Multimarket competition and innovation in industrial markets: Spain and Colombia in comparative perspective

Abstract

Purpose Multimarket competition is an area of competitive dynamics focused on studying situations where firms compete against each other simultaneously in more than one market. The intensity of competition depends on the aggressiveness and the market contingencies, influencing the competitive strategies. Particularly, the purpose of this paper is to explore the influence of multimarket competition and market contingencies on innovation. Design/methodology/approach An exploratory qualitative approach using the Grounded Theory is applied with conceptual purposes. The data were collected through in-depth semi-structured interviews and additional observations with senior strategies and decision-makers. The paper follows an extensive narrative to understand decision-taking processes on competitive strategy with the support of analytical software. The paper was performed in the automotive components industry making seats in two different countries to acknowledge the influence of market contingencies. Findings The results suggest that multimarket competition does not reduce the level of aggressiveness, but it offers a background that favors opportunities for companies and new business in circumstances of crisis associated to innovation. Depending on the market contingencies, strategies can foster a higher technological innovation, in those cases of high development in the industry, or diversification, when the development is lower. Originality/value This paper contributes to enrich multimarket competition theory with the study of innovation strategies in different market conditions, a topic not much explored in multimarket literature. Additionally, it suggests implications for managers attending to different market contingencies.

Research and innovation and the role of competition in family owned and managed firms

“…Finally, this study extends the ongoing debate on the innovative behaviour of family firms to an under-explored but noteworthy aspect—the impact of external stimuli via market competition processes. Given the extensive work that has been undertaken in previous studies to address the relationship between competition and SME innovation (Aghion et al., 2018 ; Cabanelas et al. , 2019; Lee et al.…”

“…Finally, this study extends the ongoing debate on the innovative behaviour of family firms to an under-explored but noteworthy aspect-the impact of external stimuli via market competition processes. Given the extensive work that has been undertaken in previous studies to address the relationship between competition and SME innovation (Aghion et al, 2018;Cabanelas et al, 2019;Lee et al, 2020), it is surprising this is not more developed in the family firm literature. This study responds to Park et al's (2019) call to complement knowledge gaps at the intersection of the external environment and family business research fields by exploring the role of market competition in inhibiting or facilitating innovative activity in family businesses.…”

Leveraging grounded theory in supply chain research: A researcher and reviewer guide

“…GT projects can be found in many disciplines of course, some of which are also business disciplines. A few recent examples of a variety of topics to which GT has been applied include reverse innovation (Malodia et al , 2020), multimarket competition and innovation (Cabanelas et al , 2020), social marketing (Cook et al , 2020), market-shaping (Nenonen et al , 2019), brand trusting and distrust (Mal et al , 2018), brand repulsion (Dessart et al , 2021), regaining consumer trust (Wang et al , 2020) and salesperson persistence (Chakar et al , 2018). Within this realm, some projects come closer to developing mid-range theory than others.…”

Competing and cooperating globally: how firms’ multimarket contact relates to joint price elevation in coopetition networks

“…The ongoing internationalizing of firms requires that they increasingly engage with various competitors in multiple markets (Hsu et al, 2013). Multimarket contact (MMC) refers to a situation whereby a focal firm competes with other firms in different markets (Cabanelas et al, 2020;Gimeno, 1999;Karnani and Wernerfelt, 1985;Wernerfelt and Karnani, 1987) and takes the form of differentiation of products, services or geographical markets (Baum and Korn, 1999;Chen, 1996;Jayachandran et al, 1999). In MMC-related literature, two paths of research have explored the design of the mutual forbearance mechanism, identifying the deterrence and familiarity effect [1] between firms with decreased level of competition, especially in intensely competitive environments (Chen, 1996;Jayachandran et al, 1999;Wernerfelt and Karnani, 1987;Ma, 1998).…”

“…Many extant studies have examined the deterrence effect of MMC on competition levels (Barnett, 1993;Barnett et al, 1994;Chen, 1996;Woo, 1996, 1999). Furthermore, research on multimarket competition focuses on antecedence to contact (Baum and Korn, 1999), multimarket competition response strategies (Ma, 1999), the effects of market growth (Haveman and Nonnemaker, 2000), rivalry deterrence effects (Yu et al, 2009, innovation (Cabanelas et al, 2020) and the patents of competitors in multimarkets (Scott, 2001), as few examples. Researchers have conducted empirical studies on the mutual forbearance [2] mechanisms of multimarket competition across different industries.…”