Strategic competition

Strategic competition is a commitment within an organization or polity to make a very large change in competitive relationships. One of the main principles of strategic competition is that the response of an organization regarding another one's introduction of a new product defines the impact of such in the market. This type of competition has proven itself useful when trying to explain a firm's executive compensation schemes, leading to time compensation.^[1]^[2]

Within a market where strategic competition is present, investment provides a much bigger capability of taking advantage of future opportunities of growth which also implies obtaining a greater market share. If such interaction between rivals is efficiently used, even all actors of the industry in which strategic competition was applied may be compensated on their profits. This is implemented either by putting entry barriers to new competitors or to dissuading others from 'making space' for stronger ones.^[3]^[4]

Also, the application of strategic competition may lead to outsourcing activities used by rival firms involved in the process.^[5]

^ Stern, Carl; Deimler, Michael (2006). The Boston Consulting Group on Strategy. New Jersey, USA: John Wiley & Sons, Inc. pp. 2–7. ISBN 978-0-471-75722-1.
^ Chen, Sheng-Syan; Ho, Kim Wai; Ik, Kueh Hwa; Lee, Cheng-few (2002-01-01). "How Does Strategic Competition Affect Firm Values? A Study of New Product Announcements". Financial Management. 31 (2): 67–84. doi:10.2307/3666223. JSTOR 3666223.
^ Boyer, Marcel; Gravel, Éric; Lasserre, Pierre (May 2004). "Real Options and Strategic Competition: A survey" (PDF). Real Options. Retrieved 9 May 2017.
^ Aggarwal, Rajesh K.; Samwick, Andrew A. (1999). "Executive Compensation, Strategic Competition, and Relative Performance Evaluation: Theory and Evidence" (PDF). Journal of Finance. 54 (6): 1999–2043. doi:10.1111/0022-1082.00180. S2CID 154817522.
^ Chen, Yutian; Dubey, Pradeep; Sen, Debapriya (2011). "Outsourcing Induced by Strategic Competition". International Journal of Industrial Organization. 29 (4): 484–492. CiteSeerX 10.1.1.531.695. doi:10.1016/j.ijindorg.2010.10.001. S2CID 13409054.

[:0-1] Stern, Carl; Deimler, Michael (2006). The Boston Consulting Group on Strategy. New Jersey, USA: John Wiley & Sons, Inc. pp. 2–7. ISBN 978-0-471-75722-1.

[2] Chen, Sheng-Syan; Ho, Kim Wai; Ik, Kueh Hwa; Lee, Cheng-few (2002-01-01). "How Does Strategic Competition Affect Firm Values? A Study of New Product Announcements". Financial Management. 31 (2): 67–84. doi:10.2307/3666223. JSTOR 3666223.

[3] Boyer, Marcel; Gravel, Éric; Lasserre, Pierre (May 2004). "Real Options and Strategic Competition: A survey" (PDF). Real Options. Retrieved 9 May 2017.

[4] Aggarwal, Rajesh K.; Samwick, Andrew A. (1999). "Executive Compensation, Strategic Competition, and Relative Performance Evaluation: Theory and Evidence" (PDF). Journal of Finance. 54 (6): 1999–2043. doi:10.1111/0022-1082.00180. S2CID 154817522.

[5] Chen, Yutian; Dubey, Pradeep; Sen, Debapriya (2011). "Outsourcing Induced by Strategic Competition". International Journal of Industrial Organization. 29 (4): 484–492. CiteSeerX 10.1.1.531.695. doi:10.1016/j.ijindorg.2010.10.001. S2CID 13409054.

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