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This paper investigates how the pattern of encounters between a firm's competitors affects the firm's inclination to follow its competitors into a new market. We theorize that direct encounters between a firm's rivals lead to a herding effect, making imitative market entry more likely. Past mutual forbearance between a firm's competitors (resulting from asymmetric multimarket competition) further strengthens this herding effect, by enhancing the firm's expectations of market attractiveness. In contrast, aggressive past rivalry between the competitors (resulting from symmetric multimarket contact) dampens these expectations, producing a competition effect that makes herding less probable. We test our idea in two distinct contexts—the Chinese pharmaceutical industry and the Taiwanese computer hardware industry—and find consistent support in both settings. We discuss how our analysis of what we call the "structure of competition" can be extended to research on other forms of firm behavior.

AbstractThis study examines the effect of online community's recognition on continued participation in idea competitions, and how personal winning record moderates such an influence. We reason that the motivating role of community recognition might either be reinforced or substituted by personal winning record, depending upon whether relational motives (psychological and social bonding) or individualistic motives (personal benefits, such as status and career enhancement) are the primary behavior driver. Through an event history analysis of data obtained from a platform of creative design contests, we find that although community recognition exerts a positive effect on the rate of continued participation for designers who are yet to win any competitions, this effect increasingly turns negative for designers who have won. Such findings indicate that the motivating role of community recognition might be substituted instead of reinforced by personal winning record, lending support to the individualistic view while rejecting the relational view. Although virtual social spaces represent an important means for modern competition platforms to attract and motivate participants, our study informs practitioners about online community's limitation in retaining "star" participants.