Competition of a Different Flavor: How a Strategic Group Identity Shapes Competition and Cooperation

Abstract

Using an inductive study of 41 gourmet food trucks, we develop theory about how firms form a strategic group identity that shapes both competitive and cooperative behaviors among its members. Based on an analysis of group prototypes, we find that members cooperate to help each other meet the central tendencies of the group—the properties that typical group members have—and yet compete to strive for the ideal tendencies of the group—the attributes of members held in highest regard. These competitive and cooperative dynamics lead to three surprising consequences in light of previous research on strategic groups: (1) existing members of the strategic group help new firms enter the market; (2) resource scarcity leads to cooperation, not competition; and (3) when competition does emerge, it focuses on status within the group and not on price. To make sense of these empirical puzzles, we develop theory around the micro identity processes that allow a strategic group’s identity to persist and to shape its member firms’ behaviors, which alters how scholars understand the inner workings of strategic groups and their impact on both firms and markets.