Who exactly a firm identifies as a competitor is consequential. Competitors form a key element of the environment that firms must monitor and respond to, helping to shape strategic priorities and how executives address them. Importantly, the specific competitors on which executives focus their attention can vary between similar firms and often differ from the “objective” competitors identified by third parties. This project analyzes the perceptual competition networks created by firms’ idiosyncratic attention to some competitors over others and the implications for a variety of firm outcomes, including product innovation and alliance formation.
In practical terms, the project’s findings suggest the question of “Who are my firm’s competitors?” can be answered in a manner that is strategic rather than merely descriptive. Executives do not have to simply react to competition as a taken-for-granted element of the environment. Instead, they can actively define the boundaries of that environment for themselves and others within the firm, with tangible effects on firm outcomes such as innovation. “Competition” is therefore not only an obstacle to overcome, but can be thought of as another strategic lever available to executives seeking to create competitive advantage.