Competitive Experience, Multi-market Contact, and Firm Performance: Based on the Perspective of Red Queen Competition

Abstract

The Red Queen effect means that companies easily fall into an intense self-expansion direct competition, and they fail faster if they try to work harder or improve the main success factors of traditional industries. The study examines the relationship between the actions of the focal enterprise, the actions of rivals and the performance of the focal enterprise in various industries. We believe that the Red Queen effect, which is considered to be the positive and negative effects of the enterprise's performance, is stronger in highly concentrated industries and less in high-growth industries. Specifically, we have shown that firm actions compared to competitor actions and the speed of competitor actions have two opposing effects on the performance of the central enterprise. We also demonstrate that the impact of enterprise actions on performance is complex and depends on industry and competitive market positions.