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 that flurries of intense rivalry punctuate extended periods of mutual forbearance. For firms exposed to the competence depleting influences of MMC, punctuated forbearance threatens performance. The competence depletion and punctuated forbearance hypotheses here advanced promise to sensitize future research efforts to MMC’s adverse strategic implications.