"The literature on asymmetric competition has largely portrayed asymmetry to be a competitive advantage. However, this assertion has been made on the basis of studies that assume perfect rationality and ignore cognitive limitations of firms. The salience of assuming cognitive limitations becomes evident when we decompose the concept of asymmetric competition into its individual components of interfirm rivalry and competitive analysis (Chen 1996). At the action level of interfirm rivalry,... Show more"The literature on asymmetric competition has largely portrayed asymmetry to be a competitive advantage. However, this assertion has been made on the basis of studies that assume perfect rationality and ignore cognitive limitations of firms. The salience of assuming cognitive limitations becomes evident when we decompose the concept of asymmetric competition into its individual components of interfirm rivalry and competitive analysis (Chen 1996). At the action level of interfirm rivalry, asymmetry captures the one-sided, actionresponse dynamic between competing firms, and denotes the competitive advantage of attacking your rivals with impunity. Seen from a focal firm's point of view, asymmetry at the cognitive level of competitive analysis implies a dangerous situation, indicating the firm's inability to recognize or respond to competitive threats from outwardly insignificant competitors (Chen 1996; Desarbo, Grewal, and Wind 2006). The purpose of this study is to develop a theoretical understanding of the paradoxical phenomenon of asymmetric competition and provide insight into why such contradicting outcomes occur. Furthermore, we consider that competitive experience is embedded within the larger context of institutional norms, political systems, and social network structures (Desarbo, Grewal and Wind 2006; Grewal and Dharwadkar 2002). Using data from 41 publicly traded firms in the U.S. retail industry observed over a ten-year period (2003-2012), we examined the paradoxical nature of asymmetric competition. Our results strongly suggest that while strategic adaptations to a context's logic of competition lead to the favorable consequence of asymmetric rivalry, some of the same strategic adaptations lead to the adverse effect of asymmetric competitive analysis. We found that firms' defensive manipulation of political logics in the form of money spent on campaign finance and lobbying is significantly and positively related to the focal firm's ability to carry out greater number of competitive actions relative to rivals. However, defensive manipulation of political logics was also found to be significantly and positively related to the focal firm's market share erosion, indicating impaired awareness that characterizes asymmetric competitive analysis. Similarly, we found that when firms had a hierarchical distribution of positional embeddedness among their key decision-makers, they were able to perform more competitive actions compared to their rivals. However, we also found that a hierarchical distribution of positional embeddedness among key decision-makers to also be positively and significantly related to the firms engaging in a narrow repertoire of competitive actions, indicating exploitative behaviors associated with asymmetric competitive analysis. Our results bear important implications for future research, managerial practices, and public policy, on a topic that has been largely overlooked in the marketing strategy literature."--Pages ii-iii. Show less
