When should firms watch for cross‐industry competition? A demand‐side perspective
Year: 2025
Type: article
Abstract: Research Summary Research on competitor identification has primarily focused on intra‐industry competition. However, cross‐industry competitive threats are prevalent and consequential. We adopt a consumer‐oriented perspective to examine how consumer perceptions shape de facto competition across industry boundaries. Drawing from social cognition theories, we introduce two mechanisms—cultural embeddedness and social salience—that lead consumers to perceive products in an emerging industry as viable substitutes for those in an established industry, thereby intensifying competitive pressures on established firms. We further hypothesize that the impact of these mechanisms varies across heterogeneous customer groups, specifically with respect to income, education, and immigration status. Event history analyses of Illinois movie theater failures during television's rise in 1944–1962 support our theorizing. Managerial Summary Identifying competitors can be a complex managerial task. While it often suffices to monitor only within‐industry competitors, unexpected cross‐industry rivals selling seemingly different products can create competitive blind spots. To identify cross‐industry competitive threats, we propose a demand‐based view to complement managerial perceptions: Do your customers view your offerings as interchangeable with emerging products? We find that when an emerging industry's products embody cultural elements borrowed from the established industry's offerings or resonate better with public discourse, customers are likely to perceive substitutability and switch to the emerging products. However, this tendency varies among customers with different profiles, making it essential to recognize which customer segments are more vulnerable when facing cross‐industry competition.
Source: Strategic Management Journal
DOI: 10.1002/smj.70034
Authors: Ying Li, Samira Reis, Olga M. Khessina
Language: English
Subfield: Marketing
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $4,250
OpenAlex ID: W4416411379