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A Typology of Competitive Actions Dissertation by Tomi Nokelainen Tampere University of Technology March 2008. Opponent Walter Ferrier, Ph.D. Gatton College of Business & Economics University of Kentucky. A Sensible, Intuitive Model of “Competitive Dynamics”. Competitive Outcomes. Rivalry.

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slide1

A Typology of Competitive ActionsDissertation by Tomi NokelainenTampere University of TechnologyMarch 2008

Opponent

Walter Ferrier, Ph.D.

Gatton College of Business & Economics

University of Kentucky

slide2

A Sensible, Intuitive Model of “Competitive Dynamics”

Competitive

Outcomes

Rivalry

Organizational

Characteristics

External

Characteristics

prehistoric competitive rivalry
Prehistoric Competitive Rivalry

Karjala

Lapin

Kulta

Lapin

Kulta

competitive dynamics
Competitive Dynamics
  • Relatively young field of study
    • Ming-Jer Chen’s dissertation, University of Maryland, 1988
  • Rapid rate of extensions
    • Organizational, industry & network antecedents/drivers
    • Unique levels of aggregation
  • Small field, but has significant visibility and impact
    • Citation counts*
      • Chen, Smith & Grimm (1992) = 141
      • Miller & Chen (1994) = 203
      • Ferrier, Smith & Grimm (1999) = 115
      • Ferrier (2001) = 66
      • Gnyawali & Madhavan (2001) = 173
      • Chen, Su & Tsai (2007) = 2

* Google Scholar

slide7

Competitive

Outcomes

Rivalry

Coke’s Actions

Pepsi’s Actions

b

c

e

b

c

e

a

d

a

d

types of actions
Types of Actions *
  • Pricing
  • Marketing
  • New Product
  • Distribution
  • Service

a

b

c

d

e

* For illustration purposes only

competitive action reaction dyads
Competitive Action-Reaction Dyads

Action

Pair 1

Action

Pair 2

Action

Pair 3

Action

Pair 4

b

b

b

a

Coca-Cola

Pepsi

c

a

c

e

time

competitive action repertoires
Competitive Action “Repertoires”

b

b

b

b

b

Coca-Cola

c

a

b

Year-End

Tallies

Pepsi

c

e

time

slide11

Competitive Attack

Coke

Pepsi

a

a

a

b

b

b

c

c

c

d

d

e

e

time

d

c

e

a

a

b

a

b

c

d

e

c

b

Observed Sequence

Observed Sequence

slide12

Coke Competitive Attack Predictability

Coke in time1

Coke in time2

a

a

a

b

b

c

c

c

d

d

b

e

e

a

d

a

b

c

e

a

d

b

c

c

e

e

Observed Sequence

Observed Sequence

slide13

Pepsi Competitive Attack Unpredictability

Pepsi in time1

Pepsi in time2

a

a

a

b

b

b

c

c

c

d

d

e

e

a

d

a

b

c

e

d

b

b

c

c

e

a

Observed Sequence

Observed Sequence

slide14

Coke Competitive Attack [Long] Duration

a

a

a

b

c

c

d

d

e

e

time

a

d

e

c

a

c

d

b

a

e

Observed Sequence of Competitive Actions

slide15

Pepsi Competitive Attack [Short] Duration

a

c

c

d

time

c

a

c

d

Observed Sequence of Competitive Actions

market share in the fizzy beverage industry
Market Share in the Fizzy Beverage Industry

Market

Share

Coke

Pepsi

1950 1960 1970 1980 1990 2000 2005

athletic shoes
Athletic Shoes

Market

Share

(U.S.)

Nike

Reebok

Adidas

1980 1990 2005

u s retailing
U.S. Retailing

Wal-Mart

Market

Share

Sears

JC Penney

1950 1960 1970 1980 1990 2000

commercial aircraft
Commercial Aircraft

Market

Share

Boeing

McDonnell-

Douglass

Airbus

1950 1960 1970 1980 1990 2000

slide21

Levels of Analysis

Firm

Dyad

Finnair

Finnair

SAS

slide22

Levels of Analysis

Triad

Firm

Dyad

Finnair

SAS

Finnair

Finnair

SAS

Blue 1

slide23

Levels of Analysis

Triad

Firm

Dyad

Finnair

SAS

Finnair

Finnair

SAS

Blue 1

Network

Lufthansa

Virgin

Finnair

US Airways

KLM

slide24

Levels of Analysis

Triad

Firm

Dyad

Finnair

SAS

Finnair

Finnair

SAS

Blue 1

Network

Group

Lufthansa

Air France

Lufthansa

KLM

Virgin

eos

SAS

Finnair

Brussels

Blue 1

US Airways

Ryanair

KLM

slide25

Levels of Analysis

Triad

Firm

Dyad

Finnair

SAS

Finnair

Finnair

SAS

Blue 1

Network

Group

Industry

(or Population)

Lufthansa

Air France

KLM

Lufthansa

Finnair

KLM

Lufthansa

Virgin

eos

Virgin

eos

SAS

Finnair

British Airways

Brussels

US Airways

Blue 1

US Airways

Alitalia

Ryanair

Ryanair

KLM

slide26

Levels of Aggregation

Individual Action

(or response)

New

Product

Introduction

slide27

Levels of Aggregation

Individual Action

(or response)

Action-Response

Dyad

New

Product

Introduction

Price

Cut

Ad

Campaign

slide28

Levels of Aggregation

Individual Action

(or response)

Action-Response

Dyad

Competitive

Repertoire

New

Product

Introduction

Price

Cut

Ad

Campaign

6 x Price

1 xProduct

4 x Ads

2 x Signaling

1 x Law Suit

slide29

Levels of Aggregation

Individual Action

(or response)

Action-Response

Dyad

Competitive

Repertoire

New

Product

Introduction

Price

Cut

Ad

Campaign

6 x Price

1 xProduct

4 x Ads

2 x Signaling

Competitive

Attack

1 x Law Suit

attack

Coke

Ad

Signal

Product

Price

Legal

counter attack

Pepsi

Ad

Ad

Product

Price

Price

time

what is competitive dynamics
What is Competitive Dynamics?

…a paradigm

…a theory

…a pre-theory

…a view

…a reasoning

…a lens

…a method

  • Research design element
  • Observational mechanism
  • Measurement technique
pre theory of competitive inter action emerging theoretical features and boundary conditions
Pre-Theory of Competitive Inter-ActionEmerging Theoretical Features and Boundary Conditions
  • Competitive “action” as fundamental element
      • “…a visible, externally-directed competitive move carried out to improve a firm’s relative competitive position”
  • Dynamic
      • Explicitly accounts for:
        • Time
        • Change
        • Evolution
        • Contingencies
        • Processes
a pre theory of competitive inter action
A Pre-Theory of Competitive Inter-Action:
  • Actor relativity/interdependence
      • The firm relative to:
        • Itself (over time)
        • Dyadic partners
        • Groups
        • Industry members
        • Other non-rivals
      • On factors/dimensions such as:
        • Competitive actions
        • Resources/capabilities
        • Firm characteristics
        • Outcomes
pre theory of competitive inter action
Pre-Theory of Competitive Inter-Action
  • Has impact/consequences on:
      • Performance
        • Relative
        • Absolute
      • Behavior of other firms
      • Supply chain members
        • Customers
        • Suppliers
      • Regulators
      • Investors
      • Society
pre theory of competitive inter action34
Pre-Theory of Competitive Inter-Action
  • Other
      • Uncertainty, unknowability
      • Imperfect information
      • Thought, intent, purpose
      • Not costless
slide35

An Emerging Theory of Competitive Dynamics

Firm 1

Strategy

Awareness

Competitive

Inter-Action

Organizational

Drivers

Motivation

Capability

Performance

External

Drivers

Firm 2

Strategy

implicit drivers of competitive action
Implicit Drivers of Competitive Action
  • Awareness
      • Alertness - attention
      • Vision
      • Scanning
      • Filtering
  • Motivation
      • Intention
      • Valence
      • Emotion
      • Desire
  • Capability
      • Organizational enablers/constraints
      • Contextual enablers/constraints

Awareness

Motivation

Capability

slide37

An Emerging Theory of Competitive Dynamics

Firm 1

Strategy

Awareness

Competitive

Inter-Action

Organizational

Drivers

Motivation

Capability

Performance

External

Drivers

Firm 2

Strategy

phenomenological and theoretical diversity
Information processing

Social networks

Managerial cognition

Multi-market competition

Prospect/Threat-rigidity

First-mover

Institutional theory

Complexity

Communication

Knowledge

Signaling

Resource-based view

Real option theory

Game theory

Upper echelons

Strategic groups

Structure-conduct-perform.

Dynamic limit pricing

Austrian economics

Corporate entrepreneurship

Dominant firm/Oligopoly

Force field (from psychology)

Population ecology

Internationalization/multinationals

Phenomenological and Theoretical Diversity
non organizational theories and techniques
Physics

Physical

Optical

Quantum mechanics

Biology

Molecular/DNA

Virology

Medicine

Neurology

Psychiatry

Kinesiology

Non-Organizational Theories and Techniques
  • Music
      • Perception/appreciation
      • Composition theory
  • Experimental aesthetics
      • Perception
      • Interpretation
      • Subjective judgment
what is the next big thing
What is the next “big thing”?
  • Phenomena
  • Constructs
  • Measures
  • Levels of analysis or aggregation
  • Data
  • Unobservables
  • Analytical techniques
  • Theory
slide41

An Emerging Mess of Competitive Dynamics

Organizational

Drivers

Firm 1

Strategy

Awareness

Industry

Structure

Drivers

Competitive

Inter-Action

Motivation

Capability

Performance

Cognitive

Drivers

Firm 2

Strategy

Institutional

Drivers

Socio-

Relational

Drivers

Other?

definitional typological and measurement diversity
Definitional, Typological and Measurement Diversity
  • What is a competitive action?
    • Externally-directed
    • Market-based
    • Visible, observable
    • Others

~ 20 different definitions

  • What are types of competitive actions?
    • Pricing
    • Marketing
    • New products
    • Alliances
    • Others

~ 20 different typologies

unrestrained chaotic growth
Unrestrained, Chaotic Growth?

Diversity of

Theoretical and

Empirical

Research

Diversity of Phenomena Studied

problems with unrestrained chaotic growth
Problems with Unrestrained, Chaotic Growth
  • Imprecise, messy constructs and measures
    • 20 different definitions of action
    • 20 different classification schemes
  • Reduces generalizability of findings
    • Action related to performance in different ways, depending on definition and type
  • Inhibits advancement and evolution of the field
    • Action is fundamental building block of an emerging theory of competitive dynamics, but…
        • 20 different definitions of action
        • 20 different classification schemes
return to fundamentals theoretical refinement
Return to Fundamentals & Theoretical Refinement

Diversity of

Theoretical and

Empirical

Research

Action

Definition

and Types

Diversity of Phenomena Studied

nokelainen contributions
Nokelainen Contributions
  • Impact on definition and measurement of action-based constructs
    • Internal actions
    • Non-market actions
    • Undetectable actions
    • Action in situ
    • Comprehensive range of action types
  • Theoretically-derived action typology
    • Financial
    • Physical
    • Human
    • Informational
    • Relational
  • Recognition of intentional ”non-actions”

Conceptual examples

Response delay

Competitive repertoire simplicity

Competitive attack predictability

Competitive attack duration

types of actions47
Types of Actions
  • Pricing
  • Marketing
  • New Product
  • Distribution
  • Non-Action

a

b

c

d

n

non actions and non responses
Non-Actions and Non-Responses…?

Action

Pair 1

Action

Pair 2

Action

Pair 3

Action

Pair 4

b

n

b

a

Coca-Cola

Pepsi

c

a

c

n

difference in competitive repertoires
Difference in Competitive Repertoires…?

b

b

n

n

n

Coca-Cola

c

n

b

Year-End

Tallies

Pepsi

c

n

time

slide50

Pepsi Competitive Attack Unpredictability…?

Pepsi in time1

Pepsi in time2

a

b

b

b

c

c

c

d

n

n

n

n

n

n

d

a

b

c

n

n

b

b

c

c

n

n

Observed Sequence

Observed Sequence

slide51

Pepsi Competitive Attack of Short Duration…?

a

c

c

n

n

n

n

n

n

n

time

n

n

n

c

a

c

n

n

n

n

Observed Sequence of Competitive Actions

general contributions of nokelainen dissertation
General Contributions of Nokelainen Dissertation

Given that competitive action is fundamental building block of competitive dynamics research…

  • Theoretically-derived definition and typology of competitive action are vital to:
      • Refinement, extensions and evolution of theory of competitive dynamics
      • Improvements in construct validity
      • Improved empirical precision and generalizability of findings
      • Exploration of relationship between internal organizational resources/processes and externally-directed, market-based events and processes
      • Robust and valuable inclusion of qualitative research approaches
detectability of actions
Detectability of Actions

A twist on the old adage…

  • If a tree lands in the forest and no one is there to hear it, does it make a noise?
  • If an action is carried out but is not detected by any observers, is it an action?
detectability of actions56
Detectability of Actions

A twist on the old adage…

  • If a tree lands in the forest and no one is there to hear it, does it make a noise?
  • If an action is carried out but is not detected by any observers, is it an action?

Are non-detectable internal actions, for example, really actions?

Perhaps non-detectability is due to observer inattention, blindness, or ambivalence?

Is action nondetection on the same plan as unobservables?

slide57

Planned Actions vs. Emergent Actions

Intended

Actions

Actions

Carried Out

Dropped

Actions

Emergent

Actions

slide58

Planned Actions vs. Emergent Actions

Intended

Actions

Actions

Carried Out

Dropped

Actions

Emergent

Actions

How do you account for emergent actions that are opportunistic, reactive, reflexive/automatic, or instinctive?

planned non actions
Planned Non-Actions

Involuntary non-action due to threat-rigidity response

(Staw, Sandelands & Dutton, 1981)

planned non actions60
Planned Non-Actions

Involuntary non-action due to threat-rigidity response

(Staw, Sandelands & Dutton, 1981)

Must a “non-action” carry intention or result from planning?

resources and actions
Resources and Actions

Competitive advantage “…is never the resources themselves, which are the inputs to the production process, only the services that the resources can render…”

Penrose, 1959

“…resources and products are two sides of the same coin.”

Wernerfelt, 1984; Porter, 1991

“…what is a resource’s cloud chamber?”

Barney, 1994

resources and actions62
Resources and Actions

Competitive advantage “…is never the resources themselves that are the inputs to the production process, only the services that the resources can render…”

Penrose, 1959

“…resources and products are two sides of the same coin.”

Wernerfelt, 1984; Porter, 1991

“…what is a resource’s cloud chamber?”

Barney, 1994

What do these statements mean?

Do you agree with them?

resource advantage as basis for action types
Resource-advantage as Basis for Action Types

Resources

Competitive Actions

Informational

Distribution

Physical

Relational

Price

Product

Financial

Marketing

resource advantage as basis for action types64
Resource-advantage as Basis for Action Types

Resources

Competitive Action

Informational

Physical

Relational

Financial

  • Evidence of this action:
  • Apple rehires Steve Jobs as CEO
  • Apple acquires Synaptics Inc.
  • Apple devotes $210 million for R&D
  • Apple introduces iPhone
resource advantage as basis for action types65
Resource-advantage as Basis for Action Types

Resources

Competitive Actions

Informational

Distribution

Physical

Relational

Price

Product

Financial

Marketing

Do must your action types have a direct, unitary, or otherwise one-to-one correspondence with their resource-based conceptual anchors?

resource advantage as basis for action types66
Nokelainen

Financial

Physical

Legal

Human

Organizational

Informational

Relational

Product attributes

Porter’s Value Chain Activities

Inbound logistics

Operations

Outbound logistics

Marketing

Service

Procurement (purchasing)

Technology development (R&D)

Human resource management

Adminstrative (legal, IT, finance, org structure, culture)

Resource-advantage as Basis for Action Types
resource advantage as basis for action types67
Nokelainen

Financial

Physical

Legal

Human

Organizational

Informational

Relational

Product attributes

Porter’s Value Chain Activities

Inbound logistics

Operations

Outbound logistics

Marketing

Service

Procurement (purchasing)

Technology development (R&D)

Human resource management

Adminstrative (legal, IT, finance, org structure, culture)

Resource-advantage as Basis for Action Types

Porter’s value-chain emphasizes a generalizable set of firm activities, whereas your action types emphasize resource-linked domains of actions. Why reinvent the wheel, so to speak?

resource advantage as basis for action types68
Nokelainen

Financial

Physical

Legal

Human

Organizational

Informational

Relational

Product attributes

Grimm & Smith Action Domains

Ricardian

Resource strengths

Entrepreneurial

Opportunity-seeking, alertness, resolve uncertainty

Deterrence/preemptive actions

Aggressive behavior

Cooperative actions

Alliance, coopetition

Resource-advantage as Basis for Action Types
nokelainen typology
Nokelainen Typology

Physical

Human

Resource

Domain

Informational

Product

Bring about

Suppress

Preserve

Forbear to destroy

Elementary Action Domains

plus situational domains of action
plus…Situational Domains of Action

Physical

Human

Informational

Cooperative

Deterrence

Product

Entrepreneurial

Ricardian

Forbear

to destroy

Bring about

Suppress

Preserve

resource advantage as basis for action types71
Nokelainen

Financial

Physical

Legal

Human

Organizational

Informational

Relational

Product attributes

Grimm & Smith Action Domains

Ricardian

Resource strengths

Entrepreneurial

Opportunity-seeking, alertness, resolve uncertainty

Deterrence/preemptive actions

Aggressive behavior

Cooperative actions

Alliance, coopetition

Resource-advantage as Basis for Action Types

Is the formation of an R&D alliance with a competitor, for example, a relational action? …does it not also have more/less Ricardian, entrepreneurial, deterrence and/or cooperative character?

within type taxonomic variation
Scope

Intensity

Magnitude

Radicality

Visibility

Newsworthiness

Centrality

Implementation requirement

Irreversibility

Execution speed

Response difficulty

Within-Type Taxonomic Variation

Prior research defined (and tested some) of the following generalizable attributes of competitive action:

within type taxonomic variation73
Within-Type Taxonomic Variation

Physical

Human

Informational

Execution speed

Irreversibility

Product

Implementation requirement

Radicality

Forbear

to destroy

Bring about

Suppress

Preserve

within type taxonomic variation74
Scope

Intensity

Magnitude

Radicality

Visibility

Newsworthiness

Centrality

Implementation requirement

Irreversibility

Execution speed

Response difficulty

Within-Type Taxonomic Variation

Prior research defined (and tested some) of the following generalizable attributes of competitive action:

Can an action borne of managerial intent to bring about and leverage, for example, a human resource vary with respect to its radicality, implementation requirement and/or irreversibility?

situational qualifiers of action type
Situational Qualifiers of Action Type

GM has too much inventory in large

SUV segment

GM

Cuts Prices

Starbucks closes 400 units; Dunkin’ Donuts goes on the attack

Dunkin’ Donuts

Cuts Prices

Intel to introduces new 3GHz Dual Core microprocessor

AMD

Cuts Prices

situational qualifiers of action type76
Situational Qualifiers of Action Type

GM has too much inventory in large

SUV segment

GM

Cuts Prices

Starbucks closes 400 units; Dunkin’ Donuts goes on the attack

Dunkin’ Donuts

Cuts Prices

Intel to introduces new 3GHz Dual Core microprocessor

AMD

Cuts Prices

Is a price cut simply a price cut?

How does your typology really account for situational differences?