|Ph.D Student||Yaron Amir|
|Subject||Multimarket Competition and Alliance Formation|
|Department||Department of Industrial Engineering and Management||Supervisor||Professor Emeritus Erez Miriam|
|Full Thesis text|
The first study of this dissertation identifies multimarket competition as an antecedent of alliance formation, bridging research streams on alliances, multimarket competition, and competitive dynamics. Going beyond existing research which focuses on the attenuating effect of high level of multimarket competition on competitive pressure through implicit cooperation, this study proposes that at low levels of multimarket competition, explicit cooperation in the form of alliances between rivals (horizontal alliances) serves to attenuate such pressure. As multimarket competition increases, mutual deterrence attenuates the competitive pressure, and thus alliances become redundant, resulting in decrease in alliance formation. Hence, this study uncovers the interplay of explicit cooperation in the form of horizontal alliances and implicit cooperation in the form of tacit cooperation between rivals. Firm size is offered as a moderator that weakens the association between the level of multimarket competition and the number of horizontal alliances formed. A firm's internal assets serve as a unilateral deterrence mechanism to deter rivals instead of resorting to alliance formation or tacit coordination. Panel data analysis of 242 U.S. publicly-traded firms operating in the pre-packaged software industry during the period 1990-2001 supports these conjectures, demonstrating an inverted U-shaped association between multimarket competition and alliance formation as well as a negative moderating effect of firm size. While the first study explores the means that firms take to attenuate competitive pressure, the second study explores consequences of competitive pressure by offering a theoretical framework relating competitive pressure to an incumbent's propensity to adopt a radical technology. The study explains such a response to competitive pressure by increased monitoring efforts and higher motivation to adopt such a technology. Integrating research streams on competitive dynamics, innovation management and organizational learning, the study offers several organizational and environmental contingencies that affect monitoring and the motivation to adopt a radical technology in response to competitive pressure: organizational slack is expected to weaken the positive effect of competitive pressure on a firm's propensity to adopt a radical technology as it hinders a firm's motivation to respond to competitive pressure; absorptive capacity is hypothesized to strengthen the effect of competitive pressure as it facilitates monitoring capability and lowers risks associated with the adoption of a radical technology, thus promoting such an adoption; a positive performance gap is expected to weaken the positive effect of competitive pressure since the firm is less motivated to respond to it by adopting such a technology, whereas a negative gap is expected to strengthen this effect as it motivates response to competitive pressure and bearing the risks associated with the adoption of a radical technology; finally, the diffusion rate of the technology in the industry is expected to strengthen the positive effect of competitive pressure by restricting risks and motivating adoption of such technology, before the firm’s rivals do; however, beyond a certain threshold a further increase in the diffusion rate weakens the positive effect of competitive pressure as such a technology becomes widely adopted, which limits the advantage of adopting it by the firm.