Adding context into competitive dynamics research: strategy and evolution in the global paper and pulp industry

Abstract

Competitive dynamics research has provided useful insights regarding how firms’ actions and reactions affect competition, competitive advantage, and performance outcomes. Despite these rich insights, the competitive dynamics literature has tended to focus on the action- and firm-specific aspects of competition, leaving unexplored the broader context that may strongly influence firms’ competitive behavior. To begin to address such a challenge, I build on the evolutionary approach to firms’ competition, through which I explore the implications of integrating spatial, historical, and temporal contexts to competitive dynamics research. Institutional and extra-institutional environments (the spatial context) and their changes through time (the temporal context) influence a firm’s competitive behavior through its decision-makers’ mental model. Competitive behavior, the corresponding performance outcomes, and their feedback (the historical context) in turn trigger change at the higher environmental levels in a mutually reinforcing manner. Such integration helps advance contextualized explanation of variations in firms’ competitive behavior and performance. The dissertation comprises an introductory chapter and four essays. The introductory chapter discusses the current under-contextualized problem in competitive dynamics research and calls for an integration of the broader contextual dynamics and firms’ competitive behavior. Essays I and II explore patterns of firms’ competitive behavior and performance outcomes in different evolutionary contexts. Essay III studies linguistic responses to contextual changes and behavioral mechanisms that drive language-based competitive behaviors. Essay IV considers competitive behavior as responses to contextual changes across factor-product markets and provides an evolutionary framework on preceding and succeeding competitive behavior. Overall, the dissertation complements the extant competitive dynamics stream by offering a more in-depth understanding of the interaction between context and competition. It also hints at the benefit of exploring further the dynamic interplay between firms’ institutional and extra-institutional environments, managerial cognition, competitive behavior, and strategic successes. The four essays contribute to the development of deep insights into how firm-level competitive behavior emerges and evolves according to different contextual dynamics. Keywords: context, competitive dynamics, new institutional economics, strategic renewal, firm exit, fs/QCA, event structure analysis, upper echelons, language game, speech act, pulp and paper industry, demand-driven strategies, competitor identification, competitor analysis