The Role of Industry Concentration on Competitive Inventory-Management Behaviors: Evidence from U.S. Manufacturers

This research study investigates the potential effect of industry concentration on the rivalrous moves and counter moves made between leader and challenger firms relative to inventory management decisions. Theoretically, “the perennial gale of creative destruction” proposed by Schumpeter (1934) enables an examination of the competitive dynamics between firms. Mimetic isomorphism (as embedded within institutional theory, per DiMaggio & Powell (1983)) and signaling theory (Porter, 1980) have likewise been applied here to the presumed actions and reactions of firms relative to management and operational decisions. For their part, Ferrier, Smith & Grimm (1999)—in leveraging earlier research from Young, Smith & Grimm (1996)—offer evidence to indicate that higher industry concentrations may result in fewer rivalrous moves. In such concentrated environments, the dynamism of competitive rivalries may be lessened, thereby suppressing otherwise potentially aggressive moves and counter moves relative to inventory and other operational decisions.