Multimarket contact and resource dissimilarity: A competitive dynamics perspective

Does the competitive dynamics perspective support the mutual forbearance (E dwards, 1955) and resource dissimilarity (Caves & Porter, 1977) theories of competitive behavior? This research examines competitive behavior in the U .S. software industry and finds: (1) as multimarket contact increases, a fi rm moves less frequently but more quickly following the moves of rivals; (2 ) as a firm's resources are more dissimilar relative to rivals, it becomes more rivalrous along both action and timing dimensions of competitive behav ior; and (3) the influence of multimarket contact on firm-level action is m ost influential for firms whose resources are more dissimilar relative to r ivals, but its influence on a firm's time to move is most influential for f irms whose resources are more similar relative to rivals. Thus, the dynamic perspective generally supports, but goes beyond the insights of the establ ished mutual forbearance and resource dissimilarity theories. (C) 2000 Else vier Science Inc. All rights reserved.