The search for hypercompetition: evidence from a Nordic market study

ABSTRACT

Some scholars and practitioners argue that markets have become hypercompetitive, decreasing the opportunities for sustainable competitive advantage. We test for increasing competition in a panel of 266 Danish firms from 7 industries over the period 1980–2017. We find no support for the argument that the market across industries has become hypercompetitive over this period. The durability of abnormal business returns has remained stable. Dynamism only changed in the 1980s, and levels of munificence are also stable. We do, however, find a small decrease in the survival probability rate of firms over time. Our results lead us to caution against the use of hypercompetition as a universal label for the state of contemporary competition.

KEYWORDS:

• Hypercompetition
• sustainable competitive advantage
• resource-based view
• competitive dynamics

Acknowledgments

We acknowledge the very helpful comments of Jiang Yu, Zhao Hong, and Dovev Lavie, as well as the editor and two anonymous reviewers on earlier drafts. We also thank Jan Vang and Pernille Gjerløv-Juel for their insightful comments and suggestions at the DRUID Academy Conference 2020, where an earlier draft was presented. Support for this research from the Sino-Danish Center for Education and Research is gratefully acknowledged.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Note that it is also standard in the literature to use capital expenditure as another determinant of munificence. However, since there were excessive numbers of missing values in our sample for capital expenditure, we decided to exclude this variable from our study.

² We exclude the dummy for the final time period (2015–2017) and treat it is as our base.

³ For a rich analysis on inflation and economic growth in Denmark and well as the consequences to business returns, see Abildgren and Thomsen (2011) and Jensen and Johannesen (2017).

⁴ Note that for the Mining Industry (SIC 1) the number of observations in this regression falls to only 14 points, making interpretations difficult.

⁵ Note that data is only available for 12 years in the mining sector (SIC 1).

⁶ Observe that the small Mining industry in Denmark (Trading Economics 2020) is one of the industries with no significance in this time trend.

Additional information

Funding

This work was supported by the Sino-Danish Centre [2018-4527].