Playing dirty or building capability? Corruption and HR training as competitive actions to threats from informal and foreign firm rivals

Akie Iriyama, Rajiv Kishore, Debabrata Talukdar

Research output: Contribution to journalArticle

24 Citations (Scopus)

Abstract

Research summary: We examine why a firm takes specific competitive action in nonmarket and resource-market spaces, particularly when it perceives threats from informal and foreign competitor groups, respectively. We address this question by combining insights from competitive rivalry, strategic groups, and nonmarket strategy literatures in an emerging economy context. Specifically, we theorize how threats from informal and foreign rival firms in an emerging market influence a firm's engagement in corruption activities and its investments in HR training, respectively. We also argue that the likelihoods of such focal firm actions against competitor group threats differ, contingent on the focal firm's market and resource profiles. Results from the empirical analyses, with survey data from the Indian IT industry, provide broad support to our hypotheses. Managerial summary: Based on a World Bank dataset on the Indian IT industry, this study finds that corruption and HR training are pursued by firms in emerging economies as mindful strategies against specific types of rivals-informal and foreign firm rivals, respectively, and are not pursued simply as culturally-based practices. Multinational companies may need to understand that domestic firms in emerging countries will engage in corruption strategically to reduce their costs and time to market of their products/services. Therefore, multinational firms may need to devise suitable strategies other than corruption to reduce their costs and time to market if they wish to compete with firms in emerging economies for customers who don't care about ethical issues and will buy a cheaper product/service that is delivered quickly.

Original languageEnglish
JournalStrategic Management Journal
DOIs
Publication statusAccepted/In press - 2016

Fingerprint

Threat
Corruption
Foreign firms
Emerging economies
Competitors
Costs
Resources
IT industry
Time to market
Multinational firms
Ethical issues
Survey data
Industry studies
Domestic firms
Emerging countries
World Bank
Strategic groups
Multinational companies
Competitive rivalry
Emerging markets

Keywords

  • Competitive actions
  • Competitive rivalry
  • Corruption
  • Emerging markets
  • Foreign firms
  • Human resource training
  • Informal sector
  • Strategic groups

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

Cite this

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abstract = "Research summary: We examine why a firm takes specific competitive action in nonmarket and resource-market spaces, particularly when it perceives threats from informal and foreign competitor groups, respectively. We address this question by combining insights from competitive rivalry, strategic groups, and nonmarket strategy literatures in an emerging economy context. Specifically, we theorize how threats from informal and foreign rival firms in an emerging market influence a firm's engagement in corruption activities and its investments in HR training, respectively. We also argue that the likelihoods of such focal firm actions against competitor group threats differ, contingent on the focal firm's market and resource profiles. Results from the empirical analyses, with survey data from the Indian IT industry, provide broad support to our hypotheses. Managerial summary: Based on a World Bank dataset on the Indian IT industry, this study finds that corruption and HR training are pursued by firms in emerging economies as mindful strategies against specific types of rivals-informal and foreign firm rivals, respectively, and are not pursued simply as culturally-based practices. Multinational companies may need to understand that domestic firms in emerging countries will engage in corruption strategically to reduce their costs and time to market of their products/services. Therefore, multinational firms may need to devise suitable strategies other than corruption to reduce their costs and time to market if they wish to compete with firms in emerging economies for customers who don't care about ethical issues and will buy a cheaper product/service that is delivered quickly.",
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author = "Akie Iriyama and Rajiv Kishore and Debabrata Talukdar",
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AU - Kishore, Rajiv

AU - Talukdar, Debabrata

PY - 2016

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N2 - Research summary: We examine why a firm takes specific competitive action in nonmarket and resource-market spaces, particularly when it perceives threats from informal and foreign competitor groups, respectively. We address this question by combining insights from competitive rivalry, strategic groups, and nonmarket strategy literatures in an emerging economy context. Specifically, we theorize how threats from informal and foreign rival firms in an emerging market influence a firm's engagement in corruption activities and its investments in HR training, respectively. We also argue that the likelihoods of such focal firm actions against competitor group threats differ, contingent on the focal firm's market and resource profiles. Results from the empirical analyses, with survey data from the Indian IT industry, provide broad support to our hypotheses. Managerial summary: Based on a World Bank dataset on the Indian IT industry, this study finds that corruption and HR training are pursued by firms in emerging economies as mindful strategies against specific types of rivals-informal and foreign firm rivals, respectively, and are not pursued simply as culturally-based practices. Multinational companies may need to understand that domestic firms in emerging countries will engage in corruption strategically to reduce their costs and time to market of their products/services. Therefore, multinational firms may need to devise suitable strategies other than corruption to reduce their costs and time to market if they wish to compete with firms in emerging economies for customers who don't care about ethical issues and will buy a cheaper product/service that is delivered quickly.

AB - Research summary: We examine why a firm takes specific competitive action in nonmarket and resource-market spaces, particularly when it perceives threats from informal and foreign competitor groups, respectively. We address this question by combining insights from competitive rivalry, strategic groups, and nonmarket strategy literatures in an emerging economy context. Specifically, we theorize how threats from informal and foreign rival firms in an emerging market influence a firm's engagement in corruption activities and its investments in HR training, respectively. We also argue that the likelihoods of such focal firm actions against competitor group threats differ, contingent on the focal firm's market and resource profiles. Results from the empirical analyses, with survey data from the Indian IT industry, provide broad support to our hypotheses. Managerial summary: Based on a World Bank dataset on the Indian IT industry, this study finds that corruption and HR training are pursued by firms in emerging economies as mindful strategies against specific types of rivals-informal and foreign firm rivals, respectively, and are not pursued simply as culturally-based practices. Multinational companies may need to understand that domestic firms in emerging countries will engage in corruption strategically to reduce their costs and time to market of their products/services. Therefore, multinational firms may need to devise suitable strategies other than corruption to reduce their costs and time to market if they wish to compete with firms in emerging economies for customers who don't care about ethical issues and will buy a cheaper product/service that is delivered quickly.

KW - Competitive actions

KW - Competitive rivalry

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KW - Emerging markets

KW - Foreign firms

KW - Human resource training

KW - Informal sector

KW - Strategic groups

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