Integrating the Dark Side of Competition into Explanations of Business Failures: Evidence from a Developing Economy

• Author: Joseph Amankwah‐Amoah,Issek Antwi‐Agyei,Hongxu Zhang
• Published date: 01 March 2018
• Date: 01 March 2018
• DOI: http://doi.org/10.1111/emre.12131

Integrating the Dark Side of Competition into

Explanations of Business Failures: Evidence

from a Developing Economy

JOSEPH AMANKWAH-AMOAH,

1

ISSEK ANTWI-AGYEI

2

and HONGXU ZHANG

2

1

Kent Business School, University of Kent, Medway, UK

2

School of Economics, Finance & Management, Bristol University, Bristol, UK

In spite of the growing body of literature on the bright side of inter-firm relationships, limited attention has been

paid to the dark side of inter-firm relationships. Using insights of serial entrepreneurs in a developing economy,

we articulate the mechanisms through which adverse rumours and misinformation perpetrated by rivals’firms

undermine small businesses and lead to decline and eventual collapse. We uncovered that the rumours were made

more potentwhen combined with other factorssuch as prior history of poor and faultyproducts, sensitivity of industry

and intense competition fromrival firms in reducing thelife chance of firms. Our study alsouncovered that inter-firm

backstabbing leads former business owners to form a negative perception of former competitors and their

organizations even after their business collapsed. We conclude by articulating the theoretical and practical

implications.

Keywords: business failure; developing economy; Ghana; Africa

Introduction

Over the past few decades, a growing body of literature

has suggested that inter-firm relationships can provide

conditions for innovation to thrive and access to scarce

financial and human capital (Noordhoff et al. 2011;

Wassmer et al. 2014). One stream of research rooted in

the concept of ‘co-opetition’has suggested that deep

collaborationand co-operation even among rivals as route

to sustainable competitive advantage (Brandenburger and

Nalebuff 1996; Yu et al. 2013; Bouncken and Fredrich

2016). In spite of a growing body of research on this

bright side of inter-firm relationships, limited attention

has been paid to the effects of dark side of inter-firm

relationships and how they unfold (Anderson and Jap

2005; Reuber and Fischer 2010; Villena et al. 2011).

Although a handful of studies haveexamined dark-side

of inter-firm relationships issues such as conflicts

(Deutsch 1958), opportunistic behaviour (Das 2006) and

deviant behaviour (Clegg et al. 2006; Buchanan 2008),

to date, much of the existing literature has overlooked

the issue. Although some scholars have hinted that

external factors such as business rivalry and inter-firm

backstabbingcan lead to bankruptcy of firms (see Mellahi

and Wilkinson 2004; van Iterson and Clegg 2008), it

remains unclear how the effects unfold to precipitate

business failure.This omission is surprising given that

inter-firm backstabbing remains a unique and common

feature of business practices in informal and under-

developed economies. To date, business failure and

business ethics scholars (e.g., Stokes and Blackburn

2002; Walsh and Bartunek 2011) have largely failed to

articulate the underlying dynamics of backstabbing and

its effects.

Our primary purpose in this paper is to examine the

mechanisms through which inter-firm backstabbing

unfolds to precipitate business failure. We focus on

Ghana as an exemplar setting to illustrate our analysis.

First, Ghana’s democracy and its progress over the past

few decades have been regarded as charting course for

African democracy (Robson and Freel 2008). Unlike

other African countries, in Ghana during the past two

decades ‘the presidency has twice changed hands without

violence’but rather through free and fair democratic

elections (The Economist 2013: 50). Indeed, Ghana is

regarded as one of Africa’s more progressive economies

Correspondence: Joseph Amankwah-Amoah, Kent Business School,

University of Kent, Medway ME4 4TE, UK, Tel: +44 (0) 1634 (88)

8870. E-mailj.amankwah-amoah@kent.ac.uk

European Management Review, Vol. 15, 97–109, (2018)

DOI: 10.1111/emre.12131

©2017 European Academy of Management