Summary
Although interfirm rivalry as a determinant of firm behavior and performance has been extensively discussed in the literature, there has been little examination of the influence of rivalry that is not current but can potentially unfold in the future. This study investigates the effect of anticipated rivalry on the relationship between crucial firm resources and firm performance. Firm resources are measured by assessing the extent of human capital and organizational capital that a firm possesses and the extent to which held partnerships matches firm's expectations (partnership quality). Anticipated rivalry is hypothesized to strengthen the relationship between firm resources and performance. Data for this study were obtained from the managers of 105 Indian business process outsourcing (BPO) provider firms who responded to a specially-developed questionnaire. Our empirical analysis suggests that higher anticipated rivalry results in stronger associations of human capital and organizational capital with firm performance but weaker association of partnership quality with performance. Lower anticipated rivalry results in exactly opposite effects. We note practical implications of this study and identify areas of future inquiry.
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Extract
Anticipated Rivalry As a Moderator of the Relationship Between Firm Resources and Performance
Introduction
The question of how rivalry among business enterprises may affect corporate behavior and performance has always captured the attention of executives and management scholars. Interfirm rivalry - the extent to which firms compete against each ouier tíirough actions and reactions - can influence firms' competitive positioning, profitability and even long-term survival. Prior research suggests that interfirm rivalry as an industry-level attribute emanates from rivals' competitive moves, can vary in nature and intensity, and may have crucial bearing on business performance and competitive advantage (Chen, 1 996; Schul et al., 1995; Young et al., 2000). Studies have also been shown that rivalry may have important implications for organizational structure (Vroom, 2006), managerial incentives (Vroom and Gimeno, 2007) or strategy formulation (Jayachandran et al., 1999). The multifaceted consequences of interfirm rivalry drive most executives to comprehend this force in the best possible manner and determine how it may impact the performance of enterprises...See the full content of this document
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