Cheng Gao is a doctoral student in strategy at Harvard Business School. His research interests are in non-market strategy, business-government relations, and emerging markets innovation. Before academia, Cheng was a management consultant at Oliver Wyman, where he worked on engagements in strategy, operations, and risk management for Fortune 500 clients and was co-captain of the Harvard recruiting team. Previously, Cheng was principal research assistant to a former U.S. deputy assistant secretary of state at CSIS, a non-partisan Washington policy think tank. Cheng graduated from Harvard College with high honors in economics and was a recipient of the Dunster Shield Award.
Competition as Strategic Interaction
Strategic interaction has been a topic of scholarly inquiry dating back to the 1960s. Drawing on several seminal examples, we explore the nature of the concept, comparing it to other forms of competition in strategy and organizations. Next, we organize and review the findings of three ostensibly separate theoretical perspectives that have arisen from game theory, competitive dynamics, and institutional theory—each with its own assumptions, constructs, methods, and findings—and we identify core insights about how firms compete against one another in established markets. Based on our evaluation, we argue that a promising research opportunity for strategy lies in exploring how firms strategically interact in new markets and which moves are most effective in these contexts.
Keywords: competitive strategy;
HomeAway: Organizing the Vacation Rental Industry
In less than 10 years, cofounders Brian Sharples and Carl Shepherd had transformed HomeAway from just another Internet startup into the world's leading vacation-rental marketplace—a global online platform that links customers seeking vacation-home rentals to the property owners and managers who supply them. The case traces HomeAway's founding and acquisition-led growth, its 2011 IPO, and the core elements of its subscription-based business model. By 2014, incumbent travel giants like TripAdvisor and high-profile startups like Airbnb had begun to enter the vacation-rental sector. To stay ahead, HomeAway initiated a pilot cross-platform collaboration to list some of its properties on Expedia's site. More momentously, Sharples was also weighing a new commission-based revenue model that promised to attract a broader array of property listings but at the risk of undermining HomeAway's existing business.