The Red Queen: History-Dependent Competition Among Organizations

We argue that competition among organizations is history-dependent, so that each organization’s competitiveness at a given point in time hinges on the organization’s historical experience leading up to that point. Specifically, we summarize the theory of “Red Queen” competition, where competition de-selects weak organizations and stimulates organizational learning, which in turn further increases the intensity of competition and so further strengthens survivors in an ongoing dynamic of reciprocal causality. Empirical evidence of Red Queen competition is summarized from various analyses of two organizational populations. We conclude that theories and empirical models of competition may be seriously mis-specified, and that the analytic tools of the field of strategic management may lead to incorrect conclusions, if they do not explicitly allow for this form of history dependence in competition.