IDEAS home Printed from https://ideas.repec.org/a/inm/orstsc/v8y2023i1p85-102.html

See You in Your Backyard: Multipoint Contact, Firm’s Capacity and Capability, and Technological Expansion

Author

Listed:
  • You-Ta Chuang

    (School of Administrative Studies, York University, Toronto, Ontario M3J 1P3, Canada)

  • David H. Weng

    (Department of Management, Mihaylo College of Business and Economics, California State University, Fullerton, Fullerton, California 92831)

  • Chia-Hung Wu

    (College of Management, Yuan Ze University, Taoyuan City, Taiwan 320)

  • Kelly Thomson

    (School of Administrative Studies, York University, Toronto, Ontario M3J 1P3, Canada)

Abstract

Past studies of multipoint competition have mainly focused on the effect of multipoint contact in product markets on firm competitive behaviors in those markets only. Our study advances this literature by examining how multipoint contact in product markets affects a firm’s expansion into a rival’s technological areas. We further investigate the factors that moderate the proposed effect. Our analyses suggest that the degree of multipoint contact between a firm and a rival in product markets has an inverted U-shaped relationship with the degree of the firm’s expansion into the rival’s technological areas (patent classes). Furthermore, the firm’s capacity (market share) and capability (status in terms of technological development) relative to the rival’s have different moderating effects on the relationship between multipoint contact in product markets and the firm’s expansion into the rival’s technological areas. Our findings contribute to the literatures on multipoint contact, competitive dynamics, and firm technology strategies.

Suggested Citation

  • You-Ta Chuang & David H. Weng & Chia-Hung Wu & Kelly Thomson, 2023. "See You in Your Backyard: Multipoint Contact, Firm’s Capacity and Capability, and Technological Expansion," Strategy Science, INFORMS, vol. 8(1), pages 85-102, March.
    • Handle: RePEc:inm:orstsc:v:8:y:2023:i:1:p:85-102
    DOI: 10.1287/stsc.2022.0174
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/stsc.2022.0174
    Download Restriction: no
    File URL: https://libkey.io/10.1287/stsc.2022.0174?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bronwyn H. Hall & Adam B. Jaffe & Manuel Trajtenberg, 2000. "Market Value and Patent Citations: A First Look," NBER Working Papers 7741, National Bureau of Economic Research, Inc.
    2. Atul Nerkar & Peter W. Roberts, 2004. "Technological and product‐market experience and the success of new product introductions in the pharmaceutical industry," Strategic Management Journal, Wiley Blackwell, vol. 25(8‐9), pages 779-799, August.
    3. Jay B. Barney, 1986. "Strategic Factor Markets: Expectations, Luck, and Business Strategy," Management Science, INFORMS, vol. 32(10), pages 1231-1241, October.
    4. Breschi, Stefano & Lissoni, Francesco & Malerba, Franco, 2003. "Knowledge-relatedness in firm technological diversification," Research Policy, Elsevier, vol. 32(1), pages 69-87, January.
    5. Javier Gimeno, 1999. "Reciprocal threats in multimarket rivalry: staking out ‘spheres of influence’ in the U.S. airline industry," Strategic Management Journal, Wiley Blackwell, vol. 20(2), pages 101-128, February.
    6. Joel A. C. Baum & Helaine J. Korn, 1999. "Dynamics of dyadic competitive interaction," Strategic Management Journal, Wiley Blackwell, vol. 20(3), pages 251-278, March.
    7. Matt Theeke & Hun Lee, 2017. "Multimarket Contact and Rivalry over Knowledge‐based Resources," Strategic Management Journal, Wiley Blackwell, vol. 38(12), pages 2508-2531, December.
    8. Feinberg, Robert M., 1984. "Mutual forbearance as an extension of oligopoly theory," Journal of Economics and Business, Elsevier, vol. 36(2), pages 243-249, May.
    9. Dibiaggio, Ludovic & Nasiriyar, Maryam & Nesta, Lionel, 2014. "Substitutability and complementarity of technological knowledge and the inventive performance of semiconductor companies," Research Policy, Elsevier, vol. 43(9), pages 1582-1593.
    10. John Stephan & Johann Peter Murmann & Warren Boeker & Jerry Goodstein, 2003. "Bringing Managers into Theories of Multimarket Competition: CEOs and the Determinants of Market Entry," Organization Science, INFORMS, vol. 14(4), pages 403-421, August.
    11. Stan Xiao Li & Royston Greenwood, 2004. "The effect of within‐industry diversification on firm performance: synergy creation, multi‐market contact and market structuration," Strategic Management Journal, Wiley Blackwell, vol. 25(12), pages 1131-1153, December.
    12. Aneel Karnani & Birger Wernerfelt, 1985. "Multiple point competition," Strategic Management Journal, Wiley Blackwell, vol. 6(1), pages 87-96, January.
    13. David J. TEECE, 2008. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," World Scientific Book Chapters, in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 5, pages 67-87, World Scientific Publishing Co. Pte. Ltd..
    14. Kevin Zheng Zhou & Fang Wu, 2010. "Technological capability, strategic flexibility, and product innovation," Strategic Management Journal, Wiley Blackwell, vol. 31(5), pages 547-561, May.
    15. Dominika Kinga Randle & Gary Paul Pisano, 2021. "The Evolutionary Nature of Breakthrough Innovation: An Empirical Investigation of Firm Search Strategies," Strategy Science, INFORMS, vol. 6(4), pages 290-304, December.
    16. B. Douglas Bernheim & Michael D. Whinston, 1990. "Multimarket Contact and Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 1-26, Spring.
    17. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
    18. Toby E. Stuart, 2000. "Interorganizational alliances and the performance of firms: a study of growth and innovation rates in a high‐technology industry," Strategic Management Journal, Wiley Blackwell, vol. 21(8), pages 791-811, August.
    19. Sean T. Hsu & Susan K. Cohen, 2022. "Overcoming the Incumbent Dilemma: The Dual Roles of Multimarket Contact During Disruption," Journal of Management Studies, Wiley Blackwell, vol. 59(2), pages 319-348, March.
    20. Tang Wang & Vikas A. Aggarwal & Brian Wu, 2020. "Capability interactions and adaptation to demand‐side change," Strategic Management Journal, Wiley Blackwell, vol. 41(9), pages 1595-1627, September.
    21. repec:spo:wpmain:info:hdl:2441/43aq8ffdqb82sbffkv69bt1eaa is not listed on IDEAS
    22. Margaret A. Peteraf & Jay B. Barney, 2003. "Unraveling the resource-based tangle," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 24(4), pages 309-323.
    23. Henrich R. Greve, 2008. "Multimarket contact and sales growth: evidence from insurance," Strategic Management Journal, Wiley Blackwell, vol. 29(3), pages 229-249, March.
    24. Elizabeth G. Pontikes & William P. Barnett, 2017. "The Coevolution of Organizational Knowledge and Market Technology," Strategy Science, INFORMS, vol. 2(1), pages 64-82, March.
    25. Scott, John T., 1991. "Multimarket contact among diversified oligopolists," International Journal of Industrial Organization, Elsevier, vol. 9(2), pages 225-238, June.
    26. Matsushima, Noriaki, 2001. "Cournot competition and spatial agglomeration revisited," Economics Letters, Elsevier, vol. 73(2), pages 175-177, November.
    27. David J. Teece & Richard Rumelt & Giovanni Dosi & Sidney Winter, 2000. "Understanding Corporate Coherence: Theory and Evidence," Chapters, in: Innovation, Organization and Economic Dynamics, chapter 9, pages 264-293, Edward Elgar Publishing.
    28. William P. Barnett & Mooweon Rhee & Elise Tak, 2022. "Manufacturing Popularity: An Ecological Model of Time-Based Competition," Strategy Science, INFORMS, vol. 7(4), pages 267-283, December.
    29. Hannan, Timothy H. & Prager, Robin A., 2004. "The competitive implications of multimarket bank branching," Journal of Banking & Finance, Elsevier, vol. 28(8), pages 1889-1914, August.
    30. Mary Tripsas, 1997. "Unraveling The Process Of Creative Destruction: Complementary Assets And Incumbent Survival In The Typesetter Industry," Strategic Management Journal, Wiley Blackwell, vol. 18(S1), pages 119-142, July.
    31. repec:hal:journl:halshs-01948186 is not listed on IDEAS
    32. Wonsang Ryu & Jeffrey J. Reuer & Thomas H. Brush, 2020. "The effects of multimarket contact on partner selection for technology cooperation," Strategic Management Journal, Wiley Blackwell, vol. 41(2), pages 267-289, February.
    33. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    34. Lee Fleming, 2001. "Recombinant Uncertainty in Technological Search," Management Science, INFORMS, vol. 47(1), pages 117-132, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tomasz Obloj & Metin Sengul, 2025. "Ownership as a Bundle of Rights: Antecedents of the Wedge Between Control and Cash-Flow Rights Within Firms," Strategy Science, INFORMS, vol. 10(2), pages 109-127, June.
    2. Tho Pham & Oleksandr Talavera & Junhong Yang, 2020. "Multimarket competition and profitability: evidence from Ukrainian banks," Oxford Economic Papers, Oxford University Press, vol. 72(2), pages 517-545.
    3. Jin, Tuofu & Eapen, Alex, 2022. "‘Delayed Forbearance’: Multipoint contact and mutual forbearance in inaugural and subsequent competitive actions," Journal of Business Research, Elsevier, vol. 149(C), pages 938-953.
    4. Maria Chiara Di Guardo & Kathryn Rudie Harrigan & Elona Marku, 2019. "M&A and diversification strategies: what effect on quality of inventive activity?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(3), pages 669-692, September.
    5. Raja Roy & Soumodip Sarkar, 2022. "Boundary conditions of the mutual forbearance hypothesis: Impact of technology evolution on multimarket competition," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2545-2556, September.
    6. Gianluigi Giustiziero & Aseem Kaul & Brian Wu, 2019. "The Dynamics of Learning and Competition in Schumpeterian Environments," Organization Science, INFORMS, vol. 30(4), pages 668-693, July.
    7. Tom Broekel & Matthias Brachert, 2015. "The structure and evolution of inter-sectoral technological complementarity in R&D in Germany from 1990 to 2011," Journal of Evolutionary Economics, Springer, vol. 25(4), pages 755-785, September.
    8. Lasse B. Lien & Peter G. Klein, 2013. "Can the Survivor Principle Survive Diversification?," Organization Science, INFORMS, vol. 24(5), pages 1478-1494, October.
    9. Sean T. Hsu & Susan K. Cohen, 2022. "Overcoming the Incumbent Dilemma: The Dual Roles of Multimarket Contact During Disruption," Journal of Management Studies, Wiley Blackwell, vol. 59(2), pages 319-348, March.
    10. Puay Khoon Toh & Cameron D. Miller, 2017. "Pawn to Save a Chariot, or Drawbridge Into the Fort? Firms' Disclosure During Standard Setting and Complementary Technologies Within Ecosystems," Strategic Management Journal, Wiley Blackwell, vol. 38(11), pages 2213-2236, November.
    11. Jaime Gómez & Raquel Orcos & Sergio Palomas, 2013. "Multimarket Contact Externalities: The Effect of Rivals' Multimarket Contacts on Focal Firm Performance," Working Papers 1302, Departament Empresa, Universitat Autònoma de Barcelona, revised Apr 2013.
    12. Candiani, Juan Antonio & Gilsing, Victor & Mastrogiorgio, Mariano, 2022. "Technological entry in new niches: Diversity, crowding and generalism," Technovation, Elsevier, vol. 116(C).
    13. Degl’Innocenti, Marta & Girardone, Claudia & Torluccio, Giuseppe, 2014. "Diversification, multimarket contacts and profits in the leasing industry," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 31(C), pages 231-252.
    14. Mahka Moeen, 2017. "Entry into Nascent Industries: Disentangling a Firm's Capability Portfolio at the Time of Investment Versus Market Entry," Strategic Management Journal, Wiley Blackwell, vol. 38(10), pages 1986-2004, October.
    15. Fiona Kun Yao & Ming-Jer Chen & Jiatao Li & Danielle Combs & Qiang Li, 2024. "A review of 50 years of research since Knickerbocker (1973): competitive dynamics in international business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 55(5), pages 522-550, July.
    16. Pham, Tho & Talavera, Oleksandr & Yang, Junhong, 2016. "Multimarket Competition and Profitability: Evidence from Ukrainian banking," MPRA Paper 72376, University Library of Munich, Germany.
    17. Villalonga, Belen, 2004. "Intangible resources, Tobin's q, and sustainability of performance differences," Journal of Economic Behavior & Organization, Elsevier, vol. 54(2), pages 205-230, June.
    18. Jatinder S. Sidhu & Harry R. Commandeur & Henk W. Volberda, 2007. "The Multifaceted Nature of Exploration and Exploitation: Value of Supply, Demand, and Spatial Search for Innovation," Organization Science, INFORMS, vol. 18(1), pages 20-38, February.
    19. Kocaman, Barış & Gelper, Sarah & Langerak, Fred, 2023. "Till the cloud do us part: Technological disruption and brand retention in the enterprise software industry," International Journal of Research in Marketing, Elsevier, vol. 40(2), pages 316-341.
    20. Wonsang Ryu & Jeffrey J. Reuer & Thomas H. Brush, 2020. "The effects of multimarket contact on partner selection for technology cooperation," Strategic Management Journal, Wiley Blackwell, vol. 41(2), pages 267-289, February.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:orstsc:v:8:y:2023:i:1:p:85-102. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.