Resource similarity and market commonality are receiving increased attention in the strategic management literature. In this thesis, I attempt to explore how the firm¡¦s characteristics and the resource similarity between two firms affect the tendency of firm¡¦s action. And follow this with a discussion of the necessity to put the resource similarity into consideration when we analyze the firm¡¦s action tendency from the aspect of market commonality. The thesis focuses on the competitive interaction in Taiwan domestic automobile industry between 1991 and 1996. In the concluding section, I explore the implication of each hypothesis under the empirical evidences.

Multimarket competition has become a substantial part of the modern economy. As such, it has drawn the attention of academics in both economics and strategy fields. Many studies have found empirical evidence of mutual forbearance in several industries, but despite its importance, its behavioral roots have not been explored. In my dissertation I integrate the reality of boundedly-rational decision makers into the mutual forbearance hypothesis. I apply an outgrowth of the behavioral theory of the firm – the shifting focus model of risk taking – to the study of competitive behavior. I propose a behavioral model of multimarket competition that focuses on corporate strategic decisions - market entry and exit decisions, regardless of entry mode (e.g. acquisitions) or exit mode (e.g. divestitures). This approach provides a granular view of changes in the business scope of the firms in terms of product and geographic markets served. I test my hypotheses in the U.S. property liability insurance industry over a 12-year period (1998-2008). I argue that firms follow the mutual forbearance logic as long as their performance goals are satisfied. However, under conditions of adversity, firms shift attention to recovering from the performance shortfall and their actions deviate from the mutual forbearance predictions. This dissertation shows that underperforming firms with abundant slack take longer to forbear, and underperforming firms with limited slack start forbearing sooner, as predicted. By bridging behavioral and competitive perspectives to the study of market entry and exit decisions, I underscore the value of cross-fertilization in strategy research.

Multimarket competition has become a substantial part of the modern economy. As such, it has drawn the attention of academics in both economics and strategy fields. Many studies have found empirical evidence of mutual forbearance in several industries, but despite its importance, its behavioral roots have not been explored. In my dissertation I integrate the reality of boundedly-rational decision makers into the mutual forbearance hypothesis. I apply an outgrowth of the behavioral theory of the firm – the shifting focus model of risk taking – to the study of competitive behavior. I propose a behavioral model of multimarket competition that focuses on corporate strategic decisions - market entry and exit decisions, regardless of entry mode (e.g. acquisitions) or exit mode (e.g. divestitures). This approach provides a granular view of changes in the business scope of the firms in terms of product and geographic markets served. I test my hypotheses in the U.S. property liability insurance industry over a 12-year period (1998-2008). I argue that firms follow the mutual forbearance logic as long as their performance goals are satisfied. However, under conditions of adversity, firms shift attention to recovering from the performance shortfall and their actions deviate from the mutual forbearance predictions. This dissertation shows that underperforming firms with abundant slack take longer to forbear, and underperforming firms with limited slack start forbearing sooner, as predicted. By bridging behavioral and competitive perspectives to the study of market entry and exit decisions, I underscore the value of cross-fertilization in strategy research.

Il lavoro analizza gli effetti della multimarket competition sulle principali undici aziende multinazionali operanti nel fashion retailing, e approfondisce l’analisi del posizionamento strategico che le imprese scelgono in ciascun mercato. L’analisi empirica mostra che, per le aziende che si confrontano su diversi mercati comuni, il grado di market commonality con i concorrenti è negativamente associato alla redditività a livello di gruppo. Inoltre, i risultati mostrano che le imprese differenziano il posizionamento sulla base dell’ importanza strategica del mercato: minore risulta essere l’importanza strategica, maggiore è il markup applicato. Le imprese tendono quindi a ricercare, nei mercati strategicamente poco rilevanti, un posizionamento più alto, che giustifichi un markup più elevato rispetto al posizionamento ottenuto a livello globale. Inoltre, la dimensione del mercato influisce sull’effetto che le scelte di posizionamento generano sulla redditività locale. Nello specifico lo studio mostra che: (a) nei mercati grandi la redditività maggiore è associata ad aziende che registrano simultaneamente quote di mercato elevate e livelli di markup maggiori; (b) nei mercati piccoli la redditività maggiore è basata alternativamente sulla ricerca di quote di mercato maggiori o di un prezzo più alto (elevato markup). / This study investigates the outcomes of multimarket competition using data on the top eleven global fashion retailers, and deepens the analysis of the strategic positioning that firms choose in each foreign market where they operate. Empirical results suggest that the level of international market commonality with direct competitors is negatively related to their corporate financial performance. Moreover, focusing on the strategies of the single local units, the results of the analysis show that firms do not choose the same positioning in all their international markets, but they rather differentiate their positioning. In markets that constitute a small fraction of a firm’s total export, fashion retailers tend to skim the market commanding fairly higher price compared with their average global pricing level. Furthermore, market size also has influence on strategic positioning and on the relationship between strategic positioning and financial performance. Specifically, this study shows that: (a) in large markets, the winning strategy requires both a high market share and a high pricing; (b) in small markets, winning strategies can be based either on large market share or on high pricing.