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Competitor-oriented Objectives: The Myth of Market Share

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  • Armstrong, J. Scott
  • Green, Kesten C.

Abstract

Competitor-oriented objectives, such as market-share targets, are promoted by academics and are commonly used by firms. A 1996 review of the evidence, summarized in this paper, found that competitor-oriented objectives reduced profitability. We describe new evidence from 12 studies, one of which is introduced in this paper. The new evidence supports the conclusion that competitor-oriented objectives are harmful, especially when managers receive information about competitors’ market shares. The evidence appears to have had little effect on managers’ decisions and on what is taught in business schools.

Suggested Citation

  • Armstrong, J. Scott & Green, Kesten C., 2007. "Competitor-oriented Objectives: The Myth of Market Share," MPRA Paper 81674, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:81674
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    Cited by:

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    2. de Villiers, Rouxelle & Woodside, Arch G. & Marshall, Roger, 2016. "Making tough decisions competently: Assessing the value of product portfolio planning methods, devil’s advocacy, group discussion, weighting priorities, and evidenced-based information," Journal of Business Research, Elsevier, vol. 69(8), pages 2849-2862.
    3. Woodside, Arch G., 2012. "Incompetency training: Theory, practice, and remedies," Journal of Business Research, Elsevier, vol. 65(3), pages 279-293.
    4. Engelbert J. Dockner & Steffen Jørgensen, 2018. "Strategic Rivalry for Market Share: A Contest Theory Approach to Dynamic Advertising Competition," Dynamic Games and Applications, Springer, vol. 8(3), pages 468-489, September.
    5. Gerasimos T. Soldatos, 2021. "A model of market competition as a prize contest or a model of strife for market domination," SN Business & Economics, Springer, vol. 1(1), pages 1-9, January.
    6. Sarah Wolf & Steffen Fürst & Antoine Mandel & Wiebke Lass & Daniel Lincke & Federico Pablo-Marti & Carlo Jaeger, 2013. "A multi-agent model of several economic regions," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00825217, HAL.
    7. Snyder, Ralph D. & Ord, J. Keith & Koehler, Anne B. & McLaren, Keith R. & Beaumont, Adrian N., 2017. "Forecasting compositional time series: A state space approach," International Journal of Forecasting, Elsevier, vol. 33(2), pages 502-512.
    8. Josep M. Argilés-Bosch & Josep Garcia-Blandón & Diego Ravenda & Mónica Martínez-Blasco, 2018. "An empirical analysis of the curvilinear relationship between slack and firm performance," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 29(3), pages 361-397, December.
    9. Brokesova, Zuzana & Deck, Cary & Peliova, Jana, 2014. "Experimenting with purchase history based price discrimination," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 229-237.
    10. Chong, Josephine L.L, 2010. "Evaluating the impact of Arnould and Wallendorf's (1994) market-oriented ethnography," Journal of Business Research, Elsevier, vol. 63(12), pages 1295-1300, December.
    11. Torsten J. Gerpott & Jan Berends, 2022. "Competitive pricing on online markets: a literature review," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(6), pages 596-622, December.
    12. Mai, Nhat Chi, 2022. "Strategic Management," OSF Preprints vauxf, Center for Open Science.
    13. J. Scott Armstrong & Philippe Jacquart, 2013. "The Ombudsman: Is the Evidence Sufficient to Take Action on Executive Pay? Reply to Commentators," Interfaces, INFORMS, vol. 43(6), pages 602-604, December.
    14. , 2024. "Effect of Marketing Strategies on the Performance of Agribusinesses in North-Central, Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(1), pages 993-1024, January.
    15. Hanno Drews, 2008. "Abschied vom Marktwachstums-Marktanteils-Portfolio nach über 35 Jahren Einsatz? Eine kritische Überprüfung der BCG-Matrix," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 19(1), pages 39-57, May.
    16. Nippa, Michael, 2011. "Zur Notwendigkeit des Corporate Portfolio Management: Eine Würdigung der wissenschaftlichen Forschung der letzten vier Jahrzehnte," Freiberg Working Papers 2011/02, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
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    More about this item

    Keywords

    Competition; Market Share; Objective; Profitability;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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