Status games in Wine industry .pdf

Technological disruption may give a fi rm advantage

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Technological disruption may give a fi rm advantage for a time, but this advantage dissipates as the market returns to stasis. In a traditional game, fi rms pursue pro fi t and advance competitive strategies, while customers determine winners and losers according to a market-based logic. Our analysis suggests that market-driving fi rms competing through social in uence play a very different competitive game. Firms and consumers are part of a system of interdependent actors. When consumers are open to in uence, fi rms create a vision and engineer the system to shape consumer tastes. Resources ow through this system according to existing re- lationships, and fi rms create social consensus about value by building both formal and informal alliances with in uential actors. Competition becomes a continual effort to build re- lationships, use those relationships to gain consensus, and shift the ow of resources to favor one fi rm over others. Doing so is a competitive but deeply cooperative effort. Cooperating with others can serve to both signify status and further enhance it through norms of reciprocity. For some fi rms, this competitive game is unfamiliar, un- clear, or poorly understood, so these fi rms continue to rely on a market-based logic, sometimes developing products on the basis of apparently objective criteria, such as product quality. Even those that play a status game with a market-driving strategy can be puzzled by the outcomes. For example, one executive told us, Sometimes we all scratch our heads. We don t know. Well, why is it so popular? Is it the consumer? Is it a gatekeeper? Is it execution? What s really driving it? And we don t always know the answer. For these fi rms, understanding the critical relationship between actions and outcome is dif fi cult, so achieving success is challenging. By embracing a market- driving view of competition, fi rms gain needed insight into the consequences of their actions, a basis for creating more effective strategies, and new avenues for creating competitive advantage. New Sources of Advantage The prevailing view of competitive advantage focuses on in- dustry and fi rm characteristics. Firms gain advantage when potential entrants face entry barriers, reducing the threat of new competition. Within an industry, a fi rm gains advantage over existing rivals when it possesses unique resources (Besanko, Dranove, and Shanley 1996). The resource-based view of competitive advantage suggests that unique resources can yield competitive advantage when they are valuable, rare, imperfectly imitable, and nonsubstitutable. Competitive advantage thus arises from assets within the fi rm, such as patents or rare managerial talent. If a resource is widely available, it loses its FIGURE 2 A Market-Driving Approach for Changing Customer and Producer Behavior Through Social In uence and Status Develop Vision Shape Producer Behavior Enhance Status Ally with Critics and the Press Celebrate Artist and Magician Perform Retail Theater Increase Demand
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