Competition and the Formation of Inter-firm Differentiation Following the Dominant Perception
Annals of Business Administrative Science
In this paper, in order to answer the question: "In an industry where the imitation by other competitors is easy, how has a differentiation between companies been created and maintained?" we provide a new framework, based on a Dynamic Capability-Based View of the Firm and the Action System Theory. On the basis of this framework, we analyze the early stages of competition in the online securities industry in Japan. We found that when a Dominant Perception created in the industry is strengthened
... y the action between companies, the strategy of a successful company is not imitated for several years and consequently that an expansion in differentiation between companies may occur. Key words online securities industry internet business innovation dynamic capability-based view of the firm action system theory 21COE, University of Tokyo MMRC Discussion Paper No. 101 Takai Capability-Based View of the Firm, which focuses on researching the dynamic process (e.g., based on this approach is still developing and there is a lack of available reference material. In this situation, Noda and Collis (2001) attempted to build a universal framework to analyze the dynamic process. In their research, they showed a thorough framework, focusing on the strength of three forces: 1. Initial Conditions, which generate the seeds of differentiation among companies; 2. Divergence Forces, which extend the differentiation; 3. Convergence Forces, which counter differentiation and; Sustainability Conditions that prevent convergence and sustain differentiation. The researchers also studied the correlation of these components, in an attempt to build a strategic theory about the evolution of differentiation between companies in the same industry.