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Corporate Investment and Strategic Stability in Hypercompetition

Roch Parayre and Dileep Hurry
Managerial and Decision Economics
Vol. 22, No. 4/5, Strategy and the Market Process (Jun. - Aug., 2001), pp. 281-298
Published by: Wiley
Stable URL: http://www.jstor.org/stable/3657293
Page Count: 18
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Corporate Investment and Strategic Stability in Hypercompetition
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Abstract

As competition accelerates, so do the strategies of players, in the shape of fast-track corporate investment strategies to maneuver around competitors. Under hypercompetition, a corporate strategy for acquiring competitive options may form an evolutionarily stable meta-strategy capable of sustaining persistent disruptive actions. This type of strategy is evolutionarily stable under competition across generations of contests. This paper explains the concept of memetic evolution and applies evolutionary game theory to the study of hypercompetition. We show how this option meta-strategy has superior long term dynamic stability compared to large acquisitions and small greenfield investments. We demonstrate the disruptive potential of this meta-strategy under hypercompetition, through a simulation analysis of competing strategies in hypercompetitive markets. The concept of evolutionarily stable strategies implies that hypercompetition may indeed be an enduring phenomenon.

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