The search for hypercompetition: evidence from a Nordic market study

Abstract

Some scholars and practitioners argue that markets have become hypercompetitive, decreasing the opportunities for sustainable competitive advantage. We test for increasing competition in a panel of 266 Danish firms from 7 industries over the period 1980-2017. We find no support for the argument that the market across industries has become hypercompetitive over this period. The durability of abnormal business returns has remained stable. Dynamism only changed in the 1980s, and levels of munificence are also stable. We do, however, find a small decrease in the survival probability rate of firms over time. Our results lead us to caution against the use of hypercompetition as a universal label for the state of contemporary competition.

Hypercompetition: a review and agenda for future research

“…The issue increased interest among strategy scholars and created a debate as to whether industries are becoming hypercompetitive and advantages less sustainable. Some scholars provided empirical evidence of a shift in the nature of competition towards hypercompetition (Thomas and D’Aveni, 2009), whereas others found no evidence of a decrease in profit levels (McNamara et al , 2003) or intra-industry differences in the level of competition (Lindskov et al , 2020; Vaaler and McNamara, 2010).…”

“…Notably, the majority of the studies on hypercompetition use the context of the USA. Only a few of the studies have provided other contexts, such as Denmark, Norway and Latin America (Hanssen-Bauer and Snow, 1996; Hermelo and Vassolo, 2010; Lindskov et al , 2020). In general, the theory of hypercompetition does not specify how to determine whether a firm is operating in a hypercompetitive market.…”

“…Scholars measure these temporary advantages by using a function of time or “the pace of erosion, or regression to the mean, of abnormal returns” (Pacheco-De-Almeida, 2010, p. 1502). However, the empirical evidence of decreasing sustainability in competitive advantages over time are mixed (Lindskov et al , 2021; McNamara et al , 2003; Vaaler and McNamara, 2010; Wiggins and Ruefli, 2005).…”

“…The hypercompetition thesis has led to a steady stream of studies of this form of competition, and inspired a related stream of literature on temporary competitive advantage (Dagnino et al , 2020). While some have pointed to hypercompetition as the “new normal” (Thomas, 1996; Thomas and D’Aveni, 2009; Wiggins and Ruefli, 2005), others have questioned its very existence (Castrogiovanni, 2002; Lindskov et al , 2020; McNamara et al , 2003; Vaaler and McNamara, 2010). This review surveys a quarter century of literature on hypercompetition and provides a comprehensive overview of the causes and effects of hypercompetition, of the ways it has been measured, and of what gaps remain to be explored.…”

“…Along with these studies, scholars have provided a variety of views and understandings, generating several definitions and characteristics of a hypercompetitive environment. Despite the interest from management scholars, the literature has provided a mixed bag of theoretical and methodological issues, such as the inconsistency in the empirical findings related to the existence (Thomas, 1996; Thomas and D’Aveni, 2009; Wiggins and Ruefli, 2005) or non-existence (Castrogiovanni, 2002; Lindskov et al , 2020; McNamara et al , 2003; Vaaler and McNamara, 2010) of hypercompetition. This leaves several questions unanswered for future research to explore.…”