Good connections with rivals may weaken a firm’s competitive practices: The negative effect of competitor ties on market orientation practices and innovative performance

• Published in: Asia Pacific journal of management 2020-09, Vol.37 (3), p.693-718
• Main Authors: Yuan, Xina, Guo, Zhaoyang, Lee, Jin Won
• Format: Article
• Language: English
• Subjects: Business and Management; Competition; Cooperation; Management; Market orientation
• ISSN: 0217-4561; 1572-9958
• DOI: 10.1007/s10490-019-09663-3

Cooperation with competitors has received considerable attention regarding both its positive and negative influences on innovative performance. However, as a possible underlying mechanism for the negative consequences of such cooperation, the role of market orientation has not been explored. Establishing and maintaining strong competitor ties (cooperative relationships with competitors) assumes the avoidance of conflicts with competitors. Thus, there is a possibility that such ties may lead the firm to attend less to market orientation practices as the ties weaken the firm’s competitive actions. With China as the research setting, our analyses show that strong competitor ties weaken the firm’s market orientation practices, causing its innovative performance to decline. Furthermore, the negative relationship between competitor ties and market orientation is contingent: This negative relationship is likely to occur except when the firm engages in high entrepreneurial risk-taking. Based on our theoretical rationales and empirical evidence for the underlying mechanism of the negative indirect effect of competitor ties on innovative performance, the present study raises several issues for both management scholars and practitioners.