How To Measure Competitive Intensity?

• Pages: 22-42
• Date: 01 January 2021
• Published date: 01 January 2021
• Author: Suela Bylykbashi ,Gilles Roehrich,Khalil Assala
• Subject Matter: Derecho Público y Administrativo

Vol. 5 No. 1

January, 2021

European Journal of Economics, Law and Social Sciences

IIPCCL Publishing, Graz-Austria

ISSN 2519-1284

Acces online at www.iipccl.org

22

How To Measure Competitive Intensity?

Suela Bylykbashi 1

Research Professor of Marketing

Brest Business School,France

Gilles Roehrich

Professor of Marketing

Khalil Assala

Professor of management

ENSTA Bretagne, France

Abstract

In this research, we analyse the internal structure of competitive intensity on the basis

of competitive dynamics. We propose a measure of competitive intensity based on two

dimensions: strategic and tactical. This two-dimensional design makes it possible to gain a

beer understanding of the competitive bale, allowing managers to improve operations

and the allocation of resources, according to both dimensions. It also provides a beer

understanding of the relationship between competitive intensity and other variables.

Keywords: Competitive intensity, Competitive dynamics, New product, Strategic decisions,

Tactical decisions.

Introduction

A dynamic interpretation of competition is one of the recent trends in strategic

management research (Chen and Miller, 2012). With this approach, competitive

intensity is identied as a threat factor aecting the ability of rms to maintain a

long-term competitive advantage (D'Aveni, 1994), and inuencing the performance

and success/failure of new products (Cooper, 1979; Cooper, 1984; Cooper and de

Brentani, 1991; Cooper and Kleinschmidt, 1987; Cooper and Kleinschmidt, 1990;

Gonzales-Benito et al., 2014; Lee and O'Connor, 2003; Muller, 2005; Song and Parry,

1997).

Despite the importance of competitive intensity, its internal structure has been

neglected. Nevertheless, an improved knowledge of its workings provides for a

beer understanding of the competitive environment in a market, and leads to

more appropriate management decisions (Ketchenet al., 2004). The present research

aempts to ll this gap by studying the internal structure of competitive intensity,

through the identication of its dimensions.

Competitive intensity allows the competition observed in any given market to be

 1 The authors would like to thank M. Gerard Cliquet, Professor Emiritusat the Rennes 1 University,

France, and M. Danny Miller, research worker at HEC Montreal, Canada, for their comments and advice.

European Journal of Economics, Law and Social Sciences

IIPCCL Publishing, Graz-Austria

Vol. 5 No. 1

January, 2021

ISSN 2519-1284

Acces online at www.iipccl.org

23

characterized. It corresponds to the degree of competition exerted by competitors in

a market (Chen, 1996). Competitive bale in a market leads to two types of action:

strategic and long-term actions involving major investments, which are generally

designed to make an oer that is more aractive to buyers than that proposed by

competitors (Abell, 1980; Ailawadiet al. 2001; Bowman and Gatignon, 1995; Chen

and Lii, 2005; Chen et al., 1992; Lemmink and Kasper, 1994; Ramaswamy et al., 1994;

Thompson, 1987; Urban and Hauser, 1993), and tactical actions leading to only minor

modications. This is a question of short-term investments, whose purpose is either

to curb competitors' sales, or to temporarily boost a company’s own sales. Strategic

actions, on the other hand, require a greater mobilization of resources and are

accompanied by major changes in the company's strategic orientation (Thompson,

1987) and in the denition of its sphere of business (Abell, 1980). In the short term,

these expenses oen have a negative impact on prots, whereas their long-term

impact can be extremely positive. This research suggests that competitive intensity

has a two-dimensional nature, because it occurs at two dierent levels. However, the

literature dealing with the operationalization of competitive intensity, through the

observation of actions and responses in a market, reveals a rather one-dimensional

posture and makes no distinction between strategic and tactical decisions (Cooper

and Kleinschmidt, 1990; Gonzales-Benito et al., 2014; Jaworski and Kohli, 1993;

Lee and O’Connor, 2003; Pulendranet al., 2000). Nonetheless, strategic and tactical

decisions do not have the same temporalities and consequences (Chen and Miller,

1994; Smith et al., 1991). According to Lee and O’Connor (2003), for example, a high

level of competitive intensity corresponds to an intense bale over price, distribution

or advertising. Pulendranet al. (2000) consider this same bale in terms of price and

promotion. Finally, according to Muller (2002), although this author accepts that

there is a correlation between competitive intensity and the degree of competition in

a market, the instruments used by competitors are not specied.

The aim of this research is to study the internal structure of competitive intensity,

and to explore the possibility of developing a two-dimensional structure. To do this,

we rstly present the methods used to measure competitive intensity in previous

research. We then expand the notion of competitive intensity using a qualitative

study, and present our approach to the development of a measurement scale. Finally,

we discuss the theoretical and managerial implications, as well as some thoughts

about the limitations of this study.

Literature Review

Competitive intensity has been central to research on strategic groups (Porter, 1979;

Caves and Porter, 1977; Cool and Dierickx, 1993; Peteraf, 1993) or multi-market

competition (Amine and Bensebaa, 2005; Fuentelsaz and Gomez, 2006; Gimeno,

1999; Gimeno and Woo, 1999; Jaychandranet al., 1999). Although it is widely used in

management sciences, with 1100 publications noted at the end of 2014 (Kwiecinski,

2017), very few authors have focused on dening this concept. According to Porter

(1980, 2008), one of the founders of the structuralist conception of competition,

competitive intensity is identied as one of the ve forces determining the