When should firms watch for cross-industry competition? A demand-side perspective

Deskripsi

Research on competitor identification has primarily focused on intra-industry competition. However, cross-industry competitive threats are prevalent and consequential. We adopt a consumer-oriented perspective to examine how consumer perceptions shape de facto competition across industry boundaries. Drawing from social cognition theories, we introduce two mechanisms—cultural embeddedness and social salience—that lead consumers to perceive products in an emerging industry as viable substitutes for those in an established industry, thereby intensifying competitive pressures on established firms. We further hypothesize that the impact of these mechanisms varies across heterogeneous customer groups, specifically with respect to income, education, and immigration status. Event history analyses of Illinois movie theater failures during television's rise in 1944–1962 support our theorizing.