CATEGORIES AND COMPETITION CATTANI, GINO; PORAC, JOSEPH F.; THOMAS, HOWARD
Strategic management journal,
01/2017, Letnik:
38, Številka:
1
Journal Article
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Research summary: In this article, we review, integrate, and extend the literature on markets, competition, and categories as it applies to strategic management theory. Developments in the ...literatures of economics and organizational theory have shed new light on market categories and category dynamics. These developments highlight the fact that boundary questions are fundamental to the competitive process, and represent a fertile area for research and theory. The objective is to encourage a theoretically grounded rapprochement between current strategic management research and both older and newer research on categories and competition. Managerial summary: One of the key problems for business strategists is understanding the competitive environment and interpreting the effects of competition on a business. This article attempts to integrate various literatures in the study of competition by suggesting that strategists play a crucial role in linking abstract categories of firms and products that have become part of an industry's terminology with real-time competitive processes taking place among firms and buyers. Strategists interpret cues such as cross-elasticities of demand among their own and competing products and connect these cues to taken-for-granted categories demarcating the boundaries of markets. Simultaneously, strategists are introducing new categories by reformulating old nomenclatures and introducing new ones. We also trace the possible effects of this 'competitive sensemaking' on firm behaviors.
Although the benefits of high status are well documented, in this research we explore the potential hazards associated with high status that have increasingly been implicated in recent studies. ...Organizational research suggests two such hazards: (1) opportunistic behaviors by elites that eventually lead to sanctions and (2) the targeting of elites by various audiences such that they are held more accountable than their lower-status counterparts for similar offenses. Our objective was to disentangle these two explanations in the context of an organizational scandal involving the Members of the British Parliament (MPs) whose annual expense claims were unexpectedly exposed in a well-known 2009 scandal. We find that high-status MPs were not more likely to abuse the expense system than were lower-status MPs, but they were more likely to be targeted by the press and voters for their inappropriate expense claims. As a consequence, high-status MPs were significantly more likely than non-elite MPs to exit Parliament when they had high levels of inappropriate expense claims. Elite MPs who were not implicated in the scandal, however, were far more likely to remain in Parliament than their lower-status counterparts. Our results also suggest that media coverage of the expense incident by British newspapers played a significant role in shaping social reactions to the scandal.
We used the results from Financial World's widely publicized certification contest, CEO of the Year, to investigate the impact of such contests on firm performance and executive compensation. A ...certification contest ranks actors on performance criteria that key stakeholders accept as credible and legitimate. We found that certified CEOs received higher compensation than noncertified CEOs when performance was high but lower remuneration when performance was poor. Although certifications appear to generate positive abnormal returns when they are first announced, the longer-term impact of CEO certifications appears to be negative.
We examine how managerial growth logics combine with financial and human resource slack to influence the short-term revenue growth of a sample of 112 manufacturing firms drawn from a unique database ...provided by the Ewing Marion Kauffman Foundation. Our results provide evidence that firms pursuing product expansion logics generally grow more slowly than firms that are not expanding their product base, but that financial slack positively moderates this relationship. We also find that human resource slack enhances short-term market expansion, but slows down short-term product expansion. We discuss the implications of these results for resource-based views of growth.
In this paper we reflect on the contribution of our 1989 article ‘Competitive Groups as Cognitive Communities: The Case of Scottish Knitwear Manufacturers’. We begin by recalling our backgrounds and ...motivations as collaborators on the project, and then discuss recent developments in the Scottish Borders knitwear industry. Noting that the industry has suffered continual decline in the twenty years since we published our paper, we suggest that the case still raises issues that remain open questions in the field despite the significant efforts by management researchers in recent years to understand the sources of industrial decline and revitalization. We outline what we feel are gaps in the existing literature and then end with the suggestion that these gaps are likely to be addressed only through multidisciplinary research that integrates resource, power, and cognitive theories of industrial dynamics.
Research Summary
We investigate the extent to which the increasing availability of ratings information has affected heterogeneity in firm performance and, if so, what market segments are responsible ...for these changes. A unique dataset was constructed with restricted‐access government data to examine these questions in the context of the New York City restaurant industry between 1994 and 2013. We find that firms serving tourist and expensive price point market segments experienced increasing sales discrepancies as a function of rating differentials when ratings information became more easily accessible with the advent of online rating platforms. These findings depict how the prevalence of online rating systems have shaped competition and value capture, thus providing insight into the determinants of firm performance heterogeneity.
Managerial Summary
We examine the extent to which increasing availability of ratings information has affected firm performance by estimating changes in comparative sales between New York City restaurants between 1994 and 2013. Analyses indicate that increased access to ratings information during this period had a considerable effect on comparative sales for firms serving the tourist and the expensive price point market segments. These results provide insights into other industries where access to evaluations and rating systems have also increased. This work suggests that online ratings have affected how firms compete and capture value, and managers have opportunities to use rating systems to their advantage.
In this paper we develop and test predictions regarding the impact of CEO status on the economic outcomes of top management team members. Using a unique data set incorporating Financial World's ...widely publicized CEO of the Year contest, we found that non-CEO top management team members received higher pay when they worked for a high-status CEO. However, star CEOs themselves retained most of the compensation benefits. We also show that there is a "burden of celebrity" in that the above relationships were contingent on how well a firm performs. Last, we found that, when compared with the subordinates of less-celebrated CEOs, members of top management teams who worked for star CEOs were more likely to become CEOs themselves through internal or external promotions.
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.
In this paper, we compare the publication outcomes of two teams within a multi-university scientific alliance. Scientists in one team share similar scholarly backgrounds and work in a well ...established paradigm, while scientists in the second team have different backgrounds and work in an emergent discipline. While the alliance has increased the productivity of both teams, this increase was highest for the more heterogeneous team. In addition, while the variety of knowledge concepts employed in their research was initially higher for the heterogeneous team, this gap narrowed over time. We discuss the implications of our research for alliance design.
Research on the influence of third-party endorsements of CEO quality generally does not account for the context in which such signs manifest. To address this limitation, the present study examines ...how a CEO's level of managerial discretion shapes boards' and shareholders' responses to external endorsements of his or her quality. Managerial discretion refers to the range of strategic options that executives have at their disposal in a given business context. The findings indicate that boards only react to CEO endorsements in high-discretion settings, and this reaction is positive (i.e., more pay). In contrast, shareholders – regardless of discretion levels – positively respond to CEO endorsements in the short-term, while these responses become more equivocal over the time. These results suggest that – at least in the short term – directors more adeptly interpret and respond to external information about CEO quality than shareholders.