How Much Does Industry Strategy Matter? Organizational Field Dynamics and Cooperation Among Rivals

Abstract:     
This paper combines economic, political, and sociological perspectives to present a dynamic framework for understanding how a firm strategically allocates its limited resources between competitive pursuits and industry-wide cooperation. Organizational field dynamics alter a firm's incentive to engage in industry-wide cooperation relative to competition. Periods of intensive industry-wide cooperation, in turn, alter the organizational field and thereby influence the competitive conditions facing a firm and its rivals. Periods of cooperation are unstable, varying in their duration and intensity according to the characteristics of the organizational field, industry, and firm. A set of propositions developed in this paper outlines these characteristics and illustrates how, even in the face of rivalry and the collective action problem, firm-level self-interest aggregates into patterns of industry-level collective action. Moreover, these propositions demonstrate how the interplay between factors exogenous and endogenous to an industry facilitates change within an organizational field and so determines the nature of the competitive environment facing a firm and its rivals over time.

Keywords: Interorganizational cooperation, competitive dynamics, organizational field

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