Competitive interaction: A study of market, nonmarket and integrated competitive behavior

The current research draws from theories of strategic management, public policy and Austrian economics to expand an existing model of competitive interaction that includes nonmarket and integrated actions and counter actions as sources of sustainable competitive advantage and firm performance. Previous scholarly work in the area has generally focused on market-based actions, and not taken into account the social, legal, and political activities of the firm. Clearly, nonmarket actions serve the primary objectives of firms, but represent one of two mechanisms for the implementation of firm strategies. Both market and nonmarket activities must be considered, and the integration of market and nonmarket actions occurs when specific links between actions are observed. Hypotheses for these different action types, as well as several characteristics were framed from the extant literature.; The hypotheses were tested using 1,145 actions aggregated into a sample of 420 firm-months, and a model was tested using an original data set covering U.S. scheduled passenger airlines serving international routes in the North Atlantic region from 1995 to 1999 inclusive.; The structured content analysis method continues to demonstrate its usefulness in unobtrusively exploring the internal workings of firms that reveal patterns of behavior and strategies. Moreover, and with the advent of powerful online search engines and Boolean keyword search techniques, vast full-text databases can be explored in a direct and unbiased manner. Finally, keyword search permits data collection to be perfectly duplicated.; The results suggest that both market and nonmarket actions have a positive and statistically significant impact on performance, measured by: operating profit and gross profit margin. Certain action characteristics, including integration, also significantly influence performance.; Generally, the results are consistent with the previous competitive dynamics literature: firms that undertake more competitive market and nonmarket actions perform better. Additional findings indicate the capability of the firm to carry out purposeful action is essential to its long-term success.; The results of the study imply the nonmarket environment is a crucial competitive dimension for the sample firms. Detailed analysis of firm activity remains a promising approach for continued research, and remains an effective way to understand firm interaction and business competition.