Red Queen theory (Barnett and Hansen 1996; Barnett and Burgelman 1996; Barnett and McKendrick 2004; Barnett and Pontikes 2004 and 2008; Derfus et al. 2008) posits that firm rivalry is an evergoing progress, where reciprocal learning–development action dyads affect the whole industry. However, Red Queen theory has largely omitted the impact of the wider business environment and has left unanswered questions about the effects of contextual forces on Red Queen competition. Hence, in this study, a historical case study perspective is employed to examine Red Queen competition and its effects on market share variation of Finnish grocery trade companies between 1985 and 2005. This study explores Red Queen competition in a business environment setting that represents a food retailing ecosystem, specifically describing how evolving context affects firm rivalry and firm performance. Assuming that organizational performance is a process, an outcome of action and dynamism in the market, this study reconstructs five different development paths and shows the interlinkages between them, describing the causal complexity behind firm performance generating processes. In particular, this study identifies a wider infrastructure for processes contributing to firm performance. The study expands the previous research by showing how firm performance is created by internal development, external market behavior, and is affected by the events and development in the contextual political, macro- and microeconomic environment as well as technological and social factors in the wider environment. In addition, this research identifies and explains the multiplicity of bifurgative performance development by showing how competition is dispersed into different managerial arenas (Teulings 1985; Tainio et al. 1983 and 1984). This study argues that the variation in market shares was an outcome of improving the competitive position by developing customer preferences and customer loyalty, and gaining technical, operational and/or institutional superiority. Market share increase or decrease was an outcome of a layered spectrum of events, the combined effect of a number of phenomena in changing causal chains. Companies focused on the continuous improvement of their own capabilities and their own activity by internal development efforts. In addition, there was action, which was targeted at transforming the external structures of the competitive field, in order to modify the operating framework conditions favorable to the focal company. Besides company initiated competitive action there were also significant external environmental changes, which the company itself had a limited possibility to influence, and which could appear on the horizon at short notice. Such external forces, however, had a major impact on companies' market share development and thus on their future efficiency.
|Translated title of the contribution||Explaining variance in market shares in the Finnish grocery trade 1985-2005|
|Publication status||Published - 2015|
|MoE publication type||G4 Doctoral dissertation (monograph)|
- Red Queen