Rivalry and the Industry Model of Scottish Knitwear Producers

TLDR

Firms construct a model of industry boundaries by observing each other's actions and positioning products relative to one another. The study argues that market boundaries are socially constructed around a collective cognitive model summarizing typical organizational forms. The authors investigate how firms identify rival reference groups amid ambiguous market cues and high interorganizational variety, uncovering the industry model of rivalry among Scottish knitwear producers. The data reveal a six‑category model of organizational forms—defined by size, technology, product style, and geographic location—that best captures industry competition, and show how this model is reproduced within the rivalry network to structure imperfect competition. The authors acknowledge contributions from managers and colleagues and note funding from the Economic and Social Research Council and the Hewlitt Foundation.

Abstract

The authors thank all of the managers who gave freely of their time in helping to complete this study. Ian Watson was particularly helpful. Thanks also go to Peter Grinyer of St. Andrews Management Institute, Roy Payne, Tony Berry, Pam Lewis, and to Manchester Business School. This research was partially funded by an Economic and Social Research Council grant to the Manchester Business School and by a grant from the Hewlitt Foundation to the first author. In this paper we argue that market boundaries are socially constructed around a collective cognitive model that summarizes typical organizational forms within an industry. This model is produced when firms observe each other's actions and define unique product positions in relation to each other. Our study examines the question of how firms define a reference group of rivals when market cues are ambiguous and interorganizational variety is high and identifies the industry model underlying rivalry among Scottish knitwear producers. The data suggest that a six-category model of organizational forms best describes the common sense of competition in the industry and that an ensemble of attributes involving size, technology, product style, and geographic location forms the foundation for this ordering. The results also show how this industry model is reproduced within the rivalry network structuring imperfect competition in the industry.'