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Competitor-oriented Objectives: The Myth of Market Share

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  • Kesten C. Green
  • J. Scott Armstrong

Abstract

Competitor-oriented objectives, such as market-share targets, are promoted by academics and are common in business. A 1996 review of the evidence indicated that this violation of economic theory led to reduced profitability. We summarize the evidence as of 1996 then describe evidence from 12 new studies. All of the evidence supports the conclusion that competitor-oriented objectives are harmful. However, this evidence has had only a modest impact on academic research and it seems to be largely ignored by managers. Until this situation changes, we expect that many firms will continue to use competitor-oriented objectives to the detriment of their profitability.

Suggested Citation

  • Kesten C. Green & J. Scott Armstrong, 2005. "Competitor-oriented Objectives: The Myth of Market Share," Monash Econometrics and Business Statistics Working Papers 17/05, Monash University, Department of Econometrics and Business Statistics.
  • Handle: RePEc:msh:ebswps:2005-17
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    File URL: http://www.buseco.monash.edu.au/ebs/pubs/wpapers/2005/wp17-05.pdf
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Woodside, Arch G., 2012. "Incompetency training: Theory, practice, and remedies," Journal of Business Research, Elsevier, vol. 65(3), pages 279-293.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.

    More about this item

    Keywords

    Competition; Market Share; Objectives; Profitability.;

    JEL classification:

    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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