Theorizing identity-based competition: The case of formation and erosion of competitive positions among political parties

Competition is a central process in every society, but its current theorization is unnecessarily restrictive in its focus on product-centric competition. In this project we broaden the theorization of competition to include situations where competition is not primarily on the technical aspects of the products offered, but on the identification of a customer with the identity of an organization – what we term identity-based competition. Identity-based competition is important in many, but not all, markets – and it is central in the competition among political parties. We draw on the organization theory literatures of identity and social categorization to expand competition theory to include identity-based competition. A core question concerns competitive differentiation, which in product markets is structured around a dominant design or technology. Building on our earlier work, we propose that identity-based competition is structured around an ‘identity template’ – i.e. the taken for granted scale on which organizations can seek to differentiate their identities. The processes of formation and disbanding of identity templates are, however, unclear. We hypothesize, and test empirically, that an identity template forms as expectations of the customers and producers harmonize and become institutionalized around a type of identity differentiation, and that it can be abandoned through a process of de-institutionalization.