The competitive tension as a moderator for strategic innovation

Abstract

The tension created by competition has long been of interest to innovation researchers. A notable contribution to this topic stems from the behavioral theory of the firm (Greve 2003). Scholars have noted that in firms while high performance reduces R&D intensity and innovation launches, contingency variables such as growth stage, performance below the aspiration level, and ambidexterity increase innovation decisions. On the other hand because the firm "has a stick of market share with which to discipline the other firm" (Karnani and Wernerfelt 1985: 90) competitive tension in firm dyads has an inevitable attack and mostly withdrawal effect (Hambrick and Fredrickson 2005). Although improving our understanding of the rivalry, or interactive market behavior, between firms in their quest for competitive position in an industry these studies have focused on the structural properties of an industry (e.g., market share or innovation typology) and ignored specific effects of competitive tension between firms. As a result, limited attention has been paid to the nuance of interfirm rivalry in strategic innovation.