Interfirm Relational Rivalry: Implications for Competitive Strategy

In this article I seek to apply findings from recent research on rivalry relationships to firm-level competitive strategy. I integrate microlevel and macrolevel theory in arguing that certain pairs of firms can, over time, develop rivalry relationships much like those between athletic teams or universities. In turn, these rivalry relationships can drive firms’ competitive behavior above and beyond current market and competitive conditions (such as resource similarity or market overlap between firms). I then connect the relational rivalry literature and competitive dynamics literature and put forth a series of propositions centered on how relational rivalry between firms affects their competitive moves vis-à-vis one another. In doing so I aim to contribute to competitive strategy research by exploring social psychological and sociological factors, particularly by emphasizing the importance of pairs of firms’ histories of interaction in driving future competitive action. This work also extends the existing literature on relational rivalry by pointing to institutionalization as a key difference between interfirm and interindividual relational rivalry and by examining the consequences of relational rivalry for macrolevel strategic and competitive decisions.