Competition Networks as a New Insight into the Determinants of Firm Technological and Market Performance

Based on the global patents of 109 mobile phone vendors filed from 1992 to 2016 and sales data from 2002to 2016, this study formulates technological and market competition networks. We find that an increasingly large number of firms joined the market, leading to a competition network of increasingly larger scale and greater density. We also propose indicators to measure competitive intensity, which reflects the extent to which the firms are competing against each other. We examine the role of competitive intensity in mediating firms’ performance. We employ a weighted least squares regression model for the empirical analysis. The empirical results confirm the significant role of competitive intensity in determining firm performance. However, in technological and market competition networks, competitive intensity generates essentially different mediating impacts. For technological competition, competitive intensity positively mediates the impact between the leaders’ and followers’ technological performances. There is an asymmetric mediating effect that enlarges the gap between the technological performances of leading vendors and their followers. Accordingly, competitive intensity may generate different impacts on the technological performance of leaders and followers. In comparison, the competitive intensity embedded in the market competition network has a symmetrical role in mediating the mutual impact between the leaders’ and followers’ market performances, that is, it neither enlarges nor narrows the market performance gap between leaders and followers. Therefore, when creating a development strategy, firm managers need to account for their competitors’ behaviors, carefully analyze the significance of these behaviors, and adjust their strategic arrangements in a timely manner.