Dysfunctional Competition Research Articles

One size does not fit all: Strategy configurations, complex environments, and new venture performance in emerging economies

New ventures face a variety of competitive and external challenges as they seek high performance. This requires an assortment of market and non-market growth strategies best aligned with the complex environments they face. However, rather than holistically evaluating these multiple drivers of high performance, past research has primarily focused on a narrow subset of strategies and environmental conditions. We attribute this to a mismatch between studying causally complex relationships with conventional symmetric regression methods. Instead, we advocate for an asymmetric configurational perspective that tests the causal complexity of high and not-high venture performance. We employ fuzzy-set qualitative comparative analysis (QCA) to detect different strategy configurations of entrepreneurial orientation, market orientation, and political networking amid complex environments of hostility, dysfunctional competition, and lack of institutional support for nearly 200 Chinese new ventures. Instead of a one-size-fits-all approach with an “either/or” trade-off, our main findings reveal six pathways with different configurations for high performance: either entrepreneurial or market orientation – or both – are necessary for high performance, and there are no consistent pathways for unsuccessful ventures. This offers a more complete picture of how new ventures operate and explains why individually conflicting results can be true collectively. We also demonstrate how configurational theory and methods can be employed to analyze the complexities of entrepreneurship.

Managing business and social network relationships in Russia: The role of relational capabilities, institutional support and dysfunctional competition

The current study provides empirical insight into the nature of creating relational rents when managing business relationships in the context of the emerging Russian economy. Addressing both formal and social business network relationships, the study aims to understand the role of a systematic and purposeful approach to building and managing business relationships in order to generate superior relational advantage. The study explores the effects on both subjectively and objectively measured relational rents. Additionally, the role of institutional context in both shaping relationships and obtaining relational rents is considered through the inclusion of dysfunctional competition and institutional support. The results of a survey on a sample of 148 business-to-business firms demonstrate the leading role of the business relationship portfolio in generating relational rents, as well as the supporting role of relational capabilities in building this relationship portfolio. These effects are significantly affected by institutional moderators, demonstrating multidirectional effects on the mechanisms behind building relationships and obtaining the associated relational advantage.

Innovating with Limited Resources: The Antecedents and Consequences of Frugal Innovation

Frugal innovation is a resource scarce solution for emerging market firms. Based upon the resource-constrained innovation perspective, this research theoretically explores and empirically examines the drivers and consequences of frugal innovation. The results of a firm-level survey show that two types of frugal innovation (cost innovation and affordable value innovation) positively affect the performance of emerging-market firms. We also address the issues of how emerging-market firms deal with institutional, technological, and market constraints in emerging markets, and we show how these constraints drive frugal innovation. We find that emerging-market firms with higher levels of capability for institutional leverage and bricolage, and firms that face perceived dysfunctional competition, tend to generate more affordable, value-added new products. Overall, these findings have important implications for emerging-market firms seeking to conduct frugal innovation in resource-constrained emerging markets.

Effects of intellectual capital and university knowledge in indigenous innovation: evidence from Indian SMEs

Intellectual capital and collaboration with universities are vital knowledge management practices for small- and medium-sized enterprises (SMEs) to innovate and improve the effectiveness of their operations. This study investigates empirically the impacts of intellectual capital and university knowledge on indigenous innovation and how business and institutional environments affect the relationships. The research model is tested using moderated regression analysis and data collected from 150 SMEs in India. The results show that intellectual capital and university knowledge improve indigenous innovation, both individually and interactively. The effect of intellectual capital in indigenous innovation is amplified by dysfunctional competition whereas the effect of university knowledge in indigenous innovation is attenuated by environmental uncertainty. In addition, we find that indigenous innovation is positively associated with business performance. The impact of indigenous innovation on business performance is enhanced by dysfunctional competition but reduced by environmental uncertainty.

Institutional forces and customer participation in new product development: A Yin-Yang perspective

Despite the growing research interest in customer participation, few studies explore how institutional forces affect a firm's decision to engage customers in their new product development (NPD). Building on the Yin-Yang perspective, we investigate how distinct institutional characteristics of emerging markets, namely legal inadequacy and dysfunctional competition, as perceived by managers, have differential relationships with customer participation in firms' NPD process, which in turn relate to new product performance. Using a sample of 238 high-tech firms in China, we find that perceived legal inadequacy negatively relates to customer participation, whereas perceived dysfunctional competition is positively associated with customer participation. Further, the negative relationship between perceived legal inadequacy and customer participation is more salient for domestic firms than foreign firms, and the positive association between perceived dysfunctional competition and customer participation is weaker when the focal firm has longer partner experience. In highlighting the significance of institutional drivers, our study extends the literature by developing a holistic and dualistic explanation of customer participation in the B2B marketing context.

The Direct and Indirect Impact of Relational Ties on Innovation Performance: An Empirical Study in China

This paper aims to understand the underlying mechanisms by which relational ties influence firm innovation. Companies in China rely much on relational ties to implement business strategies. Combining social network theory with dynamic capability perspective, we build a model that analyzes the direct and indirect impact of relational ties (business ties and service ties) on innovation performance through supply chain adaptability. We further analyze that technological turbulence and dysfunctional competition influence the relationships between relational ties and supply chain adaptability. We test these relationships using data collected from 300 manufacturers in China. The results show that service ties plays a relatively more important role than business ties in enhancing innovation performance directly. Interactions between business ties and service ties significantly influence innovation performance. Moreover, our results demonstrate that supply chain adaptability fully mediates the relationship between business ties and innovation performance but partially mediates the relationship between service ties and innovation performance. Our results show that technological turbulence positively moderates the relationships between business/service ties and supply chain adaptability. In addition, dysfunctional competition negatively moderates the relationship between business ties and supply chain adaptability. Overall, our findings contribute to the understanding of the roles of relational ties in supply chain.

Strategy Configurations, Unfriendly Environments, and New Venture Performance in China

New ventures operating in transition economies face a variety of challenges. To understand the determinants of growth and failure, we argue that a configurational perspective – based on multiple entrepreneurial growth strategies to address different operating environments – yields a more realistic assessment of the causal pathways than efforts that focus on the net effects of one particular strategy or environment. In our study, we examine three growth strategies (market orientation, entrepreneurial orientation, and political networking) and three unfriendly operating environments (dysfunctional competition, hostility, and lack of institutional support) and their joint impact on performance. To determine potential configurations, we employ fuzzy-set qualitative comparative analyses (fsQCA) to examine a sample of new ventures in China. Our findings reveal multiple pathways for combining strategies within environments to achieve high performance. These results help resolve inconsistent findings from previous studies, confirm multiple realization to performance rather than a one-size fits all approach, and offer a more realistic portrayal of growth and failure of new ventures in transition economies.

Enhancing product innovation performance in a dysfunctional competitive environment: The roles of competitive strategies and market-based assets

Dysfunctional competition (typically involving violation of intellectual property rights) is common in emerging economies, making it difficult for innovators to profit from their innovation activities. Firms operating in emerging economies must choose appropriate strategies to address the idiosyncratic challenges of dysfunctional competition and achieve competitive advantage. The utility of competitive strategies (cost leadership and differentiation) and market-based assets (customer orientation, competitor orientation, and marketing creativity) were assessed for their ability to help an innovating firm deal with dysfunctional competition and improve the returns from innovation. Data from a survey of managers in 282 Chinese high technology companies demonstrates that an emphasis on cost leadership, a customer orientation and creative marketing predicts better product innovation performance in environments with a high level of dysfunctional competition. Differentiation and a competitor orientation were found to be less effective.

The effect of export marketing capabilities on export performance: Moderating role of dysfunctional competition

This study utilizes multiple-informant and time-lagged primary data from 162 industrial exporting firms in Sub-Saharan Africa to contribute to an understanding of when export marketing capabilities can be deployed to drive export performance. The study finds that market responsiveness capability drives export performance when it is deployed together with a product innovation capability. The joint effect of both capabilities on export performance is weakened at high levels of dysfunctional competition in export market environment. The findings suggest that a stronger capability to respond to export market needs and a greater competence in introducing new products in export markets are not always beneficial in Sub-Saharan African markets as the resulting export performance outcome is dependent upon degrees of dysfunctional competition.

Boundary-spanning demand-side search and radical technological innovations in China

PurposeThe purpose of this paper is to explore how boundary-spanning demand-side search (BSDSS) fuels radical technological innovations as well as how innovation appropriability moderates this relationship. In particular, based on Teece’s (1986) argument regarding the appropriability of innovation, the authors divide factors to influence innovation appropriability into two types: external institution related and internal capability related.Design/methodology/approachThis study employs a survey methodology. Specifically, the authors collected a sample composed of 150 high-tech manufacturing Chinese firms.FindingsResults show that BSDSS has a positive effect on radical technological innovations. Further, the authors find that dysfunctional competition and political ties negatively moderate the main effect, whereas firms’ legal and IPRs protection capabilities positively moderate the main effect.Research limitations/implicationsOne major limitation is that the findings are based on data derived from Chinese firms, which may limit the generalization of the findings.Practical implicationsThe findings suggest that firms competing Chinese market, both Chinese and foreign firms, should actively leverage BSDSS to boost radical technological innovations. Chinese firms should pay attention to the negative roles of appropriability hazards originating from external institutional environment. Foreign firms in Chinese market should be cautious on potential dysfunctional competition from local competitors, such as imitation and intelligence property violation, and enhance appropriability through building internal capabilities, such as legal and IPRs capabilities.Originality/valueThe study highlights the crucial roles of BSDSS in radical technological innovations, as well as the moderating roles of innovation appropriability. These results provide new insights into the drivers of radical technological innovations.

Boundary-spanning demand-side search and radical innovations in China

This study explores how boundary-spanning demand-side search (BSDSS) fuels radical innovations as well as how innovation appropriability moderates this relationship in China. In particular, based on Teece's (1986) argument regarding the appropriability of innovation, we divide factors to influence innovation appropriability into two types: external institution related and internal capability related. Using a sample of 150 high-tech manufacturing firms in China, we find that BSDSS has a positive effect on radical innovations. Further, we find that dysfunctional competition and political ties negatively moderate the main effect, whereas firms legal and IPRs protection capabilities positively moderate the main effect. These results provide some new insights into the drivers of radical innovations.

Dysfunctional competition & innovation strategy of new ventures as they mature

Drawing on a sample of 288 new ventures from three disperse locations in China, we examine how dysfunctional competition impacts the innovation strategy of new ventures as they mature. Our results show that: 1) innovation strategy has a positive effect on new venture competitive advantage; 2) the impact of dysfunctional competition positively moderates this relationship in the early stages of the venture; 3) dysfunctional competition negatively moderates it as the venture matures. Thus, dysfunctional competition forces new ventures to focus on their resource shortages through innovation strategy. However, as these ventures mature, they accumulate greater resources, and dysfunctional competition acts to limit the firm's competitive advantage. With these findings, we contribute to the theoretical understanding of innovation strategy in a dysfunctional competition environment and how new ventures strive for competitive advantage in such a setting.

Does It Pay to Be Innovation and Imitation Oriented? An Examination of the Antecedents and Consequences of Innovation and Imitation Orientations

Although innovation orientation has been documented as the primary strategy to support a firm's growth, imitation orientation, which represents an alternative strategic and cultural focus, has begun to receive attention. However, empirical evidence as to how each orientation is shaped by environmental turbulence and whether it is fruitful to adopt both orientations simultaneously is lacking. This study attempts to close such an important research gap by surveying 294 managers at 147 firms in China. Results indicate that dysfunctional competition and technological turbulence, two critical environmental forces in emerging economies, influence the extent to which a firm adopts these two strategic orientations. The results also suggest that firms should stay focused on one strategic orientation rather than both to optimize their performance outcomes.

Effects of institutional support on innovation and performance: roles of dysfunctional competition

PurposeThe purpose of this paper is to empirically investigate the effects of institutional support on product and process innovation and firm performance and describe how dysfunctional competition influences relevant outcomes.Design/methodology/approachThis study develops a research model based on institution-based view and tests it using structural equation modeling and empirical data collected from 300 manufacturers in China.FindingsThe results show that institutional support positively affects product and process innovation and firm performance. Both product and process innovation improve firm performance. The findings reveal that dysfunctional competition significantly reduces the positive effects of institutional support on product and process innovation but leaves the effects of institutional support and product and process innovation on firm performance unaffected.Originality/valueThis study contributes to innovation literature by providing insights into the impact of China’s institutional environment on manufacturing firms’ product and process innovation decisions. The findings also contribute to institution-based view literature by providing empirical evidence on the joint effects of institutional support and dysfunctional competition on product and process innovation and firm performance. This study can help manufacturers in China take advantage of institutional environment and adjust product and process innovation decisions accordingly.

Political networking strategy and firm performance: a moderated mediation model

Purpose By incorporating the resource-based view with the dynamic capability view, this study aims to examine the link between corporate political networking strategy and firm performance in transition economies by focusing on the mediating role of corporate entrepreneurship and the moderating role of dysfunctional competition.

Hybrid Strategies, Dysfunctional Competition, and New Venture Performance in Transition Economies

ABSTRACTConventional wisdom suggests that new ventures can employ a combination of two general strategies to confront the challenges of operating in transition economies or regions known for their weak institutional conditions: These ventures may succeed by enacting amarket-orientationstrategy, which focuses on providing value to customers and implementing rapid responses to competitive situations. They can also engage in a more traditionalpolitical-networkingstrategy that engages government officials, which may yield public resources and enhance their organizational legitimacy. However, research results are inconclusive regarding the effectiveness of these strategies when they are combined in a hybrid form. We argue that the advantages of a hybrid strategy are contingent on the perception of a specific condition:dysfunctional competition. In our analysis of new venture performance in China, we show that political networking indeed amplifies the positive influence of market-orientation strategies on performance, but only in contexts where dysfunctional competition is perceived to be low. When such competition is high, political networking becomes counterproductive, diverting attention away from swift responses to market demands. By addressing how multiple strategies work together, we offer insights into the extent to which the effectiveness of hybrid strategies – incorporating both market-orientation and political-networking – depend on the context in which they are implemented.

New Venture Performance in Transition Economies from Different Institutional Perspectives*

Building on institutional theory, this study examines the effects of dysfunctional competition and government ties on new venture performance in transition economies. And, it goes deeper to investigate how these effects are contingent on a new venture's entrepreneurial orientation (EO). It finds that EO weakens the negative relationship between dysfunctional competition and new venture performance but exacerbates the negative linkage of government ties to new venture performance. The findings not only illustrate how government impacts new venture performance in transition economies, but also indicate that new ventures can leverage entrepreneurship to cope with the effects of government‐related factors.

Precarious curve ahead: The effects of forced distribution rating systems on job performance

The forced distribution rating system (FDRS) is frequently used to appraise an employee's performance. The purpose of this paper is to synthesize theory and empirical research to present an integrative model for understanding the potential benefits and risks of a FDRS on the three components of job performance: task, citizenship, and counterproductive performance. A FDRS may lead to higher task performance in the relatively short-term, as it initially motivates effort as well as helps attract and retain top talent. Caution is in order, however, as a FDRS may also lead to lower citizenship performance and higher counterproductive performance through injustice perceptions and dysfunctional competition. Over time, the risks of a FDRS on job performance may increasingly outweigh initial benefits, particularly under certain task (interdependence) and group (cultural) characteristics. Implications of a FDRS for human resource management research and practice are discussed.

A Strategy Tripod Perspective on Knowledge Creation Capability

Drawing on the strategy tripod perspective, in this study we examine how the performance effect of knowledge creation capability is contingent on key industrial and institutional variables. We find that technological turbulence, competitive intensity and government support all positively moderate the relationship between knowledge creation capability and firm performance, while dysfunctional competition has a negative moderating impact. This study provides a more fine‐grained analysis on the performance implications of knowledge creation capability. Moreover, it represents one of the first attempts to empirically test the interactive effects of the three legs of the strategy tripod (the industry‐based, resource‐based and institution‐based views) in one study and supports the importance of integrating the three legs to better understand the complex phenomenon.

The Influence of Institutional Forces on International Joint Ventures’ Foreign Parents’ Opportunism and Relationship Extendedness

Institutional forces influence the formation of international joint ventures (IJVs) in emerging economies and shape both their parents’ behaviors and their marketing strategies. Whereas previous research has centered on governance mechanisms that deter opportunism, this study investigates the influence of institutional forces (i.e., rule of law, government intervention, and dysfunctional competition) on the IJV's foreign parent's opportunism. The authors find that rule of law and dysfunctional competition curtail opportunism, whereas government intervention drives opportunism. In addition, relationships between institutional forces in local markets and the IJV's foreign parent's opportunism depend on the IJV's marketing capability. The authors further examine the influence of the foreign parent's opportunism on IJV relationship extendedness and find support for a negative relationship between opportunism and the IJV's continuity. This study enriches institutional theory and identifies the boundary of the influence of institutional forces on opportunism. Because opportunism is a critical relationship hazard, the findings of this study have important implications for IJVs’ partnership management.