Competitive Analysis: Do Managers Accurately Compare Their Firms to Competitors?

摘要

Much of the strategy formulation literature is based on firms having an objective understanding of their industry and competitors. However, there has been some speculation that competing firms may not know each other in an objective, similar way. Rather, firms may subjectively know each other and, thus, have varying views of direct competitors. Chen's (1996) integration of market commonality and resource similarity, and their effect on competitive behavior, used objective measures to determine the similarities of competitors. Chen used subjective data to help confirm the objective measures, and he indicated that such designations would normally be subjectively determined in the marketplace by managers. We concur with Chen (1996) in that firms may differ in their perception of the similarities and differences between themselves and their competitors. Therefore, following a subjective approach, we use data from 186 direct competitor relationships among 221 plants in the corrugated box manufacturing industry to illustrate that much of the time competitors are uncertain about each other and when they are certain they often disagree on how similar or different they are from each other. As expected, however, direct competitors that are of the same type were more likely to agree than direct competitors that are of a dissimilar type. These findings suggest that the accuracy of assumptions about the objectiveness of competitive analysis should be further explored.