Kavanagh, Donncha

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Organization Management Journal Volume 8 Issue 2 Article 4 6-1-2011 Introduction to Emerging Conceptual Scholarship Section Donncha Kavanagh Follow this and additional works at: https://scholarship.shu.edu/omj  Part of the Organizational Behavior and Theory Commons, and the Organizational Communication Commons Recommended Citation Kavanagh, Donncha (2011) "Introduction to Emerging Conceptual Scholarship Section," Organization Management Journal: Vol. 8: Iss. 2, Article 4. Available at: https://scholarship.shu.edu/omj/vol8/iss2/4 Emerging Conceptual ScholarshipIntroduction to Emerging ConceptualScholarship SectionDonncha KavanaghCo-EditorOrganization Management Journal (2011)8, 86–87. doi:10.1057/omj.2011.12Thomas Will’s article “A Multilevel Model of Multimarket Contact:Competence Depletion and Punctuated Forbearance Hypotheses”investigates the phenomenon of firms competing with one anotherin multiple geographic or product markets. Over 50 years ago,Corwin Edwards argued that firms with a high level of multi-marketcontact (MMC) treat one another with competitive restraint,because a competitive action in one market might invite punitivecounter attacks not only in that market but in other markets as well.Moreover, the empirical evidence supports Edwards’ “mutualforbearance” hypothesis. Will advances this literature by investi-gating a fundamental, but unaddressed question: how does MMCaffect long-term firm performance? The question is interestingbecause it is not clear, a priori, whether collusion in short-termpricing in particular markets translates into stronger long-termperformance of individual firms. Will postulates that MMC leads tolow intensity competition, which undermines competence devel-opment by stifling firm learning and fosters mimicry, myopia andinsularity in MMC cohorts. Thus, over the longer term, MMCcollusion will deplete the competence of individual firms, whichthen creates an opening for new competitors to enter and succeedin the market. Will mobilizes an extensive literature on proble-mistic search, path dependency, and learning by doing to justifythis proposition. He then proceeds to examine the effect that MMCmight have on firm level innovation. On the one hand, one mightexpect that weaker competition reduces the spur to innovate, whileon the other there is the Schumpeterian argument that weakercompetition fosters innovation because firms have the requisitemonies to support innovation and are incentivised to innovatebecause they can expect to recoup the investment in the post-innovation market. Building on this, Will postulates an “inverted-U” shaped relationship between MMC and innovation. He thenintroduces the concept of “foothold commitment” to describefirms’ desire to stay in or enter markets so as to maintain the short-term benefits of mutual forbearance. He proposes that this maydetract managerial attention from potential resource-sharingopportunities in other markets. Delving deeper, he then considersthe dynamic nature of MMC, speculating that it creates competi-tive vacuums that induce new entrants to join the market. Overtime, therefore, one can expect patterns of “punctuated for-bearance” characterised by periods of dampened rivalry punctu-ated by more competitive reorientations.Organization Management Journal (2011) 8, 86–87& 2011 Eastern Academy of Management All rights reserved 1541-6518Will extends the literature on MMC by presentinga dynamic, multi-level perspective on the pheno-menon. As he suggests, network theory or NKmodeling might provide interesting ways of explor-ing his ideas in more depth. He also suggests howscholars might operationalize an understanding ofa firm’s orientation toward MMC and how hishypotheses might be empirically tested. Implica-tions for practice are also clear: while the currentliterature presents MMC as being advantageous tofirms, he sees it as “something of a poisoned fruit”that may inhibit rather than contribute to sustain-able competitive advantage.Introduction to Emerging Conceptual Scholarship Section Donncha Kavanagh87Organization Management Journal

Introduction to Emerging Conceptual
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Introduction to Emerging Conceptual Scholarship Section

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