A Typology of Competitive Actions Dissertation by Tomi Nokelainen Tampere University of Technology March 2008

1. 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

2. A Sensible, Intuitive Model of “Competitive Dynamics” Competitive Outcomes Rivalry Organizational Characteristics External Characteristics

3. Prehistoric Competitive Rivalry Karjala Lapin Kulta Lapin Kulta

4. Complex Head-to-Head Rivalry

5. Dynamic, Adaptive, Opportunistic Rivalry

6. 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

7. Competitive Outcomes Rivalry Coke’s Actions Pepsi’s Actions b c e b c e a d a d

8. Types of Actions * • Pricing • Marketing • New Product • Distribution • Service a b c d e * For illustration purposes only

9. 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

10. Competitive Action “Repertoires” b b b b b Coca-Cola c a b Year-End Tallies Pepsi c e time

11. 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

12. 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

13. 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

14. 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

15. Pepsi Competitive Attack [Short] Duration a c c d time c a c d Observed Sequence of Competitive Actions

16. Market Share in the Fizzy Beverage Industry Market Share Coke Pepsi 1950 1960 1970 1980 1990 2000 2005

17. Athletic Shoes Market Share (U.S.) Nike Reebok Adidas 1980 1990 2005

18. U.S. Retailing Wal-Mart Market Share Sears JC Penney 1950 1960 1970 1980 1990 2000

19. Commercial Aircraft Market Share Boeing McDonnell- Douglass Airbus 1950 1960 1970 1980 1990 2000

20. Levels of Analysis Firm Finnair

21. Levels of Analysis Firm Dyad Finnair Finnair SAS

22. Levels of Analysis Triad Firm Dyad Finnair SAS Finnair Finnair SAS Blue 1

23. Levels of Analysis Triad Firm Dyad Finnair SAS Finnair Finnair SAS Blue 1 Network Lufthansa Virgin Finnair US Airways KLM

24. 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

25. 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

26. Levels of Aggregation Individual Action (or response) New Product Introduction

27. Levels of Aggregation Individual Action (or response) Action-Response Dyad New Product Introduction Price Cut Ad Campaign

28. 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

29. 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

30. 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

31. 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

32. 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

33. 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

34. Pre-Theory of Competitive Inter-Action • Other • Uncertainty, unknowability • Imperfect information • Thought, intent, purpose • Not costless

35. An Emerging Theory of Competitive Dynamics Firm 1 Strategy Awareness Competitive Inter-Action Organizational Drivers Motivation Capability Performance External Drivers Firm 2 Strategy

36. 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

37. An Emerging Theory of Competitive Dynamics Firm 1 Strategy Awareness Competitive Inter-Action Organizational Drivers Motivation Capability Performance External Drivers Firm 2 Strategy

38. 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

39. 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

40. What is the next “big thing”? • Phenomena • Constructs • Measures • Levels of analysis or aggregation • Data • Unobservables • Analytical techniques • Theory

41. 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?

42. 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

43. Unrestrained, Chaotic Growth? Diversity of Theoretical and Empirical Research Diversity of Phenomena Studied

44. 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

45. Return to Fundamentals & Theoretical Refinement Diversity of Theoretical and Empirical Research Action Definition and Types Diversity of Phenomena Studied

46. 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

47. Types of Actions • Pricing • Marketing • New Product • Distribution • Non-Action a b c d n

48. 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

49. Difference in Competitive Repertoires…? b b n n n Coca-Cola c n b Year-End Tallies Pepsi c n time

50. 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