IDEAS home Printed from https://ideas.repec.org/p/msh/ebswps/2005-17.html
   My bibliography  Save this paper

Competitor-oriented Objectives: The Myth of Market Share

Author

Listed:
  • Kesten C. Green
  • J. Scott Armstrong

Abstract

Competitor-oriented objectives, such as market-share targets, are promoted by academics and are common in business. A 1996 review of the evidence indicated that this violation of economic theory led to reduced profitability. We summarize the evidence as of 1996 then describe evidence from 12 new studies. All of the evidence supports the conclusion that competitor-oriented objectives are harmful. However, this evidence has had only a modest impact on academic research and it seems to be largely ignored by managers. Until this situation changes, we expect that many firms will continue to use competitor-oriented objectives to the detriment of their profitability.

Suggested Citation

  • Kesten C. Green & J. Scott Armstrong, 2005. "Competitor-oriented Objectives: The Myth of Market Share," Monash Econometrics and Business Statistics Working Papers 17/05, Monash University, Department of Econometrics and Business Statistics.
    • Handle: RePEc:msh:ebswps:2005-17
    as

    Download full text from publisher

    File URL: http://www.buseco.monash.edu.au/ebs/pubs/wpapers/2005/wp17-05.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Charles Abramson & Imran S. Currim & Rakesh Sarin, 2005. "An Experimental Investigation of the Impact of Information on Competitive Decision Making," Management Science, INFORMS, vol. 51(2), pages 195-207, February.
    2. JS Armstrong & Fred Collopy, 2004. "Effects of Objectives and Information on Managerial Decisions and Profitability," General Economics and Teaching 0412014, University Library of Munich, Germany.
    3. Buzzell, Robert D., 2004. "The PIMS program of strategy research: A retrospective appraisal," Journal of Business Research, Elsevier, vol. 57(5), pages 478-483, May.
    4. Antonio‐Rafael Ramos‐Rodríguez & José Ruíz‐Navarro, 2004. "Changes in the intellectual structure of strategic management research: a bibliometric study of the Strategic Management Journal, 1980–2000," Strategic Management Journal, Wiley Blackwell, vol. 25(10), pages 981-1004, October.
    5. Armstrong, J. Scott & Brodie, Roderick J., 1994. "Effects of portfolio planning methods on decision making: experimental results," MPRA Paper 81684, University Library of Munich, Germany.
    6. Alvin Scodel & J. Sayer Minas & Philburn Ratoosh & Milton Lipetz, 1959. "Some descriptive aspects of two-person non-zero-sum games," Journal of Conflict Resolution, Peace Science Society (International), vol. 3(2), pages 114-119, June.
    7. JS Armstrong & Raymond Hubbard, 2005. "Does the Need for Agreement Among Reviewers Inhibit the Publication of Controversial Findings?," General Economics and Teaching 0502052, University Library of Munich, Germany.
    8. Mueller, Dennis C., 1992. "The corporation and the economist," International Journal of Industrial Organization, Elsevier, vol. 10(2), pages 147-170, June.
    9. Marvin B. Lieberman, 1987. "The learning curve, diffusion, and competitive strategy," Strategic Management Journal, Wiley Blackwell, vol. 8(5), pages 441-452, September.
    10. Anterasian, Cathy & Graham, John L., 1989. "When it's good management to sacrifice market share," Journal of Business Research, Elsevier, vol. 19(3), pages 187-213, November.
    11. JS Armstrong, 2004. "Peer Review for Journals: Evidence on Quality Control, Fairness, and Innovation," General Economics and Teaching 0412027, University Library of Munich, Germany.
    12. Arnett, Dennis B. & Hunt, Shelby D., 2002. "Competitive Irrationality: The Influence of Moral Philosophy," Business Ethics Quarterly, Cambridge University Press, vol. 12(3), pages 279-303, July.
    13. Morton Deutsch, 1958. "Trust and suspicion," Journal of Conflict Resolution, Peace Science Society (International), vol. 2(4), pages 265-279, December.
    14. John Dawes, 2000. "Market Orientation and Company Profitability: Further Evidence Incorporating Longitudinal Data," Australian Journal of Management, Australian School of Business, vol. 25(2), pages 173-199, September.
    15. Armstrong, J. Scott & Collopy, Fred, 1996. "Competitor Orientation: Effects of Objectives and Information on Managerial Decisions and Profitability," MPRA Paper 81676, University Library of Munich, Germany.
    16. Ulf G. Marks & Sönke Albers, 2001. "Experiments In Competitive Product Positioning : Actual Behavior Compared To Nash Solutions," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 53(3), pages 150-174, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Neil Bendle & Mark Vandenbosch, 2014. "Competitor Orientation and the Evolution of Business Markets," Marketing Science, INFORMS, vol. 33(6), pages 781-795, November.
    2. de Villiers, Rouxelle & Woodside, Arch G. & Marshall, Roger, 2016. "Making tough decisions competently: Assessing the value of product portfolio planning methods, devil’s advocacy, group discussion, weighting priorities, and evidenced-based information," Journal of Business Research, Elsevier, vol. 69(8), pages 2849-2862.
    3. Woodside, Arch G., 2012. "Incompetency training: Theory, practice, and remedies," Journal of Business Research, Elsevier, vol. 65(3), pages 279-293.
    4. Engelbert J. Dockner & Steffen Jørgensen, 2018. "Strategic Rivalry for Market Share: A Contest Theory Approach to Dynamic Advertising Competition," Dynamic Games and Applications, Springer, vol. 8(3), pages 468-489, September.
    5. Gerasimos T. Soldatos, 2021. "A model of market competition as a prize contest or a model of strife for market domination," SN Business & Economics, Springer, vol. 1(1), pages 1-9, January.
    6. repec:hal:pseose:halshs-00825217 is not listed on IDEAS
    7. Snyder, Ralph D. & Ord, J. Keith & Koehler, Anne B. & McLaren, Keith R. & Beaumont, Adrian N., 2017. "Forecasting compositional time series: A state space approach," International Journal of Forecasting, Elsevier, vol. 33(2), pages 502-512.
    8. Josep M. Argilés-Bosch & Josep Garcia-Blandón & Diego Ravenda & Mónica Martínez-Blasco, 2018. "An empirical analysis of the curvilinear relationship between slack and firm performance," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 29(3), pages 361-397, December.
    9. Brokesova, Zuzana & Deck, Cary & Peliova, Jana, 2014. "Experimenting with purchase history based price discrimination," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 229-237.
    10. Chong, Josephine L.L, 2010. "Evaluating the impact of Arnould and Wallendorf's (1994) market-oriented ethnography," Journal of Business Research, Elsevier, vol. 63(12), pages 1295-1300, December.
    11. Torsten J. Gerpott & Jan Berends, 2022. "Competitive pricing on online markets: a literature review," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(6), pages 596-622, December.
    12. Mai, Nhat Chi, 2022. "Strategic Management," OSF Preprints vauxf, Center for Open Science.
    13. J. Scott Armstrong & Philippe Jacquart, 2013. "The Ombudsman: Is the Evidence Sufficient to Take Action on Executive Pay? Reply to Commentators," Interfaces, INFORMS, vol. 43(6), pages 602-604, December.
    14. , 2024. "Effect of Marketing Strategies on the Performance of Agribusinesses in North-Central, Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(1), pages 993-1024, January.
    15. Hanno Drews, 2008. "Abschied vom Marktwachstums-Marktanteils-Portfolio nach über 35 Jahren Einsatz? Eine kritische Überprüfung der BCG-Matrix," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 19(1), pages 39-57, May.
    16. Nippa, Michael, 2011. "Zur Notwendigkeit des Corporate Portfolio Management: Eine Würdigung der wissenschaftlichen Forschung der letzten vier Jahrzehnte," Freiberg Working Papers 2011/02, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
    17. Mohamed Dahir Mohamed & Halima Hassan Mohamed & Abdiqathar Ahmed Jama & Christine Achot & Halima Abdi Dibit & Peterson Obara Magutu & Richard Bitange Nyaoga, 2019. "Information Systems Outsourcing Drivers And Service Delivery Of Commercial Banks In Kenya," Noble International Journal of Business and Management Research, Noble Academic Publsiher, vol. 3(1), pages 10-24, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Armstrong, J. Scott & Collopy, Fred, 1996. "Competitor Orientation: Effects of Objectives and Information on Managerial Decisions and Profitability," MPRA Paper 81676, University Library of Munich, Germany.
    2. JS Armstrong & Fred Collopy, 2004. "Effects of Objectives and Information on Managerial Decisions and Profitability," General Economics and Teaching 0412014, University Library of Munich, Germany.
    3. Lance Brouthers & Dana-Nicoleta Lascu & Steve Werner, 2008. "Competitive Irrationality in Transitional Economies: Are Communist Managers Less Irrational?," Journal of Business Ethics, Springer, vol. 83(3), pages 397-408, December.
    4. Woodside, Arch G., 2012. "Incompetency training: Theory, practice, and remedies," Journal of Business Research, Elsevier, vol. 65(3), pages 279-293.
    5. Hinterhuber, Andreas & Kienzler, Mario & Liozu, Stephan, 2021. "New product pricing in business markets: The role of psychological traits," Journal of Business Research, Elsevier, vol. 133(C), pages 231-241.
    6. Graf, Lorenz & König, Andreas & Enders, Albrecht & Hungenberg, Harald, 2012. "Debiasing competitive irrationality: How managers can be prevented from trading off absolute for relative profit," European Management Journal, Elsevier, vol. 30(4), pages 386-403.
    7. Robert Meyer & Joachim Vosgerau & Vishal Singh & Joel Urbany & Gal Zauberman & Michael Norton & Tony Cui & Brian Ratchford & Alessandro Acquisti & David Bell & Barbara Kahn, 2010. "Behavioral research and empirical modeling of marketing channels: Implications for both fields and a call for future research," Marketing Letters, Springer, vol. 21(3), pages 301-315, September.
    8. de Villiers, Rouxelle & Woodside, Arch G. & Marshall, Roger, 2016. "Making tough decisions competently: Assessing the value of product portfolio planning methods, devil’s advocacy, group discussion, weighting priorities, and evidenced-based information," Journal of Business Research, Elsevier, vol. 69(8), pages 2849-2862.
    9. Lorenz Graf-Vlachy, 2019. "Like student like manager? Using student subjects in managerial debiasing research," Review of Managerial Science, Springer, vol. 13(2), pages 347-376, April.
    10. S. Phineas Upham & Lori Rosenkopf & Lyle H. Ungar, 2010. "Positioning knowledge: schools of thought and new knowledge creation," Scientometrics, Springer;Akadémiai Kiadó, vol. 83(2), pages 555-581, May.
    11. Neil Bendle & Mark Vandenbosch, 2014. "Competitor Orientation and the Evolution of Business Markets," Marketing Science, INFORMS, vol. 33(6), pages 781-795, November.
    12. Armstrong, J. Scott, 2003. "Discovery and communication of important marketing findings: Evidence and proposals," Journal of Business Research, Elsevier, vol. 56(1), pages 69-84, January.
    13. Roger Marshall & David Bibby & Na WoonBong, 2013. "Making Sense of Complex Marketing Decision Systems: Decision System Analysis," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 12(2), pages 121-130, December.
    14. Yanto Chandra, 2018. "Mapping the evolution of entrepreneurship as a field of research (1990–2013): A scientometric analysis," PLOS ONE, Public Library of Science, vol. 13(1), pages 1-24, January.
    15. Yadong Luo & Huan Zhang & Juan Bu, 2019. "Developed country MNEs investing in developing economies: Progress and prospect," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 633-667, June.
    16. Natarajan Balasubramanian & Marvin B. Lieberman, 2010. "Industry learning environments and the heterogeneity of firm performance," Strategic Management Journal, Wiley Blackwell, vol. 31(4), pages 390-412, April.
    17. Tamilina, Larysa, 2012. "Characteristics of social policies and social trust," MPRA Paper 96517, University Library of Munich, Germany.
    18. Cristina López-Duarte & Jane F. Maley & Marta M. Vidal-Suárez, 2021. "Main challenges to international student mobility in the European arena," Scientometrics, Springer;Akadémiai Kiadó, vol. 126(11), pages 8957-8980, November.
    19. Rogerio S. Victer, 2020. "Connectivity knowledge and the degree of structural formalization: a contribution to a contingency theory of organizational capability," Journal of Organization Design, Springer;Organizational Design Community, vol. 9(1), pages 1-22, December.
    20. Claudine Gartenberg & Julie Wulf, 2017. "Pay Harmony? Social Comparison and Performance Compensation in Multibusiness Firms," Organization Science, INFORMS, vol. 28(1), pages 39-55, February.

    More about this item

    Keywords

    Competition; Market Share; Objectives; Profitability.;
    All these keywords.

    JEL classification:

    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:msh:ebswps:2005-17. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Professor Xibin Zhang (email available below). General contact details of provider: https://edirc.repec.org/data/dxmonau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.