The Red Queen Effect: Principle, synthesis and implications for strategy

Abstract

Organisations competing with others seek a competitive advantage by improving their position compared to that of their rivals. Once they have gained this advantage, their competitors will in turn try to obtain an advantage in order not to be overtaken or left behind. This gives rise to a dynamic within the sector that makes it necessary for firms to invest ever more resources in order ultimately to remain in an identical competitive position. In the literature, this competitive spiral is called the Red Queen Effect (RQE). The aims of our research paper are threefold. First, we present this competitive process together with the main contradictory findings available in the literature. We then attempt to identify the contributions of the RQE theory by positioning it in relation to the main streams of research in strategy in order to highlight where it is similar to them and where it differs. Finally, an examination of the limitations enables us to identify future avenues for research on the RQE.