Competition in an industry can manifest in many ways. It may be represented by two or more firms jostling for position, undercutting each other’s prices, and engaging in advertising or product promotion wars. As competitive pressure increases, the intensity of the rivalry also increases. Moreover, competition can create positive effects on employment and wages in Inter-Firm Relationships.
Impact of competition on inter-firm relationships
An understanding of the impact of competition on inter-firm relationships is essential for creating effective inter-firm relationships. Effective relationships have a positive impact on the value chain and are more likely to enhance competitiveness. In contrast, the ineffective inter-firm relationships hinder progress toward the value-added goals.
For example, a firm’s focus on its immediate partners may distract the firm from acquiring complementary resources through interfirm relationships. In such cases, an intermediary may be needed to translate the knowledge that the firm can obtain from other firms. These two factors can lead to an imbalanced relationship.
An alternative perspective on inter-firm relationships is the resource-based perspective. This view emphasizes the importance of complementary resources, particularly in the context of networked firms. This approach has been applied to research on interfirm networks by Eisenhardt, Schoonhoven, Lado, Boyd, Hanlon, and Madhok. It also incorporates the idea of social capital, a concept that suggests the value of network resources.
While previous research has focused on the growth of individual firms, it has become clear that business relationships are important and potentially central to firm growth. In particular, frictions in inter-firm relationships can limit the growth of firms. In addition, the recent study by McMillan and Woodruff points to the role of networks in development. They found that networks affect both the performance of individual firms and the growth of the network as a whole.
Resource sharing among partners in an inter-firm network yields significant competitive advantages. In addition, network partners affect the performance of the focal firm through spillover rents and relational rents. The role of competition in inter-firm relationships is thus crucial for achieving firm success. However, the role of network partners is often overlooked by researchers.
Moreover, resources in an inter-firm network can differ by level. This is because firms with different levels of resources may have different levels of ties to one another. The distribution of resources among firms in a network reveals a pattern of resource distribution that is unique to the network.
Influence of public policy on competition in industries
Public policy can have a significant impact on competitiveness, and can make a huge difference in how successful businesses are. It can promote entrepreneurship, improve the quality of products and services, and lower prices. It can also protect local industries from the influx of foreign competitors. It has been argued that lower prices are good for consumers and the economy, as they encourage more business to open and produce.
The Hong Kong government and business elite have a history of anti-competitive behavior, which the consumer council and many observers have documented. But the government is reluctant to acknowledge this, because it has strong ties with businessmen who benefit from uncompetitive Sales and Marketing. Indeed, Chief Executive Tung Chee-hwa was a top executive at his family’s shipping firm when it was convicted by EU authorities of a land transportation cartel.
The report suggests several policy changes to reduce barriers to entry and encourage more competition among firms. These include changes to antitrust policy, changes to intellectual property rules, and measures to improve access to data. While these changes may provide a partial solution, they should also be paired with other steps to limit the growing concentration of market power. For example, the report suggests introducing a monopoly tax to reduce the incentive for monopolistic firms to acquire rivals.
While Taiwan has made significant progress in promoting competition, it still has its problems. As a result, the author argues that the success of Taiwan’s pro-competitive policies is closely tied to the government’s transition to a pluralistic political system. In this way, Taiwan’s transition towards a more open economy is dependent upon the political changes toward democracy.
It is important to note that the government is unpredictable when it comes to policy changes. For example, in 1998 the government secretly abandoned a pledge to build 80,000 new flats. Similarly, in 2003 it adopted comprehensive race discrimination legislation after years of restraining it. However, in August 2003, the government withdrawn the controversial national security legislation. This shows that the government has little control over competitive dynamics in the private sector.
Positive impacts of competition on jobs
Competition is a powerful economic force that can help create and save jobs. This is because it forces firms to become more productive. As competition increases, less efficient firms leave the market and more efficient ones enter. This leads to better jobs for more people. The cost savings that come from productivity improvements are often passed on to consumers through lower prices. The savings may also be used to expand business activities. However, competition can also lead to some short-term job losses.
Competition also fosters restructuring in sectors that are losing competitiveness. Governments struggle to decide which sectors of an economy need restructuring. Moreover, they are often influenced by political concerns, which can lead to suboptimal decisions. Unlike a government, competition forces decisions to be made based on the factors that are most important to consumers.
Competition can also reduce indifference and laziness. By creating a competitive environment, employees are more likely to put forth the extra effort necessary to reach their goals. Moreover, it can increase the chances of innovation and creativity. It can also make work more fun and engaging. For many, this is an advantage.
Competition can also lead to good jobs. In Rwanda, for example, the Groups of advised the government on the design of a state-owned factories of tea in 2012. This reform resulted in an increase in income for Rwanda’s 60,000 tea farmers. In Kenya, competition also helped license a specialty tea factory.
While competition can be a good thing, it can also have a negative effect on the quality of work. Employees who are unhappy with their work will not feel as motivated to do their best. Similarly, employees who are performing well might feel discouraged due to the continuous competition. In some cases, an organization may end up firing great employees because of a ranking system.
Some companies may be able to acquire large market shares. However, this is not unlawful and can be achieved by better meeting the customer’s needs than competitors. On the other hand, companies that have a strong market share can face challenges from more efficient and innovative firms.