared the establishment of its caliphate. The declaration was a direct challenge to other Sunni Jihadi groups including Al Qaeda and an attempt to become the leading Jihadi group around. The rivalry that evolved within Sunni Jihadism, and particularly between Al Qaeda and its renegade affiliate the Islamic State, entailed a hitherto unseen competitive environment within the Jihadi field. Interestingly, the increased competition did not lead to a dynamic of competitive escalation and mutual radicalization of behaviour. Theory tells us to expect competitive escalation, or outbidding, in such contexts, but despite the initial success of the Islamic State’s brutality and offensive conquest in Syria and Iraq, Al Qaeda did not “play along” and instead pursued a different path. The reason for this absence of competitive escalation, this paper argues, is to be found in a pre-conflict methodological re-orientation within Al Qaeda and in the pacifying role played by influential Al Qaeda-affiliated ideologues.

How to prevent competitive escalation in the minimal dollar auction paradigm

Escalation of commitment, the tendency to increase one’s investment in a losing course of action even after negative feedback is well known for its adverse consequences. In this paper, we investigate a situation in which escalation of commitment occurs in the context of competitive settings. Based on Shubik’s (1971) original game, we introduce a ‘minimal’ dollar auction paradigm, which allows us to study competitive escalation in small anonymous groups in the lab. In three experiments, students and experienced executives bid more than 10 CHF for a prize of 10 CHF. In addition, we test two interventions to prevent competitive escalation: a ‘goal setting’ intervention, which has been successful in reducing classic escalation of commitment, is not effective in the competitive situation, whereas a ‘vicarious learning’ intervention prevents escalation successfully. The result is consistent with the assumption/theory of a cold-hot ‘empathy gap’, which impedes individuals from correctly anticipating their experience of the competitive situation before entering it.

Do representations of male muscularity differ in men's and women's magazines?

Men overestimate the degree of muscularity that is attractive to women, and women overestimate the degree of thinness that is most attractive to men. Consistent with the thesis that sociocultural input influences such body type preferences and beliefs, we postulated that magazines aimed at a male audience would portray a more muscular male body ideal than would magazines aimed at a female audience. Systematic comparison of popular magazines ( Cosmopolitan, Men's Health, Men's Fitness, and Muscle & Fitness) revealed that the ideal male body marketed to men is more muscular than the ideal male body marketed to women. We introduce the Physical Trait Overvaluation Hypothesis, which proposes that gender-specific media fuel emphasis on certain body parts in within-gender prestige competitions. The resulting competitive escalation creates a disconnect between the preferences of one gender and the personal aspirations of the other.

HIGH‐TECH AND HIGH CAPABILITY IN A GROWTH MODEL*

A growth model is developed to substantiate the conventional wisdom that regards high‐tech high‐capability firms as an engine of sustained technological progress. High‐tech industries are characterized by abounding technological opportunities, which promote endogenous high capability firms due to a competitive escalation mechanism. While high‐tech high‐capability firms capitalize on and discharge the existing innovation potentials, they also contribute to recharge (due to knowledge spillovers). They are a source of growth and high wage rate. An inquiry into the reasons why the high‐tech/high‐capability growth mechanism is not widely adoptable across countries points to the role of the underlying corporate governance systems.

Banks, grocers and the changing retailing of financial services in Britain

The entry of the three largest grocery retailers into retail financial services marks an escalation of competition in financial services retailing in Britain. This paper explores the increasingly porous boundaries between banking and retailing, focusing on changes in the economics of information gathering, shifts in the production, marketing and consumption of retail financial services, and a series of changes in the competitive and regulatory environment of grocery retailing. The paper argues that grocery retailers’ moves into financial services raise important issues concerning both the management of strategic alliances and their impact on social inclusion and exclusion. The paper elaborates on this argument by examining four potentially problematic issues arising from the alliances between banks and retailers: the shifting geographies of financial services provision, the development and maintenance of brand leadership, the production and use of management knowledge and consumers’ access to financial services.

Program directorsʼ responses to a survey on variables used to select residents in a time of change

In an effort to gain information to give to students seeking to optimize their chances of attaining residency positions, the authors assessed actual and projected changes in the process to select residents and determined the relative weights that program directors assigned to academic and personal criteria. In the fall of 1996, the authors mailed questionnaires to 1,200 program directors in 14 specialties requesting responses in four categories: current and projected changes in programs, current experiences with applicants and residents, the residency selection process, and the interview. Of those program directors, 794 (66.2%) responded. Nearly twice as many directors in university-based hospitals projected decreases in residency positions over the next five years as did directors in university-affiliated hospitals. A significant percentage of specialties expected increased competition for positions. The authors observed a tight clustering of highly valued academic variables in the most competitive group of specialties. Some specialties admitted to using a first-come, first-served basis for selecting candidates for interview. The study found significant changes in the process to select residents, including a decrease in residency positions, a continuation of this decrease, and a protracted escalation of competition for positions.

Third-Degree Price Discrimination in Oligopoly: All-Out Competition and Strategic Commitment

Price discrimination by imperfectly competitive firms may intensify competition, leading to lower prices for all consumers; the tradeoff of consumer groups' welfare that is characteristic of monopolistic discrimination need not arise. This escalation of competition may make firms worse off, and as a result firms may wish to avoid the discriminatory outcome. Under conditions similar to those in which unambiguous price and welfare effects may arise, unilateral commitments not to price discriminate - including the adoption of everyday low pricing or no-haggle policies - may raise firm profits by softening price competition.

Are Sutton's Predictions Robust?: Empirical Insights into Advertising, R & D, and Concentration

John Sutton's (1991) widely acclaimed book on sunk costs and market structure contains several robust predictions. The authors' empirical results across exogenous and endogenous sunk cost markets support most of Sutton's robust predictions. Exogenous sunk cost markets have lower minimum values of concentration than endogenous sunk cost markets. Increasing market size reduces concentration's lower bound faster in exogenous sunk cost markets. These results indicate that the competitive escalation of endogenous sunk cost spending, from advertising or R&D, makes market entry more difficult. Other results indicate that, in relatively large markets, the competitive escalation of endogenous sunk cost spending blockades market entry. Copyright 1996 by Blackwell Publishing Ltd.

Hypercompetition in a Multimarket Environment: The Role of Strategic Similarity and Multimarket Contact in Competitive De-Escalation

The effect of intra-industry heterogeneity on hypercompetitive escalation and de-escalation in a multimarket environment is examined. The authors study two critical dimensions of intra-industry heterogeneity: strategic similarity, which captures similarity in competitive orientation, and multimarket contact, which captures the degree of overlap between rivals in the multiple markets of the industry. Theory predicts that both variables influence the intensity of rivalry and competitive disruption. The predictions in the literature about the effect of strategic similarity on the intensity of rivalry are mixed. While strategic group theory proposes that strategic similarity may lead to lower rivalry, other theories (focusing on product differentiation, the resource-based view of the firm, and hypercompetitive escalation) predict that strategic similarity may actually increase rivalry. Those diametrically opposed propositions are captured as alternative hypotheses of the effect of strategic similarity. With respect to the effect of multimarket contact on the intensity of rivalry, the existing literature on multiple point competition predicts that multimarket contact should decrease rivalry, since it provides credible threats which discourage competitive escalation. The paper performs an empirical analysis of these hypotheses with data on over 3,000 city-pair markets of the U.S. airline industry. The paper focuses on the effects of changes in strategic similarity and multimarket contact in a city-pair market on the prices charged by airlines in that market. Other important factors which influence prices, such as service attributes, market characteristics, cost positions, market structure and firm-specific advantages, are rigorously controlled. The methodology used for the empirical analysis, a panel data regression with fixed-effect intercepts, also serves to control for other sources of stable differences across airlines and city-markets. The results show that strategic similarity moderately increases the intensity of rivalry, whereas multimarket contact strongly decreases it. Interestingly, the findings suggest that the effect of strategic similarity on intensity of rivalry may be biased if the effect of multimarket contact is not explicitly accounted for. This is due to the fact that strategic similarity may capture some of the strong de-escalation effect of multimarket contact when this variable is not controlled. This finding explains and challenges prior literature which found that strategic similarity reduces rivalry. The findings have important theoretical implications. For strategic group theory, they suggest two distinct dimensions of strategic heterogeneity (strategic similarity, multimarket contact), which should not be aggregated because they have opposite effects on the intensity of rivalry. These two dimensions should be separately considered to produce more rigorous analysis of rivalry within and between strategic groups. For hypercompetition theory, the findings indicate that hypercompetition in the cost-quality arena and stronghold invasion arena may lead in the future to greater competitive restraint. If hypercompetition in the cost-quality arena leads to greater differentiation in the market positions of firms, this could de-escalate competition. In addition, if hypercompetition in the stronghold invasion arena leads firms to obtain a broader multimarket overlap with their rivals, this condition could also provide the basis for deterrence and hypercompetitive de-escalation.

Profile of the American CEO: Comparing Inc. and fortune executives

Given the documented differences between entrepreneurial and traditional organizations in their structure and climate, a well as the predicted escalation of competition in global markets in the upcoming decade, the present study focused on the following questions. First, do chief executive officers (CEOs) from different corporate environments differ in the attributes, skills, and abilities they possess, and second, what meaning do these differences have for CEOs in confronting immediate and future challenges in small growth companies and large corporations. A sample of 35Fortune 500 CEOs and 35Inc. 500 CEOs was assessed on the London House STEP battery in order to identify differences between these groups. It was hypothesized that although there would be some overlap, the pattern of strengths and weaknesses would differ between the CEO groups. Specifically, it was expected thatInc. CEOs would be more creative whileFortune CEOs would exhibit a better balance in their breadth of managerial and executive skills. Results showed that these hypotheses were confirmed. Both groups were, not surprisingly, high in their potential for success and were not significantly different from one another in this overall dimension. However,Inc. CEOs were significantly higher in creativity, ability to work under pressure, and developing technical ideas, whileFortune CEOs excelled in the interpersonal skills of communications, developing teamwork, supervisory practices, developing employee potential and in the areas of leadership experience and financial responsibility. Findings are discussed in terms of developmental and strategic suggestions for current and aspiring CEOs.

THE ECONOMIC MARKET PLACE

The major change in the library automation market place over recent years has been in the escalation of competition among suppliers. The key factors in this are: the approach of maturity in the existing large system market; the fixed nature of the existing market size; the low product differentiation; and the increase in customer critical awareness — buyer power in other words. Increasingly there is evidence of the merging of the objectives of previously quite disparate organisations, namely the traditional cooperatives and the turnkey/ commercial suppliers. This is accompanied by a growing lack of product differentiation as both types of organisation compete for the same pool of customers with products demonstrating a common range of fairly comprehensive but predictable facilities.