¿What is a direct competitor? An empirical study to corroborate the perception of direct competence based on three factors

Abstract

The present study poses the hypothesis that the perception of direct competition by a strategic business unit leader (SBU) depends on three variables: similarity of product offered, similarity of targeted market and similarity of strategic capabilities in the competing companies. It is proposed that the decision of who is the competition depends more on the managers’ perception than on an objective rule.

These three variables are initially detected through a qualitative study where SBU leaders were interviewed, which was later substantiated with a related literature search. The relation among these three variables and the perception of direct competition is corroborated through an empirical test where questionnaires were applied to SBU leaders as well, and served to measure the relation between such variables. The present study frameworks the notion of cognitive strategic groups starting from the idea that its members would tend to perceive each other as direct competitors, and that this perception of direct competition could be used as a factor to construe such groups.

The results suggest that the perception of direct competition does depend on each of the three similarity variables. A statistical analysis of two kinds was undertaken, the first one based on correlations taking the direct competition perception as an ordinal variable. A second analysis used Chi-squared and contingency tables with a dichotomic dependent variable: the most direct competition versus the least direct competition.