Competition and the Formation of Inter-firm Differentiation Following the Dominant Perception

A Case Study of the Online Securities Industry

Abstract

In this paper, in order to answer the question: “In an industry where imitation by competitors is easy, how has differentiation between companies been created and maintained?" we provide a new framework, based on the Dynamic Capability-Based View of the Firm and Action System Theory. On the basis of this framework, we analyze the early stages of competition in the online securities industry in Japan. We found that when a Dominant Perception created in an industry is strengthened by the actions of companies, the strategy of a successful company may not be imitated for several years and consequently that an expansion in differentiation between companies may occur.