Competitor-oriented Objectives: The Myth of Market Share

Kesten Charles Green () and J. Scott Armstrong ()

No 17/05, Monash Econometrics and Business Statistics Working Papers from Monash University, Department of Econometrics and Business Statistics

Abstract: Competitor-oriented objectives, such as market-share targets, are promoted by academics and are common in business. A 1996 review of the evidence indicated that this violation of economic theory led to reduced profitability. We summarize the evidence as of 1996 then describe evidence from 12 new studies. All of the evidence supports the conclusion that competitor-oriented objectives are harmful. However, this evidence has had only a modest impact on academic research and it seems to be largely ignored by managers. Until this situation changes, we expect that many firms will continue to use competitor-oriented objectives to the detriment of their profitability.

Keywords: Competition; Market Share; Objectives; Profitability. (search for similar items in EconPapers)
JEL-codes: L21 M21 M31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-mkt
Date: Written 2005-07
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