Know Thy Enemies: The Competitive Sensemaking of Market

Abstract

Due to an increasing dynamism in markets, changes in the competitive landscape have made the assessment of competitive boundaries an increasing concern to scholars of managements. The objective of this study is to develop a competitive sense-making approach to explain how firms develop a shared as well as ambiguous understanding of competitive boundaries. A unique contribution of this study is that it introduces an endogenous explanation of the competitive boundary process. This process appeals to a firm’s past (retrospective) and future (prospective) sense-making processes that not only define a firm’s competitive relationships, but these relationships create a shared and ambiguous understanding of competitive boundaries. A novel agent base simulation model was then developed to examine this competitive sense-making where it shows institutional influences involving population can moderate a firm’s competitive sense-making.