From I-O Economics S-C-P Paradigm Through Strategic Groups to Competence-Based Competition: Reflections on the Puzzle of Competitive Strategy

Over the past 20 years one basic question which has occupied the attention of both researchers and practitioners in the strategic management field is ‘with whom and how do firms compete?’ How research in strategy has attempted to answer this question over the past 20 years is the subject of this article. We begin by reviewing the literatures on industrial organization, spatial competition, strategic groups, cognitive communities and networks and examine how each of these theoretical perspectives have been used to answer basic questions of competition and rivalry. We then show how the resource-based view of the firm and the theory of competence-based competition can be used to integrate these perspectives. We conclude by proposing six issues which should motivate future strategy research, and which can help and enhance our understanding of how firms compete.