How emerging market resource-poor firms compete and outcompete advanced country resource-rich rivals
Authors: Li Xin 
Published: February 2018

Purpose

The purpose of this paper is to comment on Professor Ming-Jer Chen’s recent publication titled “Competitive dynamics: Eastern roots, Western growth” and present an asymmetry reversing perspective on the competitive dynamics between two nonobvious, invisible or indirect competitors, namely, how emerging market resource-poor firms compete and outcompete advanced country resource-rich rivals.

Design/methodology/approach

The author first identifies an important neglect in Professor Chen’s scholarship on competitive dynamics, i.e., the neglect of the ubiquity of the less visible competition between two actors who initially would not be considered as competitors. Then, the author proposes an asymmetry reversing theory (ART) of competitive dynamics to redress this neglect. The theory is presented in two parts. The first part describes the competitive dynamics between the two actors as a three-stage process of reversing the asymmetry in resource possession and market position between the resource-poor firm and its resource-rich rivals. The second part explains the key success factors for the resource-poor firm to go through each of the three stages.

Findings

The growth process of the resource-poor firm can be broadly divided into three stages: surviving, catching-up, and outcompeting. For ambitious yet pragmatic resource-poor firms, in the surviving stage, they often (have to) accept the asymmetry between themselves and their resource-rich rivals in terms of resource possession and market position, and try to avoid any direct competition with the strong incumbents. They often tactically appear to pursue different paths of development from those of the strong incumbents by focusing on particular product categories and market segments. Doing so allows the resource-poor firms to win times and spaces for non-interrupted growth. Once they have accumulated sufficient resources and market experiences, they start to reduce the asymmetry between themselves and their better-endowed rivals by entering the similar or same product categories and market segments. To effectively catch up and outcompete the incumbents, they often differentiate themselves from their rivals by offering cheaper products or services, adding new features to their products, providing extra services to their customers, inventing new business models, etc.

Research limitations/implications

One limitation of this paper is that the ART framework has so far been built on anecdotal evidences. It needs to be tested by empirical studies and refined further in the future. Another limitation is that the proposed theory is based on competitive dynamics between emerging market resource-poor firms and advanced country resource-rich firms. It needs to be tested whether this theory has applicability to any other firms.

Originality/value

This paper fills an important research gap in the competitive dynamics literature by proposing an asymmetry reversing theory of competitive dynamics between a weak latecomer and a strong incumbent in a competitive field.