The Dynamics of Multimarket Competition in Exploration and Exploitation Activities

ANAND, J.; MESQUITA, L.; VASSOLO, R. S.

ACADEMY OF MANAGEMENT JOURNAL

Academy of Management

Año: 2009 vol. 52 p. 802 - 821

0001-4273

Prior studies of multimarket contact have investigated ´exploitation´ rather than ´exploration´ activities. We contrast effects of multimarket contact on entry and exit dynamics across these two settings. Based on analyses of biopharmaceutical firms’ competitive dynamics from 1989 to 1999, we find support for our model that, while in exploitation, firms seek to optimize multimarket contact based on mutual forbearance benefits, in exploration, firms seek to reduce uncertainties through mimetic entry and exit. We also find that multimarket contact in exploration leads to competitive entry and exit in exploitation, but not vice-versa. We discuss implications for theory and practice.