The Animal That Is Competition

The Red Queen among Organizations: How Competitiveness Evolves. By William P. Barnett. Princeton University Press, 2008. 296 pages. $29.95.

There are several pillars to free market economics. Among these are private ownership of property, price regulation though market action and competition among firms for profit. Given the centrality of competition, one would expect many works out there on how it functions, but the truth is, there are relatively few. Oh, there are tons on how to become more competitive, either overall or in specific areas, and there are countless justifications of the need for competition. But actual examinations of competition per se?

The Red Queen among Organizations: How Competitiveness Evolves is one such book. In it, author William P. Barnett examines competition among organizations. One of his central tenets is implied in the metaphor that provides his title: as the Red Queen in Alice in Wonderland ran faster and faster to stay in the same place, so firms must compete more and more intensely to stay even with their competition. On one hand, that sounds frustrating, but on the other, this continual attempt to accelerate is, quite literally, the price of doing business.

Before I go on, let me be clear on one all too painful subject: Barnett is an academic. While this means he engages in careful research and took the time to let his theories evolve, this means several things for potential readers of Red Queen. First, know that the book is difficult to read. These difficulties range from (unnecessarily) dense prose delivered in smallish font to curious organizational choices in manuscript organization—referring readers in Chapter 3 back to a diagram in Chapter 1 rather than replicating it, for example. Second, Barnett examines two fields in meticulous detail: the commercial banking industry and computer manufacturers. From a learning perspective, I welcome Barnett testing his concepts so thoroughly; as a reader, I got bogged down. Third, the balance is off. At various points Barnett touches on genuine breakthroughs, but he stays so wedded to working out his core ideas that he doesn’t follow them up in the detail they deserve. A prime example of this is Barnett’s discussion of organizational learning. He argues that organizational learning occurs through competition and that individual members of the organization need not be consciously aware of what was learned so long as organizational behavior changes to match market pressures.

That extended caveat out of the way, there are a number of useful points about Barnett’s study. He approaches market competition through an extended ecological metaphor and treats market niches like ecological niches. An advantage here is that it frees you up from overly limited understandings of your competition. Firms don’t just compete against firms in industries formally named as the same; niches shift and blend as the new forces move through the economy.

Second, Barnett’s emphasis on competition as (among other things) a form of learning means that there is a limit to how completely a firm can research a market niche before it enters. Economic action is a kind of study and leads to the purest form of market learning. Though he does not explore it in detail, this suggests the limits to economic intervention by the government. It also suggests that, as in ecological matters, there will always be unexpected side effects to economic intervention. Barnett also sketches in how organizational actions that are justified in terms of learning, such as a firm forming partnerships with others, may actually thwart organizational learning. (If you don’t compete, you don’t have to develop the capacities competition would force you to.) He spends more time on competition works to create economic/ecological fitness.

Third, his discussions of the “logics of competition” of individual markets and his insistence that competition is always multiple and changing rather than binary and fixed provides a much richer and more accurate framework for understanding competition.

Fourth, these combine via Barnett’s ecological thinking: just as a successful organism changes its surrounding environment and so changes the pressures on it, so organizations change their markets and the logics that run through them. Whether they win or lose, their actions in turn change their market.

Fifth and finally, throughout the book, in approaches ranging from the schematic and theoretical to the historical and specific, Barnett discusses, describes, and analyzes not just how competition works on organizations when they are competing against one another, but also how competition functions within organizations. He shows how this competition drives innovation—this is especially clear in the discussion of the computer industry—and change the economy. All this is very useful even if it only allows readers to better understand the effort involved in…standing still.

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