Socio-Cognitive Dynamics as Positive Feedback Loops in Mature Competitive Markets

Abstract

Taking a social constructivist perspective, this paper presents a socio-cognitive framework for understanding the dynamics of mature competitive markets. Its fundamental premise is that mature competitive markets are as dynamic as emerging ones because the enactment-sensemaking cycles in which producers and consumers engage, and the constant recalibration of product conceptual systems that such activity engenders, are present in both types of markets. Furthermore, it argues that the dynamic processes unleashed by enactment-sensemaking behaviors are evident in the market stories used by producers and consumers to make sense of enacted outcomes or experiences. The value of market stories to understanding market dynamics is illustrated by a rudimentary testing a set of simple propositions. Qualitative support is found for some of the propositions, and the paper concludes by discussing several theoretical and managerial implications of the socio-cognitive perspective as it pertains to understanding and managing in mature competitive markets.

JEL Classification: L10