Competitive Actions and Dynamics in the Digital Age: An Empirical Investigation of Social Networking Firms

Authors:
Devi R. Gnyawali;Weiguo Fan;James Penner
Affiliations:
R. B. Pamplin College of Business, Virginia Polytechnic Institute and State University, Blacksburg, Virginia 24061;R. B. Pamplin College of Business, Virginia Polytechnic Institute and State University, Blacksburg, Virginia 24061;R. B. Pamplin College of Business, Virginia Polytechnic Institute and State University, Blacksburg, Virginia 24061
Venue:
Information Systems Research
Year:
2010

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Abstract

This paper examines two important questions in the context of the social networking services (SNS) firms: what kind of competitive moves do SNS firms undertake and to what extent do the competitive moves impact firm performance? We blend the literature streams on information systems (IS) and strategic management and argue that given the unique characteristics of this nascent industry, SNS firms' competitive moves are likely to focus on value cocreation, as well as enhancement of the repertoire of their moves. We propose a conceptual model by blending value cocreation perspectives from the IS literature and repertoire of competitive actions from the competitive dynamics literature, and test our hypotheses using archival data. Results show that firms that emphasize value cocreation actions through the engagement of codevelopers in their technology platform and formation of strategic alliances enhance their performance. Furthermore, firms that undertake complex action repertoires achieve better performance. This study provides unique insights about the ways in which firms compete in the industry and has several implications for future research.