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Article
Competitive intensity and its two-sided effect on the boundaries of firm performance
Management Science (2017)
  • Joao Montez, London Business School
  • Francisco Ruiz-Aliseda
  • Michael D Ryall, University of Toronto
Abstract
The new perspective emerging from strategy's value-capture stream is that the effects of competition are two-fold: competition for an agent bounds its performance from below, while that for its transaction partners bounds from above. Thus, assessing the intensity of competition on either side is essential to understanding firm performance. Yet, the literature provides no formal notion of "competitive intensity" with which to make such assessments. Rather, some authors use added value as their central analytic concept, others the core. Added value is simple, but misses the crucial, for-an-agent side of competition. The core is theoretically complete, but difficult to interpret and empirically intractable. This paper formalizes three, increasingly general notions of competitive intensity, all of which improve upon added value while avoiding the complexity of the core. We analyze markets characterized by disjoint networks of agents (e.g., supply chains), providing several insights into competition and new tools for empirical work.
Keywords
  • competition,
  • value capture,
  • strategy,
  • core,
  • competitive intensity
Publication Date
Spring May 19, 2017
Citation Information
Joao Montez, Francisco Ruiz-Aliseda and Michael D Ryall. "Competitive intensity and its two-sided effect on the boundaries of firm performance" Management Science (2017) p. 1 - 18 ISSN: 1526-5501
Available at: http://works.bepress.com/michael_ryall/20/