Competition in Multiple Geographic Markets: The Impact on Growth and Market Entry

We investigate the impact of contact between organizations in multiple geographic markets, focusing on two competitive behaviors: growth in current markets and entry into new markets. Drawing on sociological and economic theories, we propose that the extent of multimarket contact determines the level of competition experienced by a focal organization and therefore influences its growth and market entry. We also propose that market structure, specifically the extent to which markets are dominated by a few large firms, influences competition and therefore influences growth and market entry. Finally, we propose that market structure accentuates multimarket competitive dynamics, as mutual forbearance is more pronounced in markets dominated by a few large firms. Analysis of growth and market entry by a mixed population of multi- and single-market firms in the California savings and loan industry generally supports our model and shows that multipoint competition affects all rivals, multi- and single-market firms alike.

[1]  M. Marchesi,et al.  Journal of economic behavior and organization: special issue on heterogeneous interacting agents in financial markets , 2002 .

[2]  Carolyn Y. Woo,et al.  Multimarket Contact, Economies of Scope, and Firm Performance , 1999 .

[3]  Joel A. C. Baum,et al.  Love Thy Neighbor? Differentiation and Agglomeration in the Manhattan Hotel Industry, 1898-1990 , 1997 .

[4]  Johann Peter Murmann,et al.  Competition in a Multimarket Environment: The Case of Market Exit , 1997 .

[5]  Joel A. C. Baum,et al.  Chain Affiliation and the Failure of Manhattan Hotels, 1898-1980 , 1997 .

[6]  L. Röller,et al.  Collusive conduct in duopolies : multimarket contact and cross-ownership in the mobile telephone industry , 1997 .

[7]  Carolyn Y. Woo,et al.  Hypercompetition in a Multimarket Environment: The Role of Strategic Similarity and Multimarket Contact in Competitive De-Escalation , 1996 .

[8]  Joel A. C. Baum,et al.  Competitive Dynamics Of Interfirm Rivalry , 1996 .

[9]  Henrich R. Greve,et al.  Patterns of Competition: The Diffusion of a Market Position in Radio Broadcasting , 1996 .

[10]  Glenn R. Carroll,et al.  Organizational evolution in a multinational context: entries of automobile manufacturers in Belgium, Britain, France, Germany, and Italy , 1995 .

[11]  Deirdre Boden,et al.  NowHere: Space, Time, and Modernity , 1995 .

[12]  P. Allison.  Survival analysis using the SAS system : a practical guide , 1995 .

[13]  W. Evans,et al.  Living by the “Golden Rule”: Multimarket Contact in the U. S. Airline Industry , 1994 .

[14]  Heather A. Haveman.  Organizational size and change: Diversification in the savings and loan industry after deregulation , 1993 .

[15]  W. P. Barnett,et al.  Strategic Deterrence Among Multipoint Competitors , 1993 .

[16]  John T. Scott.  Purposive Diversification and Economic Performance , 1993 .

[17]  Owen R. Phillips,et al.  Mutual Forbearance in Experimental Conglomerate Markets , 1992 .

[18]  A. Witteloostuijn,et al.  Multimarket competition. Theory and evidence , 1992 .

[19]  Witteloostuijn van Arjen,et al.  Multimarket competition: theory and evidence , 1991 .

[20]  M. Whinston,et al.  Multimarket Contact and Collusive Behavior , 1990 .

[21]  Alan Gart.  An Analysis of the New Financial Institutions: Changing Technologies, Financial Structures, Distribution Systems, and Deregulation , 1989 .

[22]  Neil Fligstein,et al.  Structural Change in Corporate Organization , 1989 .

[23]  Christopher Winship.  Thoughts about roles and relations: An old document revisited , 1988 .

[24]  Loretta J. Mester.  Multiple Market Contact between Savings and Loans: A Note , 1987 .

[25]  S. Zeger,et al.  Longitudinal data analysis using generalized linear models , 1986 .

[26]  Glenn R. Carroll,et al.  Concentration and Specialization: Dynamics of Niche Width in Populations of Organizations , 1985, American Journal of Sociology.

[27]  M. Hannan,et al.  Social Dynamics: Models and Methods. , 1986 .

[28]  Malcolm M. Dow,et al.  A Biparametric Approach to Network Autocorrelation , 1984 .

[29]  Samuel Leinhardt,et al.  Sociological Methodology 1983-1984. , 1984 .

[30]  R. Friedland,et al.  Park Place and Main Street: Business and the Urban Power Structure , 1984 .

[31]  S. Salop,et al.  Strategy, predation, and antitrust analysis , 1983 .

[32]  Samuel Leinhardt,et al.  Roles and Positions: A Critique and Extension of the Blockmodeling Approach , 1983 .

[33]  M. Mizruchi,et al.  The American Corporate Network 1904-1974 , 1982 .

[34]  R. Burt.  Toward a structural theory of action , 1982 .

[35]  P. Doreian.  Estimating Linear Models with Spatially Distributed Data , 1981 .

[36]  P. Doreian.  Linear Models with Spatially Distributed Data , 1980 .

[37]  Ronald S. Burt,et al.  Autonomy in a Social Topology , 1980, American Journal of Sociology.

[38]  Multi-Market Interdependence and Local Market Competition in Banking , 1978 .

[39]  M. Porter,et al.  From Entry Barriers to Mobility Barriers: Conjectural Decisions and Contrived Deterrence to New Competition , 1977 .

[40]  S. Rhoades,et al.  Concentration and Firm Stability in Commercial Banking , 1976 .

[41]  Ronald Cohen,et al.  A handbook of method in cultural anthropology , 1973 .

[42]  C. H. Berry.  Corporate Growth and Diversification , 1971, Journal law and economy.

[43]  James D. Thompson.  Organizations in Action , 1967 .

[44]  Sol Levine,et al.  Exchange as a Conceptual Framework for the Study of Interorganizational Relationships , 1961 .

[45]  George J. Stigler,et al.  Business Concentration and Price Policy , 1955 .

[46]  C. D. Edwards,et al.  Conglomerate Bigness as a Source of Power , 1955 .

[47]  G. Simmel.  The sociology of Georg Simmel , 1950 .