Social and Behavioral Sciences Commons^™

A Multilevel Model Of Multimarket Contact: Competence Depletion And Punctuated Forbearance Hypotheses, Thomas E. Will

Organization Management Journal

Multimarket contact (MMC) research establishes a positive relationship between MMC and firm-in-market level prices and margins, supporting the mutual forbearance hypothesis that firms confronting one another in multiple markets tacitly collude. This article proposes that the MMC dynamics generating short-term firm-in-market level advantages paradoxically undermine firm-level performance over the long term. Examining recursive relationships traversing levels of analysis, I integrate a distinctive competencies perspective with the prevailing positional advantage perspective on MMC. At the firm level, I contend that MMC undermines competence development. At the population level, I propose that MMC attenuates the concentration stability upon which forbearance rests, such …