Contribution by TIME researchers

The latest issue of Academy of Management Perspectives lists a contribution by TIME researchers. The title of the article is “Organizational Hostility: Why and How Nonmarket Players Compete With Firms” and is penned by TIME’s own Andreas Panagopoulos and Gideon D. Markman, along with Theodore L. Waldron. http://amp.aom.org/content/30/1/74.abstract

A core objective of competitive dynamics theory and research is to describe, explain, and predict hostile interactions among players. By studying when, why, and how organizations contest each other, the theory guides scholarship on how firms can reduce threats and blind spots. Research in this area is important because hostile interactions can divert managerial attention, undermine firm performance, disrupt market structure, and interrupt industry equilibrium. 

Competitive dynamics research tends to frame inter-firm competition in terms of hostile engagements. Such work has contributed greatly to our understanding of adversarial interactions by introducing foundational constructs—such as product commonality, resource similarity, and strategic groups—that define conditions under which adversarial interactions occur. As useful as these constructs are, an undue adherence to their role in defining the conceptual scope of competitive dynamics research and theory may cause scholars to neglect unexpected threats to firms. Indeed, a central argument of this article was that hostility can flare up even between blatantly unrelated organizations, including in the absence of product commonality or resource similarity.

Nonmarket players (NMPs) such as activists, social entrepreneurs, environmentalists, NGOs, and even terrorists, engage firms without competing with them directly for consumers or resources. We stress that competing ideologies—namely, conflicting beliefs and attitudes regarding social, ecological, ethical, and political issues, among others (described henceforth as social issues)—place NMPs and firms on a collision course. In fact, since NMPs operate in different environments and maintain divergent ideologies from commercial firms, their bouts with firms may be more unexpected and disruptive than ‘normal’ or ‘traditional’ inter-firm competition. 

NMP attacks hint that competitive dynamics research, which currently tends to view contests and hostility quite narrowly, can achieve several conceptual expansions. For example, in 2004 People for the Ethical Treatment of Animals (PETA) attacked prominent clothing companies in an attempt to end the practice of sheep mulesing. Interestingly, PETA did not attack the Australian farmers who perpetrated the practice, but their lead customers—wool-based retailers (e.g., Benetton, Abercrombie & Fitch, and Adidas). This represents an indirect or proxy form of competitive behavior that is rarely acknowledged by the literature.  Compared with the high costs of traditional competitive action, especially price competition, the PETA attacks were relatively inexpensive – although the costs to firms were substantial (i.e., the development and implementation of new wool sourcing practices). Also, the extant research bounds rivalry within the precinct of a narrow geo-product space, but NMP attacks on one firm aim to bring industry-wide change. They often bleed over and disrupt firms in adjacent industries (e.g., wool sourcing changes in the clothing industry led to changes in the furnishing industry). 

To appreciate the disruptive nature of NMP attacks, consider how Greenpeace successfully forced International Finance Group to sell its stake in Olam International; Eon to interrupt its coal-power plant operations; and Shell Oil to dismantle it North Sea oil rig and dispose it inland. Indeed, Greenpeace lodged a series of attacks against Shell. It occupied the Brent Spar for several weeks, organized protests boycotts, and even launched an arson attack. Indeed, our evaluation of scores of hostile (and friendly) NMP-firm interactions reveals that NMPs’ objectives extend well beyond shaping the behavior of a single firm; they aim to transform behavioral standards of all organizations in every industry. To use institutional theory vernacular, NMPs aim to deinstitutionalize old norms and re-institutionalize new ones. Given that NMP-firm conflicts disrupt firms, markets, and industries, addressing them can clearly expand the scope and utility of competitive dynamics theory. 

Accordingly, the purpose of this article was to expand competitive dynamics theory by crafting a conceptual framework that explains organizational hostility between NMPs and firms. Using an institutional perspective, we explained why NMPs battle firms and how initial engagements between these parties might unfold. In terms of “why,” our framework proposed that embeddedness in different institutional environments leads NMPs to champion beliefs that conflict with their corporate counterparts, thus motivating the former to engage the latter in confrontational ways. It also underscores the role of governments in moderating such effects. In terms of “how,” our framework proposed that certain beliefs held by NMPs and firms influence the confrontational tactics used by the former and the responses of the latter. Framing competitive dynamics as an organizational hostility perspective—including diverging ideologies and conflicting practices—aimed in expanding the conceptual scope of competitive dynamics theory, making it more comprehensive, revelatory, practical, and even preventative. Our hope is to help scholars and managers to better appreciate hostile engagements that presently competitive dynamics research and theory do not address, NMP-firm conflicts being one such example.