Competitive dynamics and early mover advantages under economic recessions

• Autor(a) principal: Vassolo, Roberto
• Data de Publicação: 2017
• Outros Autores: García-Sánchez, Javier, Mesquita, Luiz
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Revista de Administração de Empresas
• Texto Completo: https://periodicos.fgv.br/rae/article/view/66028
• topic: First mover advantages; industry life cycle; competitive dynamics; recessions; supply side isolating mechanisms; Ventajas de precursores; ciclo de vida de la industria; dinámica competitiva; recesiones; mecanismos aislantes del lado de suministros; Vantagem do pioneiro; ciclo de vida de indústria; dinâmica competitiva; recessões; mecanismos de isolamento do lado da demanda

In light of the recent macroeconomic instability in global markets, we examine the evolution of competitive dynamics and firm profitability when industries are subject to recessions. Although ordinary intuition leads most to view recessions as harmful, we highlight conditions under which they enhance the relative value of industry-level supply-side isolating mechanisms, thereby affording early movers significant and sustainable profit advantages vis-à-vis laggards. We observe that the distribution of firm size within the industry switches from a bi-modal distribution (i.e., one dominated by both small and large firms) to a right-skewed one (i.e., dominated mostly by large firms) in these contexts, thereby signaling the rise of important opportunities in the form of less rivalrous competitive contexts for survivors of recessions. We derive our results from formal modeling and multiple simulation runs.