Global Strategy - blog

The presidential election nears in both Finland and the US. Simultaneously, I have spent the last month in Darden School of Business campus and the city of Charlottesville (VA) where I have been exposed to a good deal of consumer goods/services advertising US style. Incidentally, in presidential campaigning and consumer goods advertising, there is a similar cross-country difference between Finland and the US. Finnish advertising and presidential election campaigning makes far less direct references to the rival than the equivalent US campaigning. I do not think you see many ads like this in Finland.

What are the consequences of more direct rivalry where actions are aimed directly at hurting the opponent? From a theoretical, information processing perspective, making direct references to the rival intensifies competition both directly and in-directly. First, by making direct references to the rival, the focal actor provides a cue for the rival to respond. Second, direct references to rivals reduce the cognitive burden of comparing the companies' products (candidates' opinions). This should ease the consumer's (voter's) decision process, intensifying competition between the firms (candidates).

Interestingly, when competition gets tougher, you need more resources to keep up. Over time, this drives out small competitors leading to an industry with few large players. This, according to many strategy researchers, increases the likelihood of direct head to head of competition. And coincidentally, the political arena of Finland is less concentrated than the equivalent US system. This, of course, raises the chicken-or-egg problem (the answer is egg): Is the US two-party system due to aggressive campaigning or is the aggressive campaigning due to the two-party system?

But politics aside, the story shows how head to head rivalry can be understood as a self-fulfilling prediction. This and many other phenomena that strategy scholars study are often equally constructed in people's minds as they are out there. Which is just re-stating what Joseph Porac and colleagues said some two decades ago.