An Investigation of Competitor Networks in Manufacturing Strategy and Implications for Performance

Abstract

Our study demonstrates the value of taking a more encompassing and explicit view of competition in manufacturing strategy research. In doing so, we go beyond a dyadic-based approach and investigate the ways in which the degree of competition among firms in a network influences performance. Using social network analysis techniques, we develop a novel measure—which we refer to as competitor infighting—that captures the extent to which a firm's rivals compete amongst themselves. Our results suggest that a firm has a greater, unimpeded opportunity to demonstrate market gains as the degree of competition among its rivals increases, all else equal. In fact, competitor infighting is a better predictor of market performance in our sample than is a simpler, though perhaps more traditional, count of competitors. It serves an important moderating role in the relationship between a firm's operational weaknesses and market performance. As predicted, we find that as competitor infighting increases, the relationship between operational weaknesses and market performance is diminished.