Politics, strong institution and competitive advantage: an examination of organizational aspiration for competition

Inseong Song () and Jonghoon Bae ()
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Inseong Song: Seoul National University
Jonghoon Bae: Seoul National University

Computational and Mathematical Organization Theory, 2016, vol. 22, issue 4, No 2, 412-443

Abstract: 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.

Keywords: Organizational aspiration; Competitive advantage; Institutionalism (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s10588-015-9206-9

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