Towards a Social-Practice Theory of Competing

Competition is a cornerstone of strategy research, yet we currently lack a practice-theoretical perspective that explains how competing unfolds within the corpus of everyday activities of actors in firms across an industry. The strategy-as-practice (s-as-p) literature has developed considerable insights into strategizing practices and their implications within organizations(Balogun & Johnson, 2004; Kaplan & Orlikowski, 2013; Mirabeau & Maguire, 2014; Paroutis & Heracleous, 2013). However, few studies have focused specifically on competitive practices and their implications for inter-organizational dynamics (for an exception see: Vaara et al., 2004). This dearth of research has led to calls for s-as-p to fulfill its potential to examine broader phenomena, such as industry competition(Jarzabkowski & Spee, 2009; Seidl & Whittington, 2014; Suddaby, Seidl, & Lê, 2013; Vaara & Whittington, 2012). Our paper addresses this call through an examination of how competition in an industry is enacted in the everyday activities of multiple individuals dispersed across firms.  

Our interest in competing arose from an empirical puzzle that emerged during our ethnographic immersion in the global reinsurance industry. Reinsurance is a financial industry that provides insurance firms with capital to cover large-scale losses. As we followed the trading of reinsurance deals across multiple sites, we became aware of specific characteristics of competition in this industry that are particularly interesting. All reinsurers who provide capital to any deal do so at the same “consensus” price; regardless of any differentiation between them in terms of security or strategic position, none of up to 60 reinsurers on any deal gets a higher price for their capital. However, this consensus terminology should not obscure the intense competition between reinsurers. The consensus price is constructed through a competitive process of individual quoting (Dutta, Zbaracki, & Bergen, 2003), in which actors in firms seek to position themselves favorably relative to their competitors as a way to gain a share of deals at a good price without knowing how those competitors are positioning their various individual quotes. As we sat alongside reinsurance managers during their everyday practice, and interviewed them and their CEOs, we observed strongly competitive behavior in constructing this industry-wide consensus price for trading capital. Our interest in understanding the practice-theoretical nuances of competing within these complex industry dynamics was sparked, leading to this paper.  

Our findings establish the basis for a practice theory of competing. We identify a nexus of everyday activities by actors within dispersed firms that we classified as positioning and leveraging practices. We show how these comprise collective practices (Schatzki, 2002) across an industry, within which different modes of competing unfold across two temporal phases of influencing price and competing for share. Our study shows variation in competitive intensity between actors across these two phases, according to how the different moves taken by different actors shape the unfolding possibilities for competition. In particular, we identify four dynamic patterns that we label as: a) winning from the start; b) continuing to compete; c) declining competitive interest; and d) escalating competitive interest. Actors shift between these patterns as their competitive intensity waxes or wanes according to the specific industry conditions that they collectively construct. Our findings are drawn together in a conceptual framework that provides insight into competing as a dynamically unfolding process that is constructed and reconstructed continuously within each traded deal amongst competitors and relationally across traded deals in an industry. We thus begin to address the call for strategy-as-practice research to address larger questions about strategizing and its implications(Seidl & Whittington, 2014; Vaara & Whittington, 2012) and offer new insight into the literature on competitive dynamics (Chen & Miller, 2015).