Abstract
There are two forms of competition relevant to strategists. Static competition, which receives the bulk of attention, utilizes traditional industrial organization (IO) economics and game theory to link industry structure, firm behaviour and profits. While conditions exhibiting positive profits are a win for strategists (Porter’s five forces), they are a loss for society (inefficient resource allocation) and are relatively rare (<4 % of firms). The more prevalent form (>52 % of firms) is dynamic or innovation competition (Porter’s diamond). This dynamic competition occurs in structures which otherwise appear perfectly competitive. Moreover, it provides a win-win for firms (higher market value) as well as society (economic growth).
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Knott, A.M. (2016). Competition. In: Augier, M., Teece, D. (eds) The Palgrave Encyclopedia of Strategic Management. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-94848-2_464-1
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DOI: https://doi.org/10.1057/978-1-349-94848-2_464-1
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