Networks of Competition: The Foundation of Market Structure and Competitive Constraint in Organizational Ecosystems

Abstract

Research in organizational ecology demonstrates that an organization’s competitive position within its market is highly associated with its survival chances, and that patterns of competitive constraint among organizations influence how markets evolve. However, the literature’s conceptualization of market structure is relatively coarse and static; it does not explore how individual organizations’ competitive positions shift or how market offerings change over relatively short intervals of time. In this study, I use social network analysis to study the structure of organizations’ competitive relationships directly. I examine both how changes in the structure of an organization’s competitive environment influence its survival chances, and how the structure of organizations’ competitive relationships affect the stability of market offerings. With a combination of a large crowd-sourced restaurant dataset from Yelp.com and census tract information from the American Community Survey (Census Bureau, 2009; Yelp, 2019), I apply methods from social network analysis, text analysis, and geographic information systems to track how restaurants’ competitive relationships change over time and space, and to study how these changes influence restaurants’ survival chances and overall market stability. This study provides evidence for new mechanisms of competitive constraint among organizations (niche centrality and niche compression) and new mechanisms of market stability (niche redundancy), offers a new theoretic framework for studying market structure and organizational evolution, and has critical implications for theory in the field of organizational ecology.