This study examines the hypercompetition phenomenon within the prepackaged software industry. It theoretically develops and empirically validates the idea that dynamically changing complementarity relationships among software product markets increase industry hypercompetition. The study also explains how dynamic capabilities for the management of complementary product markets can enable an independent software vendor (ISV) to create and renew temporary advantages. Specifically, an ISV can maintain or increase its performance rank in its product markets in three ways: (1) by competing with a portfolio of strongly complementary products; (2) by forming a product market portfolio that has strong complementarity relationships with other product markets in the industry; and (3) by dynamically and purposefully responding to the changing product market complementarities: (a) reconfiguring resource allocations of its products to strengthen the complementarities of its product portfolio and (b) undertaking entry and exit moves that reposition the portfolio in a stronger complementarity position. These dynamic capabilities enable the ISV to coevolve with the changing complementarities, change and improve its performance rank, and trigger new competitive moves by rivals; and accordingly, contribute to the escalation of rivalry in the industry. The study finds support for these ideas in a study of 1,200 ISVs from 1990of 1,200 ISVs from to 2002

Research summary: This article uses spectral graph partitioning to advance strategic management research, and focuses on the study of complex systems that contain strongly connected components with component interactions that are weighted and directed. The spectral graph partitioning method complements existing methods, especially, when external architectural artifacts do not exist or are less than certain. We illustrate this methodology using a U.S. airline's production system. We highlight some useful metrics and show how researchers can apply this method to generate additional architectural insights. Managerial summary: We describe a method for analyzing the architecture of complex systems that contain directed and weighted component interactions, and in which each component is interdependent (directly or indirectly) on every other component. Using the spectra of a complex system, the method is not only tractable but also provides good and predictable groupings. We illustrate this method using the firm-level production task system of a firm found in the U.S. passenger airline sector. The method is useful if the system architecture is hidden, in flux, or both. The method may also permit a holistic comparison of different systems and their architectures. We discuss metrics and illustrate how they can provide additional architectural insights. Copyright © 2015 John Wiley & Sons, Ltd.