Chen, M.-J., & Miller, D. (2015). Reconceptualizing competitive dynamics: A multidimensional framework. Strategic Management Journal, 36(5), 758–775. https://doi.org/10.1002/smj.2245
Summary
In today’s rapidly changing business environment, competition is no longer just about one company attacking another or trying to steal market share. Chen and Miller (2015) argue that traditional views of competition—centered on direct, head-to-head rivalries—are too narrow. Their article proposes a broader framework for understanding competitive dynamics by considering multiple dimensions of how firms engage with one another. In plain terms, instead of thinking of business as a zero-sum game where winning means taking value away from competitors, managers can reframe competition as a mix of rivalry, cooperation, and even relationship building that benefits multiple parties over the long term.
The authors introduce five key dimensions that help map out the different ways companies can compete:
- Aim:
Traditional competition has focused on value appropriation—that is, winning by taking market share or resources from competitors. However, there are other possible goals. Some companies aim primarily at gaining a competitive advantage without necessarily undermining others, while a relational approach seeks to “lift all boats” by creating benefits that extend to various stakeholders (including competitors). For example, a firm might share best practices or even resources to help build a stronger industry overall. - Mode:
The traditional mode of competition is adversarial. This “rivalrous” approach involves attacking rivals, retaliating against competitive moves, and generally engaging in a battle-like exchange. In contrast, the competitive-cooperative mode blends elements of rivalry with cooperation—firms might work together on certain initiatives while still competing on other fronts. The most innovative is the relational mode, where the same actions can be viewed as either competitive or cooperative depending on the context. A good example is when companies work together to set industry standards, which helps everyone even as they maintain their own competitive edge. - Actors:
Most conventional models of competition focus solely on direct rivals. Chen and Miller expand this view by including a broader set of players. Besides competitors, firms today interact with alliance partners, suppliers, customers, regulators, and even community organizations. This means that your competitive environment is not limited to the few companies you compete against in your immediate market but includes a wider ecosystem of stakeholders whose interests can affect your performance. - Action Toolkit:
In the past, the tools of competition were mainly economic—price changes, marketing promotions, or cost-cutting measures. The expanded framework recognizes that competitive moves can also be political (like lobbying for favorable regulations) or even social and ideological (building a reputation as a socially responsible or innovative company). This richer toolkit allows companies to compete in ways that build relationships and long-term credibility rather than merely focusing on short-term gains. - Time Horizon:
Traditional competitive tactics tend to focus on immediate results, emphasizing short-term moves that produce quick wins. However, the relational perspective pushes firms to think over a longer time horizon. Investing in strong stakeholder relationships, building trust, and developing core capabilities may not yield immediate rewards but can lead to sustained competitive advantages over time. A long-term orientation might mean sacrificing short-term profits for investments in research, employee development, or community partnerships that pay off later.
Chen and Miller illustrate that these dimensions are interrelated. A firm that adopts a relational view might intentionally build a culture that values long-term relationships (aim), use both cooperative and competitive modes (mode), engage a wide range of stakeholders (actors), deploy a mix of economic, political, and social actions (toolkit), and plan with a long-term focus (time horizon). In contrast, a purely rivalrous approach tends to emphasize immediate, adversarial tactics directed solely at direct competitors.
The authors also integrate an awareness–motivation–capability (AMC) model into their framework. This model helps explain why some firms are better suited to a relational style of competition than others. The key points are:
- Awareness: Firms need effective systems to gather and share information about not only competitors but also about potential partners, suppliers, and customer groups. A flatter, more decentralized organization is generally more agile in picking up on new opportunities for relational competition.
- Motivation: The culture and governance of a company play a critical role. Organizations with leaders and owners who think long-term and value the benefits of collaboration tend to be more motivated to invest in relationships. For instance, family-owned or closely held companies often have a stronger inclination to nurture long-term alliances rather than chase immediate, short-term gains.
- Capability: Building and maintaining long-term relationships require significant investments in resources and capabilities. This includes hiring and developing talent, creating systems that support joint initiatives, and cultivating social capital. Firms that invest in these areas tend to be better positioned to reap the benefits of a relational approach.
Another important insight from the article is the role of industry and cultural context. For example, industries that operate in dense clusters—where companies, suppliers, and research institutions are in close physical or social proximity—naturally encourage more information sharing and collaboration. Similarly, cultural differences matter. In more collectivist societies (often seen in Eastern cultures), firms are more inclined toward relational competition because the social norms favor collaboration and group success over individual wins.
The practical takeaway is that managers should re-examine their competitive strategies by asking: Do we see our business environment purely as a battlefield, or can we identify opportunities to create value collaboratively? The framework suggests that a mix of competitive and cooperative actions might not only yield immediate advantages but also build a sustainable foundation for long-term success. In industries facing rapid change or crisis, adopting a relational approach can help firms weather disruptions and emerge stronger by leveraging a broader network of partners and stakeholders.
For instance, a company might decide to collaborate with its suppliers and even with some competitors to improve industry standards. Such cooperation could lead to better quality products, reduced costs through shared innovation, and a more robust supply chain—all of which benefit the company in the long run. Alternatively, firms that invest in developing unique capabilities and nurturing stakeholder relationships might be better positioned to adapt to market changes and sustain growth over time, even if this approach means slower initial gains.
In sum, Chen and Miller’s multidimensional framework invites businesses to look beyond the conventional win-lose mindset of competition. Instead, managers are encouraged to explore a hybrid approach that balances rivalry with cooperation, adapts to the broader network of market actors, employs a diverse set of competitive tools, and maintains a focus on both short-term performance and long-term sustainability. This rethinking of competitive dynamics is especially relevant in today’s global and interconnected economy, where success often depends on the ability to build and manage complex, mutually beneficial relationships.
10 Practical Insights for Business Owners and Managers
• Broaden Your Competitive View: Don’t limit yourself to just beating your direct rivals—consider engaging with suppliers, customers, regulators, and even some competitors to create overall value.
• Set Multifaceted Goals: Instead of focusing solely on market share, aim to build competitive advantages that enhance long-term growth and stakeholder relationships.
• Blend Rivalry with Cooperation: Recognize that sometimes working with rivals (for instance, to set industry standards) can be as valuable as direct competition.
• Invest in Relationship Building: Long-term success may require sacrifices in the short term. Cultivate trust and strong partnerships that can pay dividends over time.
• Expand Your Toolkit: Look beyond traditional economic tactics. Use political, social, and ideological moves—such as lobbying or corporate social responsibility initiatives—to improve your competitive position.
• Adopt a Long-Term Perspective: Prioritize sustainable growth over quick wins. Investing in research, employee development, and community engagement can build lasting competitive advantages.
• Foster an Agile Organizational Culture: Develop a flatter, more decentralized structure to better sense and respond to opportunities for collaboration and innovation.
• Understand Your Industry’s Environment: If you operate in a dense cluster or a resource-rich environment, leverage these connections to gain insights and build stronger alliances.
• Align Leadership and Culture: Ensure that top management and ownership share a long-term vision that values relationships and stakeholder well-being over mere short-term profits.
• Tailor Your Competitive Strategy: Use the five dimensions—aim, mode, actors, toolkit, and time horizon—to design a strategy that fits your specific market conditions and organizational strengths.
By adopting these insights, managers can shift from a narrow focus on direct competition to a more holistic, flexible strategy that leverages the full spectrum of interactions in today’s interconnected business landscape. This approach not only helps in achieving immediate competitive gains but also builds a solid foundation for long-term success and sustainability.