Who follows whom? Asymmetric competition in cross-border market expansion

Abstract

We refine the concept of asymmetric competition by considering the difference in magnitude and directionality. Drawing on the awareness-motivation- capability framework in competitive dynamics research, we examine a firm's propensity of matching a rival's expansion overseas as influenced by their asymmetric market commonality. We tested our hypotheses by studying 650 geopraphical expansions made by Taiwanese PC firms in Mainland China from 1999 to 2005, revealing that a moderate magnitude of (either positive or negative) asymmetry increases matching propensity, whereas an extremely high (or low) magnitude has the opposite effect. Our research injects the dyadic consideration into the study of who-follows-whom, a long-standing concern in international business research.