The relationship between market structure, investment in innovation and competitive position: an empirical analysis in the U.S. supermarket industry
Authors: Castro Silva Wendel Alex , Ferreira Lucas Jose , Cançado Vera L. , De Muylder Cristiana Fernandes 
Published: January 2025

Purpose

This study aims to examine the impact of investment in innovation, market structure and competitive position on the supermarket value chain in the USA.

Design/methodology/approach

This paper used secondary data from Economatica® for the period 2010–2020, encompassing 83 firms within the US supermarket value chain, resulting in 913 observations for each model covariate. The data were analyzed through structural equation modeling, using the partial least squares (PLS) approach, using SMARTPLS® software.

Findings

The results indicate that both market structure and investment in innovation have a significant impact on a firm’s competitive position. Specifically, a more concentrated market structure is associated with a weaker competitive position, whereas higher levels of investment in innovation correspond to a stronger competitive position. However, no significant relationship was found between investment in innovation and market structure.

Research limitations/implications

This study is limited to the Economatica® database, from which this paper selected a sample of firms within the US supermarket value chain. This paper recommend future research to compare data from other countries or sectors. For the three-dimensional model, this paper used constructs with indicators of investment, performance and market concentration; however, this paper suggests incorporating additional variables to enhance the model’s robustness.

Practical implications

An analysis of market structure and its impact on competitive positioning offers valuable insights for managers regarding the strategic dimensions of the supermarket industry. Integrating the effects of investment in innovation into business strategies can enhance long-term economic benefits. Adopting a value chain perspective further facilitates the examination of market equilibrium and competitive positioning within the supermarket industry.

Social implications

The findings of this study can help prevent the adoption of misguided strategies that fail to foster business growth. By highlighting the significant impact of innovation on performance, while considering the competitive dynamics within the supermarket industry, the study provides a deeper understanding of the risks faced by various firms across the value chain and the dual nature of competition within the sector. Moreover, it reinforces the relevance of research on economic sustainability and supports the development of effective growth strategies for firms.

Originality/value

While most studies focus on hypotheses examining the relationships between innovation and competitive positioning or between innovation and market structure, this study introduces a three-dimensional model that uses structural equation modeling to test these interconnections simultaneously. Furthermore, it extends the analysis by incorporating the value chain as a central component, using a diverse sample of firms directly linked to the core operations of the supermarket industry.