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Politics, strong institution and competitive advantage: An examiniation of organizational aspiration for competition

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Authors
Song, Inseong; Bae, Jonghoon
Issue Date
2016-12
Publisher
SPRINGER
Citation
Computational and Mathematical Organization Theory, Vol.22 No.4, pp. 412-443
Keywords
Politics, strong institution and competitive advantage: An examiniation of organizational aspiration for competition복합학Organizational aspirationCompetitive advantageInstitutionalism
Abstract
This study seeks to elucidate the interplay of interfirm rivalry and aspiration formation. Organizational aspiration serves as a categorical judgment over a desirable level of organizational performance. While aspiration as a driver of collective decision-making inside the firm is well recognized, our understanding is still limited as to the competitive consequence of aspiration-induced actions. From a computational model of aspiration-induced R&D, where competition is biased towards the status quo, this study suggests that although radical innovation calls for flexibility and diversity inside the firm, aspiration-induced action favors consensus such as a firm with machine bureaucracy either (1) in a market where a majority of consumers are unable to discern a small quality improvement, i.e., demand difficult to satisfy or (2) in a market where competitive advantage dissipates quickly, i.e., an unstable environment. In particular, this study shows that: (1) the level of organizational aspiration has little to do with the sustainability of competitive advantage; (2) aspiration strength—i.e., the extent of consensus among decision makers of the firm as to a legitimate level of organizational aspiration—interacts with the change in competitive advantage. The leading firm is likely to lose its competitive advantage when a follower has a stronger aspiration than the leader in a market whose demand is difficult to satisfy; and (3) the effect of aspiration strength on the sustainability of competitive advantage increases whenever organizational assets depreciate over time.
ISSN
1381-298X
Language
English
URI
http://hdl.handle.net/10371/116881
DOI
https://doi.org/10.1007/s10588-015-9206-9
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College of Business Administration/Business School (경영대학/대학원)Graduate School of Business (경영전문대학원)Journal Papers (저널논문_경영전문대학원)
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