Competition as sense making

Abstract

At the root of the conceptual difficulties in determining the competitive structures that underpin markets is the fact that firms and their product offerings can be described along a large number of attributes, and so be viewed as more or less similar depending on the attributes used for comparison. Our chapter exposes the multi-level cognitive embeddedness of competition among restaurants in New York City. Using field interviews and archival data on restaurant evaluations, categories, pricing, and menus, we employ qualitative counterfactual analysis to address fundamental issues concerning competitive boundaries that cut across categorical, organizational, and transactional perspectives of competition. We argue that conceptualizations of competition are only loosely coupled across different perspectives, and we contend that competitive judgments are better construed as a collective sensemaking process where different actors interact and competitive boundaries are constantly defined, contested, and redefined. Thus, we propose a heuristic framework for understanding the cognitive embeddedness of competition as part of a broader sensemaking perspective of competition.