Market emergence through non-market collaboration: Pursuing non-market strategies with competitors

Abstract

The non-market collaborative strategy school of thought has emerged from notions that firms are increasingly using collective political and social action to adapt to, and improve their competitive positions in, varied institutional settings. As part of this process, clusters of firms increasingly seek to enable the formation and development of new markets or new places or spaces of economic exchange, in which they can be more competitive. Non-market collaborations or trade associations and other collaborative forms that attempt to enable market emergence face institutional pressure, public policy and social instability risks, and non-market competition from others seeking to maintain the status quo. To defuse these pressures and enable market emergence, non-market collaborations need to be sufficiently resourced and embedded in their institutional settings and be adept in their selection of pertinent political and social actions that can influence public policy, social norms, and relevant stakeholders. While non-market collaborations can facilitate joint influencing and transaction cost reduction, the process by which they enable market emergence has barely been empirically considered. In this PhD thesis I investigate a key yet undertheorised value-creating mechanism in non-market strategy research, namely how market emergence, or the formation and evolution of markets, can be enabled by non-market collaborations. Similarly, I consider the systemic dynamics that underpin these collaborations’ enabling of market emergence. I define nonmarket collaborations as a unique form of interfirm meta-organisation that is created to influence government policy agenda, social or cultural norm, and public opinion in order to enable market emergence and other non-market interests (Dahan, Doh, & Guay, 2006; Lawton, Rajwani, & Minto, 2018). Congruently, I define non-market strategy broadly as purposive political and social action aimed at influencing change and continuity to public policy and social norm within institutional settings (Baron, 1995, 2016; Dorobantu, Kaul, & Zelner, 2017). The overarching research question of this thesis is: how do non-market collaborations use non-market strategy to enable market emergence? The thesis is presented as a series of three academic articles that contributes to the non-market strategy literature. The first article conceptualises how the enabling of market opportunities by non-market collaborations, especially trade associations, chambers of commerce, policy networks, and cross-sector partnerships, may be underpinned by firm pushing and other actor and factor pulling and these collaborations’ response with non-market strategy. The article contributes by providing a conceptual framework and testable propositions that explain this institutional process, including how these non-market collaborations derived diffusion of influence – enhanced and dispersed sociopolitical legitimacy. The second article discusses the results of a qualitative case study investigating how the longitudinal political strategy of LENTNZ – a New Zealand-based trade association – enabled the emergence of the nascent naumixie (pseudonym for a product) market nationally. Interview and longitudinal archival data were collected from LENTNZ executives and member representatives, which were analysed using the Gioia method of qualitative analysis (Gioia, Corley, & Hamilton, 2013). The findings show how this trade association sought state incentives to develop the nascent market and both acceded to and resisted government pressure for involvement in its political strategy selection. The trade association walked this tightrope using decoupled conforming and shaping political strategies, which concurrently aligned industry and government agency interests and influenced another stratum of government to legitimise the nascent market. The article provides a framework explaining this process and contributes using testable propositions to extrapolate its application in other settings. The third article also uses a longitudinal case study method, and interview and archival data from LENTNZ and its members. However, this article investigates how the trade association, which was small, underresourced, uninfluential, and initially had a deficit in sociopolitical legitimacy, used non-market strategy to increase its legitimacy over time. This article offers a framework that describes how the constituency building and reputation building strategies of the trade association respectively enabled its adaptation to, and acceptability in, the non-market environment. It shows that neither of these non-market strategies necessarily increased LENTNZ’s proportion of engaged membership and that the pursuit of a novel standalone membership building strategy enabled the association to achieve this aim. This article contributes by way of testable propositions that extrapolate these findings to other settings and thus provide opportunities for future research. Overall, this thesis contributes to theory by providing novel insights on the value-creating activities of non-market collaborations. It reveals the interactive process by which they enabled market emergence, and derived diffusion of influence benefits from enabling this process. Additionally, the thesis opens the “black box” on trade associations, and extends theoretical knowledge on these hard-to-empirically access non-market collaborations, by elucidating how their deployment of particular non-market strategies, enables market emergence and increases their sociopolitical legitimacy. Finally, the thesis contributes to practice by outlining risks, opportunities and business model considerations for firms seeking to enable market emergence by way of non-market collaborations, and for non-market collaborations themselves.