The Use of Relational Discrimination to Manage Market Entry: When Do Social Status and Structural Holes Work Against You?
Academy of Management Journal, Forthcoming
22 Pages Posted: 5 Jun 2007 Last revised: 2 Sep 2008
Abstract
This study examines how incumbent firms use relational discrimination to manage threats from market entry. The use of relationships to manage market entry implies that incumbent firms decide to collaborate with entering firms instead of incumbent firms based on the extent to which entering firms threaten their own market positions. I argue that incumbent firms seeking collaborators switch between favoring and disfavoring entering firms compared to incumbent firms depending on their social status and brokerage opportunities. A comprehensive dataset on commercial banks' entry into investment banking in the period 1991 to 1997 provides empirical support for my arguments.
Keywords: structural holes, status, networks, investment banking, discrimination, market entry
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