Session 230

Multi-Market Competition and Mutual Forbearance

Track E

Date: Tuesday, October 6, 2015


Time: 11:00 – 12:15


Room: Governor's Square 11

Session Chair:

  • Burak Konduk, University of North Georgia

Title: Mutual Forbearance in Factor Market Rivalry


  • Yeolan Lee, University of Alabama in Huntsville
  • Eric Fong, University of Alabama in Huntsville

Abstract: Rivalry occurs in both product markets and factor markets (i.e., competition over the acquisition of valuable resources); yet, prior studies on multimarket contact have largely focused on the role of product market rivalry in firm’s entries. In this paper, we identify the impacts of both product and factor market rivalries on firms’ entry decisions into new product and new factor markets. Using a sample of pharmaceutical firms’ entries during the time period 1991-2000, we found that mutual forbearance is supported in factor market rivalry. Our empirical results show that product market rivalry has deterrence effects on firms’ entries into rivals’ factors when factor ownership and preemption exist. We add a clear understanding regarding the impacts of rivalry occurring in both factor and product market spaces.

Title: The Distinct Effects of Product and Factor Multimarket Contact on Competitive Aggressiveness


  • Grigorij Ljubownikow, University of Auckland

Abstract: Understanding the effect of multimarket contact on competitive behavior has become a central issue for strategy scholars. However, we have limited understanding of how different types of interdependencies influence competitive behavior. In particular, while some theoretical models have analyzed how factor market dynamics impact firm outcomes, limited research has analyzed the differing effects of product and factor multimarket contact on competitive behavior. Utilizing a dataset on the competitive aggressiveness of large bank holding companies from 2000-2010, the study finds that, while both product and factor multimarket contact have a negative effect on competitive aggressiveness, the negative effect is stronger for product multimarket contact. These findings contribute to the literature on multimarket contact, competitive dynamics, and factor market competition.

Title: The Effect of Large Buyers on Multimarket Competition


  • Hyun-Soo Woo, The University of Mississippi
  • Albert Cannella Jr, Texas A&M University

Abstract: It is well-established that multimarket contact can lead to mutual forbearance among rival firms. However, mutual forbearance research is based on analyses and empirical settings in which buyers are assumed to be homogeneous price-takers. Our study considers the effects of buyer heterogeneity (buyer size) on mutual forbearance on rivals with multimarket contact. We develop theory to predict that tacit collusion does not necessarily collapse under buyer heterogeneity. Rather, it may shift to a situation in which multimarket rivals actually collude to offer very low prices to large buyers, but make up for the low prices by setting commensurately higher prices for small buyers. We test our predictions in the context of coal suppliers selling to electric generating companies and report strong support for our predictions.

Title: The Origins and Process of Cooperation Among Multi-Market Rivals


  • Burak Konduk, University of North Georgia

Abstract: This paper develops a theory to explain the origins of mutual forbearance and progress of cooperation between a pair of multi-market rivals. Specifically, it proposes that the process of competition between a pair of multi-market rivals leads them to trust one another by activating different antecedents of trust. The resulting trust in turn results in their experimental cooperation that they deepen in the face of reciprocity but break in the face of non-reciprocity.

All Sessions in Track E...

Sun: 08:00 – 09:15
Session 28: The Latest and Greatest in Empirical Methods for Strategy Scholars
Sun: 09:45 – 11:00
Session 29: The Elephant in the Room: How public policy and institutions help drive innovation, entrepreneurship, and firm performance
Sun: 11:15 – 12:30
Session 30: Heterogeneity in Firms and Their Pre-entry Capabilities: Implications for Firm and Industry Evolution
Sun: 16:15 – 17:30
Session 229: How Resources Change in Dynamic Situations
Sun: 17:45 – 00:00
Session 313: Competitive Strategy Business Meeting
Mon: 08:00 – 09:15
Session 273: Complexity in Competition
Mon: 11:15 – 12:30
Session 244: Legitimacy, Stakeholders, and Competition
Mon: 13:45 – 15:00
Session 242: Value Creation in Buyers-Supplier Relationships and Ecosystems
Mon: 16:45 – 18:00
Session 238: Temporary and Long Term Competitive Advantage
Session 243: Competitive Dynamics and Market Positioning
Tue: 08:00 – 09:15
Session 272: Competitive Dimensions of Firm Boundary and Location Decisions
Tue: 11:00 – 12:15
Session 230: Multi-Market Competition and Mutual Forbearance
Session 264: Emerging Technologies and Industries
Tue: 14:15 – 15:30
Session 267: Healthcare Industry Dynamics, Relationships, and Activities
Tue: 15:45 – 17:00
Session 269: Exploration, Exploitation, and Competition
Tue: 17:30 – 18:45
Session 263: Developing a Value Creation Theory

Strategic Management Society