Co-evolutions within the sporting goods industry: Personal interaction with crucial stakeholders.

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Master thesis – International Business and Management

Co-evolutions within the sporting goods industry:

Personal interaction with crucial stakeholders.

The case of Adidas, Puma and Nike

By Martijn Wolthuizen

S2183455

University of Groningen Faculty of Economics and Business

Nettelbosje 2 9747 AE Groningen, The Netherlands

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Master thesis

International Business and Management

Co-evolutions within the sporting goods industry:

Personal interaction with crucial stakeholders.

The case of Adidas, Puma and Nike

By Martijn Wolthuizen

S2183455

Supervisor:

R.W. de Vries

Referent:

J.A. Neuijen

Word count: 16.405

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Abstract

There is no single theory of selection or adaptation which can explain how and why firms coevolve and develop over time as they do. Therefore, this thesis considers a joint outcomes of adaptation and selection. Adaptation and selection are not opposing forces, but interrelate and co-evolve. A case study is conducted to study the co-evolution in the sporting goods industry, which is formed by the relationship between the athletes and the organisations. This study finds that extensive personal interaction with crucial stakeholders can create a competitive advantage, if it fulfils the criteria to be valuable, rare, difficult to imitate and non-substitutable. When crucial resources are thoroughly integrated within the firm, they can contribute to an area of competences.

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Table of Content

1. Introduction ... 5

2. Literature review ... 8

2.1 The adaptation-selection debate ... 8

2.2. Institutional theories ... 9

2.3. Four engines of co-evolution ... 10

2.4. Properties of co-evolution ... 11

2.5. Path dependency ... 12

2.6. Managerial intentionality ... 12

2.7. Resource based view, stakeholder approach and competitive advantages through sport sponsorship ... 13

2.7.1. Resource based view ... 13

2.7.2. Stakeholder theory ... 14

2.7.3. Sport sponsorship ... 15

2.7.4. Sport sponsorship as a competitive advantage ... 16

3. Methodology ... 17

3.1. Research design ... 17

3.2. Data ... 18

3.3. Methodology for the analysis ... 19

4. Findings ... 20

4.1. Historic background of the global sporting goods industry ... 20

4.2. Case descriptions ... 21

4.2.1. Gebrüder Dassler Schuhfabrik ... 21

4.2.2. Adidas ... 21

4.2.3. Puma ... 22

4.2.4. Nike ... 22

4.3. Case analysis ... 24

4.3.1. Within case analysis ... 24

4.3.2. Between case analysis ... 30

4.3.3. Overview ... 33

5. Discussion ... 34

5.1. Evolution or Co-evolution... 34

5.2. Selection or Adaptation ... 35

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5.4. Athlete sponsorship and the resource based view ... 39

6. Conclusion ... 41

6.1. Theoretical implications ... 41

6.2. Practical implications ... 42

6.3. Limitations and further research ... 42

References ... 43

Appendices ... 47

Appendix I Extensive case descriptions ... 47

Appendix II Current global sporting goods industry ... 62

Appendix III Historic overview in numbers ... 64

List of Figures

Figure 1. The Swot model. ... 13

Figure 2. The organisational life cycle ... 39

Figure 3. Puma’s 5 key strategic priorities ... 55

Figure 4. Porters five forces model ... 62

Figure 5. Yearly Revenue of Nike, Adidas and Puma. ... 64

Figure 6. Yearly Revenue of Nike, Adidas and Puma. ... 64

List of Tables

Table 1. Gebrüder Dassler Schuhfabrik 1920's - 1940's ... 25

Table 2. Adidas 1950’s and 1960’s ... 25

Table 3. Adidas 1970’s and 1980’s ... 26

Table 4. Adidas From 1990’s ... 27

Table 5. Puma 1950’s and 1960’s ... 27

Table 6. Puma 1970’s and 1980’s ... 28

Table 7. Puma From 1990's ... 28

Table 8. Nike 1950’s and 1960’s ... 29

Table 9. Nike 1970’s and 1980’s ... 29

Table 10. Nike From 1990’s ... 30

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1. Introduction

How do firms co-evolve with their environment? Most of the scholars in strategy and organization who study this question look at environmental change as an exogenous variable (Baum and Singh 1994, Baum and Korn 1999). When they try to describe how and why organisations tend to become isomorphic with their environment, they only look at the processes of either adaptation or selection. Questions of how organizations systematically influence their environments and how organizational environments can influence those organizations at the same time are much less frequently examined (Lewin and Volberda, 1999).

In their study, Flier et al (2003, p2167) build on Lewin and Volberda’s (1999) definition of co-evolution as “the joint outcome of managerial intentionality, institutional, and selection effects, to point out that co-evolution ‘approximates a mutual-causal, deviation amplifying, positive feedback process’, in which A reacts to B, and B to A, and so on, until halted by a damping mechanism”. Interaction effects between levels of analysis are a key phenomenon to be studied in co-evolutionary research.

There is no single theory of selection or adaptation which can explain how and why firms coevolve and develop over time as the way they do (Dooley and Van de Ven, 1999; Van de Ven and Grazman, 1999; Van den Ven and Poole, 1995). According to Volberda and Lewin (2003), it is becoming obvious that a single explanation for becoming successful has reached its limit. Instead, scholars should consider joint outcomes of adaptation and selection instead of employing a single theme. Adaptation and selection are not opposing forces, but interrelate and co-evolve.

According to Volberda and Lewin (2003), for co-evolution to occur, the population needs to consist of heterogeneous firms that have adaptive or learning capabilities. Besides these capabilities, they should also be able to interact and mutually influence each other. In the absence of these basic dynamics, co-evolution does not take place (McKelvey, 2002).

Co-evolution took place in the sports equipment industry, where Adidas and Puma first

revolutionised this industry by building relationships with stakeholders, namely athletes. By looking at the individual needs of athletes and by observing and talking to them, they introduced a new philosophy of industrialized craftsmanship. These interactions with crucial stakeholders provided them with innovative new shoes, where the use of athletes for sponsorships provided them with legitimacy and gave them access to the sport market.

In the 1970s, this personal interaction with athletes was even further developed by Nike. By paying attention to the needs of the athletes, through intensive personal interaction with them and by integrating the athletes within the firm, Nike created a competitive advantage for the upcoming company, which expanded through the use of sponsoring athletes.

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6 In this line of work, the personal interaction with these crucial stakeholders is neglected. Adidas showed that by looking closely at the individual needs of athletes and by observing and maintaining personal contact with them, these athletes can become more than ‘just’ a marketing tool. The athletes set an example and provided legitimacy for the company. Through personal interaction with crucial stakeholders, the company can create a competitive advantage through innovation. Because customers realise that there is also a commercial side to sponsorship, they have a critical attitude toward the sponsorship (Meenaghan & Shipley, 1999). This implies that organisations should be sensitive regarding the promotion of athletes and use their stakeholders in multiple ways. The resource based view of the firm argues that when a resource is used in the right way, it can create a competitive advantage for the firm. Organisations are able to obtain these competitive advantages by implementing strategies that optimise their internal strength, respond to external opportunities, neutralize external threads and avoid organisational weaknesses. According to Barney (1991), in order for these resources to create a competitive advantage, they need to be valuable, rare, difficult to imitate and non-substitutable.

Stakeholders are described as “those groups and individuals who can affect or be affected by the actions connected to value creation and trade” (Freeman, 1984: p25). By adopting the relationship between the organization and their stakeholders, organisations are supposed to have a better chance to deal with challenges. Besides effectively manage the organisation, the stakeholder theory helps organisations creating legitimacy. It also helps management with the creation and maintenance of the relationships with their stakeholders, creates value and helps to avoid moral failures.

So the main question for this research is:

To what extent can personal interaction with crucial stakeholders create a sustainable competitive advantage for an organisation?

To analyse how personal interaction with crucial stakeholders can create a sustainable competitive advantage, I will look at the case how Adidas and Puma revolutionised their industry and compare this with the rise of their biggest competitor, Nike. To answer this question, the history of these three companies is placed in a co-evolutionary perspective, related to the resource based view, with an emphasis on path dependency, managerial intentionality and, for this case, athlete sponsorship. Within the co-evolutionary perspective, important concepts are path dependency, managerial intentionality and the resource based view. Regarding path dependency, organisations gather knowledge in their course of existence which makes them repositories of skills that are unique and often difficult to imitate. These skills are the sources of both inertia and distinctive competence (Hutzschenreuter et al., 2007). The resource based view of the firm argues that when a resource is used in the right way, it can create a competitive advantage for the firm and managerial

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7 The next chapter will further develop the theoretical background, in the form of a literature review. The chapter will start with a review of the coevolution literature, followed by the relevant concepts, institutional theories, path dependency, managerial intentionality and the resource based view. The last section of the chapter reviews sport sponsorship literature.

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2. Literature review

Since there are different views on how to be successful, this chapter starts to set out the adaptation-selection debate to explain these different views, followed by institutional theories. After that, co-evolution theory is analysed by describing the properties and engines of this theory. Hereafter, the relevant factors path dependency, managerial intentionality and the resource based view are described. In the last section, a review is given of the sponsorship literature. That section starts with sport sponsorship literature, related to the resource based view, and finishes with sport sponsorship as a competitive advantage.

2.1 The adaptation-selection debate

Scholars argue which are the best ways for innovative performance, which is reflected in the adaptation-selection debate. Within this debate, there are two opposite views. On the one hand, there is the adaptation perspective, which considers pro-active behaviour to be the best condition for innovative performance. On the other hand, there is the selection perspective, which considers inert firm behaviour to be to be the best condition to achieve successful innovations (Meeus and Oerlemans, 2000).

The adaptation argument is derived from the evolutionary theory of the firm, whereas the selection perspective (which builds on inertia theory) is derived from population ecology. Inertia means that the rate of reorganizational change lower is than the rate at which environmental conditions change, which is caused by limited learning capabilities (Hannan and Freeman, 1984).

These two perspectives have a different appraisal on the change of a firm’s survival. The adaptation theory allows for certain structures and practices that can overcome inertia and can increase the generation of innovation, whereas the selection theory rules them out (Meeus and Oerlemans, 2000). According to Meeus and Oerlemans (2000), within the selection perspective, dealing with risks and uncertainties (associated with change and consequently inert behaviour) are considered as the best safeguard for survival. In contrast, the adaptation perspective allows for a better fit between strategic choice and environmental change, as it increases life chances of organisations.

To expand on the selection perspective, according to population ecology theory, environments select organizations through resource scarcity and competition (Lewin and Volberda, 2005). So, managerial intentionality should have little or no impact on selection. The inertial pressures prevent

organizations from changing in response to their environments. Therefore, organisations are unable to adapt. Within this theory, firm survival is a function of high reliability and specialization. So, this implies that, in the long run, managerial actions make no difference. According to Lewin and

Volberda (2005) managers should focus on their niche and optimize the organisational specialisation, and then hope for the best.

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9 So, different theories suggest that to be successful, organisations must adapt to their environment, while other theories say that organizations have the discretion and the strategic capacity to select, enact, and shape their environments. The middle-way here is to say that adaptation is a dynamic process subject to both managerial action and environmental forces. The implications for firm strategy are that management should take the many ways in which organizations interact with their environments into account (Lewin and Volberda, 2005). Managers should select the environment in which the organisation should compete. To maximize the organisational performance within this environment, managers must design the organizational structure that will best fit this environment. Moreover, they have to actively shape and enact it and determine the performance criteria for measuring success (Lewin and Volberda, 2005).

2.2. Institutional theories

From a co-evolutionary research point of view, the selection environment plays an important role. Regulatory agencies are able to influence the 'rules of the game', which influence the external environment of organisations. The interaction of path dependencies and managerial intentions creates different paths and positions for organisations, which are also highly influenced by institutional forces (Hutzschenreuter et al., 2007).

Institutional theories focuses on why organizations exhibit similar characteristics within a population (Lewin and Volberda, 2005). According to DiMaggio and Powel (1983), because most firms will mimic the behaviour of other firms in their institutional environment, organisations in the same field tend to look the same after a certain period of time. This process of homogenization is called

isomorphism. Isomorphism is a process that forces one organisation to resemble after other organisations that face the same set of environmental conditions. This approach suggests that organisational characteristics are modified in the direction of increasing compatibility with environmental characteristics. Because of coercive, normative, and mimetic isomorphism, organisations become more homogeneous than unique.

Coercive pressure is derived from political influence and the problem of legitimacy. It results from

informal and formal pressures on organisations by other organisations. Organisations are dependent upon other organisations by cultural expectations within the society they function in. With these pressures, organisations may feel a force to join in collusion (DiMaggio and Powel, 1983).

Mimetic pressure results from standard responses to uncertainty, which is a powerful force that

encourages imitation. When there is a lot of uncertainty, organisations may model themselves after other organisations. The reason behind this phenomenon is very simple, if an organisation faces a situation with an unclear solution, imitation may yield a viable solution with little expenses (DiMaggio and Powel, 1983).

Normative pressures stem from professionalization, which DiMaggio and Powel (1983, p152)

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2.3. Four engines of co-evolution

According to Volberda and Lewin (2003), it is becoming obvious that a single explanation for becoming successful, as the adaptation-selection explanations, has reached their limit. Instead, scholars should consider joint outcomes of adaptation and selection instead of employing a single theme. Adaptation and selection are not opposing forces, but interrelate and co-evolve.

They identified four engines of co-evolution that drive specific patterns. These four engines illustrate “the extensive range of evolutionary paths that can take place in a population of organizations” (Volberda and Lewin, 2003, p2111).

The first two engines, naïve- and managed selection, are driven by the basic principles of the Variation-Selection-Retention (VSR) principles. After a period of variation, a natural process of selection takes place. The organisations that best fit the environment and are able to adopt to the changing circumstances are able to survive. Variation occurs through random change initiatives. Hereafter, selection takes place, because of the competition for scarce resources. Retention involves forces that allow organisations to maintain the selected initiatives.

The first engine is the one of naïve selection. Within this engine, evolution generates to better fit in the selection environment. This selection occurs through the competition of scarce resources. This way of selection results in valuable routines and capabilities that give organisations competitive advantages. The organisations that match both their internal as their external selection environment are ‘selected in’, which means they are able to survive the environment. The organisation who fail are ‘selected out’. When a division or unit is ‘selected-out’, it is shut down, sold or resources are withdrawn. Within naïve selection, management is passive and senior managers are not trying to actively manage the processes of evolution of the individual units. They do not actively seek to adjust an organization to its environment. The selection is more a random process (Volberda and Lewin 2003).

Where in naïve selection, selection occurs through random processes, within managed selection, managers have a tendency to develop preferences for certain reactions to variations. Instead of blind selection, within the previous engine, selection becomes more based om past experience. Managers may develop a control system which enables them to anticipate to the competitive environment. This creates a more differentiated internal selection within the organisation, which gives managers the ability to block perceived inadequate or dangerous actions before they are executed.

Managed selection gives a more complex co-evolutionary processes than naïve selection, because it allows for a mix of intelligent variation and selection processes. None the less, managerial

intentionality is still limited (Volberda and Lewin 2003).

Were selection is the basic driver for naïve and managed selection, co-evolution journeys can be driven by engines that reflect the intention of the management (Van de Ven and Poole, 1995). Managers are able to shape the organisational environment and making strategy involves multiple levels of management in a co-evolving process (van Cauwenberg and Cool, 1982).

This is represented in the engine of hierarchical renewal. Under this view, the organisation represents the aspirations and strategic intent of the top management. The ideal role of

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11 bounded rationality (March and Simon, 1958; Simon, 1947). Due to the competitive environment and internal resources constraints, managerial actions are limited.

In reality, co-evolution is often less centralized, less rational and more multifaceted than displayed in hierarchical renewal (Van Cauwenberg and Cool, 1982). Therefore, Volberda en Lewin (2003) created a fourth engine of co-evolution, holistic renewal. Within this engine, renewal is an organization-wide activity which involves each level uniquely. In opposite to hierarchical renewal, where change is driven top-down, this engine suggests a closer link between different organisational levels. This is not about managerial purpose, as before, but about collective sense-making. By scanning and

interpreting data at each level, those levels are embedded in a shared understanding among all members.

A pitfall within this engine is that once strategic schemas are shared, the assumptions and beliefs of organizational members become embedded in the cultural web of the organisation. Over time, they resist to change, which can lead to decreased performance and even failure (Barr et al., 1992).

2.4. Properties of co-evolution

After showing “the extensive range of evolutionary paths that can take place in a population of organizations” (Volberda and Lewin, 2003, p2111), this section considers some of the essential properties of co-evolution.

The first important property of co-evolution is its multilevelness. According to Mc Kelvey (1997), coevolution takes place at two different levels, micro- (coevolution within the firm) and macro-coevolution (macro-coevolution between firms and their niche). Macro-macro-coevolutionary theory focusses on firms within a competitive context, while micro-coevolutionary theory considers the intra firm resources, as well it’s dynamic capabilities and its competences.

Pettigrew (1985) makes the same kind of distinction. He differentiates the external and the internal context. The external context involving economic, political, and social forces and the internal context focusing on resources, capabilities, culture, and internal politics.

Since organizations do not evolve on their own, the second property consists of multidirectional

causalities. Organisations co-evolve with each other and with a changing organizational environment

(Baum 1999; Kauffman 1993; McKelvey 1997), which are driven by mutual direct interactions and by feedback from the rest of the system. Baum and Singh (1994) make a distinction between direct and diffuse coevolution. Direct coevolution occurs when one organisation develops in response to

another organisation, whereas diffuse coevolution occurs in response to several other organisation in a broader system. This results in a complex system of relationships.

Because feedback paths are not always entirely clear, this may result that change in one organisation may produce a counterintuitive change in another organisation. This may result that the reaction to change in one organisation can be contradicted to a simple cause-effect logic. These effects are called nonlinearity. This nonlinearity can complicate the understanding of evolutionary change. A co-evolutionary approach requires that changes in an organisation are not only influenced by a single relationship, but are also influenced by the indirect feedback they receive through the rest of the system.

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12 and bi-directional causalities between an organisation and its environment. This mutual interaction feedback gives a cause-and-effect relationship that gives mutual causality.

2.5. Path dependency

Lewin et al. (1999, p. 535) emphasize that a coevolutionary perspective “considers organizations, their populations, and their environments as the interdependent outcome of managerial actions, institutional influences, and extra-institutional changes”. Whereas managerial intentionality has not been very prominent in international business literature, the role of path dependency has.

In their course of existence, organisations gather knowledge, which makes them repositories of skills that are unique and often difficult to imitate. These skills are the sources of both inertia, created by the sunk cost of past investments and rooted social structures, and distinctive competences

(Hutzschenreuter et al., 2007). Members of an organisation tend be become attached to certain cognitive styles, behavioural dispositions and decision heuristics. When they accumulated these skills, they provide an organisation with opportunities to further improve their know-how and strengthen their unique advantages, although these improvements are realized slowly and

incrementally. This results in better reliability when it comes to delivering sound and comprehensible products and organisational efficiency and routines (Hutzschenreuter et al., 2007).

On the downside, the same rooted routines suppress the attention span and the capacity to absorb new information, because it rules out the behaviour that is necessary to search for new ideas and are consistent with prior learning (Hutzschenreuter et al,. 2007).

Regarding path dependency, there are two theories. The first one suggests that its best for organisations to follow their history. They need to allow evolution to take place, which fits the selection argument. In contrast of this theory, there are other theories that focus more on adaptation. For instance, managerial intentionality argues that organisational journeys are more multilateral and less determined by tight selection and path dependencies. Organisations do not always adapt to environmental influences, some organisations have the opportunity and power to reshape their environments (Hutzschenreuter et al,. 2007). This concept of managerial intentionality is discussed in the next section.

2.6. Managerial intentionality

According to Hutzschenreuter et al (2007), managerial intentionality is the most neglected factor that influences organisational paths. After accounting for path dependency’s, there are still unexplained variances that remain. This may capture luck, but may also capture the effects of managerial intentionality. Managerial intentionality has many facets, for instance, it is the concept that organizations are not always passive recipients of environmental influence. They also have the opportunity and power to reshape the environment (Lewin and Volberda, 1999).

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13 Another important aspect of managerial intentionality is the aspiration level of the management (Hutzschenreuter et al,. 2007). These levels of aspiration are based on past experience and a reference group. So, performance goals are adapted on the basis of firm-specific improvement in performance and on the basis of comparisons with the performance improvements of competitors. Besides the aspiration levels and the choice of a comparison group, managerial intentionality has a lot to do with organisational learning. It is influenced by how members of the organisation notice and interpret the information and knowledge and how they use this information(Flier et al,. 2003). It is suggested that how higher the absorption level of information, the more pro-active a firm will be. Firms with high aspiration levels and absorptive capacity are more likely to develop more

idiosyncratic organizational paths (Hutzschenreuter et al,. 2007).

From a co-evolutionary research point of view, the selection environment plays an important role on managerial intentionality. Regulatory agencies are able to influence the 'rules of the game', which influence the external environment of organisations. The interaction of path dependencies and managerial intention creates different paths and positions for organisations, which are also highly influenced by institutional forces (Hutzschenreuter et al,. 2007). These institutional theories try to explain how difficult it is for firms to deviate from existing paths, and emphasising on forces (coercive, normative and mimetic) that influence the firm’s path (DiMaggio and Powell, 1983).

2.7. Resource based view, stakeholder approach and competitive

advantages through sport sponsorship

This section describes how a firm can create a competitive advantage through the use of personal sponsorships. I start to describe the resource based view, followed by the stakeholder theory. After this, it sets out the theory about sport sponsorship and concludes how sport sponsorship can create a competitive advantage.

2.7.1. Resource based view

The resource based view of the firm argues that when a resource is used in the right way, it can create a competitive advantage for the firm. Organisations are able to obtain these competitive advantages by implementing strategies that optimise their internal strength, respond to external opportunities, neutralize external threads and avoid organisational weaknesses (Barney, 1991).

According to Barney (1991), in order for these resources to create a competitive advantage, they need to be valuable, rare, difficult to imitate and non-substitutable. A resource is considered valuable when it enables a firm to implement its strategy in an efficient and effective way. It should create

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14 value for customers and should be able to exploit opportunities and neutralize threats. This implies that a resource must also meet environmental conditions, in order to avoid a ‘contingency trap’ (when an organisation possesses a resource that is no longer relevant to the market they operate in) (Fahy et al,. 2004).

A resource that is available to many competitors as well is not likely to provide an organisation with a competitive advantage. This competitive advantage is only created when its created value is not implemented by other firms. These rare resources are highly complex or consist of firm specific knowledge and they help organisations to exploit their creativity. This applies to the physical, human and organisational capital (Barney, 1991).

Besides being rare, the resource should also be difficult to imitate. A firm can be the only one to use such a resource to create a competitive advantage, but if it is easy to imitate, the competitive advantage would not be sustainable. The same goes for substitutions. If a resource has many substitutions, this would not allow for a sustainable competitive advantage (Barney, 1991). Existing literature makes a distinction between assets and capabilities, and in turn tangible and intangible assets (Wernerfelt, 1989,: Mahoney, 1995,: Fahy et al,. 2004). Tangible assets are fixed, with a long run capacity, like plant, land, offices and bank loans. These assets are relatively imitable and substitutable. Intangible assets include intellectual property, like patents and trademarks. These are better protected and less imitable, so they allow better for a competitive advantage (Fahy et al,. 2004).

Capabilities can be described as invisible assets (Itami, 1987). They involve individual- and group skills, organisational routines and interaction with resources. These forms, for example, trust, routines and culture, are very difficult to imitate (Fahy et al,. 2004).

2.7.2. Stakeholder theory

The founding father of the stakeholder theory, Freeman (1984, p25), describes stakeholders as “those groups and individuals who can affect or be affected by the actions connected to value creation and trade”. By adopting the relationship between the organization and this “groups and individuals who can affect or be affected by the actions connected to value creation and trade”, organisations are supposed to have a better change to deal with challenges (Parmar et al,. 2010): From a stakeholder perspective, an organisation can be seen as a set of relationships between groups that have stakes in the activities that make up the business. It is about how managers, employees, financiers, suppliers and customers together create and trade value. The job of the organisation is to shape these relationships and create as much value as possible for these

stakeholders. To understand these relationships and how they change overtime, is to understand the organisation. The organisation has to deal with conflicts of interests and has to make trade-offs in order to operate successful (Freeman et al,. 2010).

Besides effectively manage the organisation, the stakeholder theory helps organisations creating legitimacy. It also helps management with the creation and maintenance of the relationships with their stakeholders, creates value and helps to avoid moral failures. The stakeholder theory challenges managers to identify which stakeholders are actually involved in a particular business activity,

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2.7.3. Sport sponsorship

Sport sponsorship, has evolved as a marketing device in the last centuries (Cornwell, 2008). There are different definitions of sport sponsorship. To start with Meenaghan (1983, p9): “sponsorship can be regarded as the provision of assistance of either financial or in-kind to an activity by a commercial organization for the purpose of achieving commercial objectives”. This definition emphasises the commercial goals of sport sponsorship. Following the definition of Gardner and Shuman (1988, p. 44) “Sponsorship may be defined as investments in causes or events to support corporate objectives (for example, by enhancing corporate image) or marketing objectives (such as increasing brand

awareness)”. So sponsorship can also be seen as a strategic and as a tactical instrument. These definitions show that sport sponsorship is seen as a marketing tool to create brand awareness and a corporate image, but neglects the fact that personal interaction with these crucial stakeholders also could be important.

This study follows the definition of Meenaghan (1994) that sport sponsorship can be seen as an investment in cash in a person, to secure the organisational access to the commercial potential of, and associated with, that person. It also involves the allocation of scares resources to achieve organisational goals (Slack and Bentz, 1996).

The growth of sponsorship can be explained by a few factors. First, it provides an opportunity for exclusiveness, which is not offered by many other forms of communication (Amis et al,. 1999). Secondly, sponsorship offers the opportunity to cross cultural boundaries and thus offers a tool for international marketing (Cunningham et al,. 1992).

When effectively managed, a sponsorship can create a competitive advantage (Amis et al,. 1999). Whereas a positive (expected) performance can result in a positive perception of the brand, a negative performance can result in a negative perception (Brown, 2009), so the selection for a sponsorship is a crucial decision (Walraven, 2012). The sponsorship of individuals might even form the highest form of risk (Walliser, 2003).

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16 Walraven (2012) also differentiates individual factors that affect the sponsorship relation. There needs to be a good ‘fit’ between both parties. The brand has to be related to the sport for optimal success. A second factor is the perceived interested in the athlete. Each customer has a different attitude towards the athlete. One might favour a particular athlete or team, but might have a negative attitude towards athletes of competing teams. The last factor is the perceived sincerity of the sponsor. The perceived motives of the sponsor are important for the attitude towards the sponsorship.

2.7.4. Sport sponsorship as a competitive advantage

As argued before, intangible resources are important to create a competitive advantage. Brand image and reputation are the most important intangible resources, because they are very firm-specific and depreciate relatively slow (Conner, 1991;Grant, 1991; Hall, 1992; Amis et al,. 1997). Brand image and reputation are also the most important reasons for an organisation to enter a sponsorship (Meenaghan, 1991). Brand image and reputation may cause a competitive advantage, which can be enhanced by a sponsorship. Most firms see sponsorship a specific skill, but when combined with other activities, it can contribute to an area of competences (Amis et al,. 1997). Obtaining a sustainable competitive advantage is not static, but a process of constantly moving from one advantage to another (Grùnhaug and Nordhaug, 1992; D'Aveni, 1994; Amis et al,. 1997). In order to create a sustainable competitive advantage with the supply of resources, an organisation must understand what the advantage is dependent on. According to Amis et al (1997), to create a competitive advantage out of a sponsorship, it must possess three factors.

First of all, it must increase the perceived customer value, the product must be desired by the customers. The sponsored athlete can be seen as a proxy for quality. The use of famous athletes is supposed to make the advertisement more believable and creates a positive feeling towards the product (Kamins et al., 1989).

The second requirement is competitor differentiation. The sponsorship must be unique in order to differentiate from its competitors. The advantage depends on creating a difference between companies, which gives customers a reason to choose. To be inimitable, the sponsorship must fit perfectly into the message the company wants to express (Amis et al,. 1997). A sponsorship that is not related to a firm’s strategy, will not create a competitive advantage (Mosakowski, 1993). The message must be superior so that it differentiates the firm from its competitors.

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3. Methodology

This chapter describes the research design and the case study that are used. First, the research design is explained, where section two describes the data and section three the methodology that is used for the analysis.

3.1. Research design

To answer the research question, the history of these three companies is placed in a co-evolutionary perspective, with an emphasis on path dependency, managerial intentionality and the resource based view.

When trying to answer an open research question, a qualitative research methodology is favourable (Daymon and Holloway, 2011). Since this research tries to answer the question how Adidas, Puma and Nike did coevolve with their environment, we can look at the history of these companies. There are enough written documents about these companies to come up with a viable case study to answer the question.

A case study can be defined as “the detailed examination of a single example of a class of

phenomena” (Abercrombie et al., 2000, p. 41), in this case, the co-evolution of the sporting goods industry. A case study can be used for a detailed description of a typical case, to study it in depth and to gain new insights(Thomas, 2004). Because a case study gives a detailed investigation of a concept, it can generate theoretical insights.

In general, case studies are used for exploratory purposes and can be used for both theory building as explaining. For theory testing, a single case is sufficient (Thomas, 2004). The case study represents a research strategy, which is linked to an experiment, history or a simulation (Yin, 1981). Although the result of a case study cannot be generalised to the entire population, it can yield generalizable results (Yin, 1994).

According to Eisenhardt (1989), it is legitimate to add new theories into the research in later stages, since authors are trying to understand the case in as much depth as possible. If a new line of thinking emerges, it makes sense to take advantage of this by linking this to new theory in order to gain new theoretical insights.

To answer the research question: “To what extent can personal interaction with crucial stakeholders

create a sustainable competitive advantage for an organisation?”, the case of Adidas, Puma and Nike

is helpful. As stated before, Adidas and Puma were the first companies who used personal interaction with critical stakeholders, in the form of famous athletes, to create a sustainable competitive advantage.

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18 In the 1970s, this personal interaction with athletes was even further developed by Nike. With paying attention to the needs of the athletes and through personal interaction with them, Nike created a competitive advantage for the upcoming company, which expanded through the use of sponsoring athletes.

This thesis covers a time period from the 1920s till the beginning of the 1990s. The starting point of this thesis is the founding of the Gebrüder Dassler Schuhfabrik in 1924, since Adi Dassler was the first person to personally interact with the athletes.

The scope of this thesis ends in the beginning of the 1990s. After three periods of increasing interactions between the organisations and the athletes, a new period of global competition starts. Integrating athletes into business process, as happened in the period pervious to the 1990s, can be seen as the most successful one. Therefore, the scope of this thesis ends here.

3.2. Data

According to Thomas (2004), the collection of data for case studies can be done in several ways including document analysis, observations or interviews. There are many data available for this case-study of how Adidas, Puma and Nike influenced the sporting goods industry, namely books,

bibliographies of founders, annual reports, market analysis and scientific articles. These detailed descriptions will provide enough materials to analyse the case.

For this research, the author will make use of the book Sneaker wars: The enemy brothers who

founded Adidas and Puma and the family feud that forever changed the business of sport (Smit,

2008), which gives detailed description about the company history of Adidas and Puma, as well of the book Just do it: The Nike spirit in the corporate world (Katz, 1994), which describes the history of Nike.

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3.3. Methodology for the analysis

The actors that are involved in the co-evolutionary analysis are described as replicators and interactors. Replicators are the actors that evolve, where the interactors are the parties that make the interaction possible. These interactors regard how the evolution takes place (Lewin and Volberda, 2003). The processes of the co-evolutionary analysis are described in terms of Variation-Selection-Retention, as explained in section 2.3. (Lewin and Volberda, 2003).

In the finings section, a distinction is made between the within- and the between-case. For the within case, the three dimensions of organisational change, described by Pettigrew (1987), are used. Pettigrew (1987) makes a distinction between content, context and process. The content relates to the question ‘what has changed?’. This relates to the changes in the companies. The context relates to the question ‘why did the organisations change?’ The inner context relates to the changes within the organisations, where the outer context relates to changes in the general environment. The

process is about the ‘how’ of the co-evolution. The between-case analysis is a search for patterns

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4. Findings

This chapter is divided into three parts. It starts with a historic background of the global sporting goods industry. The second part gives a short case description (an extensive case description can be found in Appendix I) and the third part gives the case analysis, which is divided into a within case analysis and a between case analysis.

4.1. Historic background of the global sporting goods industry

The global sporting goods industry consists of (athletic) footwear, (athletic) apparel and equipment. The diverse brand portfolios of the three companies and the complexity of customers demand makes it difficult to give an exact overview of the industry. Therefore, this section will give a historic

overview of the global sporting goods industry (Lipsey, 2006).

The beginning period was a hectic time, characterised by the consequences of two world wars . After the first world war, sports started to appeal to the people. In order to forget about their misery, they started to attend sport clubs. In Germany, the rise of Hitler and his NSDAP provided a stimulant for the industry. Hitler saw sport as an instrument to encourage discipline and comradeship and victories were good material for propaganda (Smit, 2008).

During the second world war, the industry declined. Because of the war, there was little time to play sports anymore. The authorities re-allocated materials for the use of the army and the companies, ran out of materials and out of staff. All over the world, shoe-companies started to produce shoes for their armies. As the war went on, cultural and sporting events were banned, so sport shoes were no longer needed (Smit, 2008).

After the war, the market for sport shoes started to pick up again. For the sales of athletic shoes, promotion at the Olympics became very important. Under the Olympic rules, athletes were meant to be amateurs, so compensations were not allowed. By offering free shoes to the athletes, companies could surpass these rules (Smit, 2008).

In the beginning of the 1960’s, the industry started to globalise. Besides sponsoring athletes of their own country, firms started to expand through the sponsoring of foreign athletes. Around 1972, the companies that competed in the global industry for athletic shoes, started to realise that making, and promoting their brand through the use of shoes, wasn’t the only thing they could do. So they started to produce athletic apparel as well (Smit, 2008).

Around the same time, physical health and self-improvement became more and more important in the US. This interest for a healthy life became the foundation of the fitness-revolution. Within this revolution, more and more non-competitive runners started to sport, leading to a growth in demand for athletic shoes and apparel for non-professional athletes.

Since the companies also started to produce athletic apparel and the boost of the fitness revolution, these apparel were not only used for sports anymore. The line between athletic apparel and normal wear became very close. For the market, this was an opportunity to produce not only for athletes, but also for people who love fashion. Shoes and apparel were not only seen as equipment anymore, but design and image became important factors as well.

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4.2. Case descriptions

4.2.1. Gebrüder Dassler Schuhfabrik

In 1924, the brothers Adi and Rudolf Dassler started the “Gebrüder Dassler Schuhfabrik” in Germany. The business model they first used seemed very simple. Adi Dassler learned about the needs of athletes by observing and talking to them and Rudolf focused on selling (Ind et al,. 2015). After the second world war, the two brothers split the company, due to a huge conflict. Rudolf created Puma and Adi created Adidas. “These two companies reflected the brothers' interests: Puma adopted a more sales-oriented business model, and Adidas was more product focused” (Ind et al,. 2015).

4.2.2. Adidas

The company was formed by Adi Dassler’s philosophy of industrialized craftsmanship and belief in "only the best for the athlete"(Ind et al,. 2015). This philosophy meant that Adidas wanted to design a shoe for the best performance of the individual athlete, but could be produced at industrial scale. The best of the best started to trust Adidas, which generated stable relationships with the athletes. This lead to a profitable period for Adidas.

Adidas’ first success was at the 1954 world cup, were, unexpected, West-Germany won, on Adidas shoes.

According to the rules of the Olympics, the athletes had to be amateurs and were not allowed to be paid. So Adidas started to hand out shoes for free to the athletes. They figured that there wasn’t a better way for publicity for the business. At the medal count, more than seventy of the medals were won in Adidas shoes, leaving the competitors far behind them. This provided the company with many grateful contacts (Smit, 2008).

For the 1972 Olympics in Munich, Adidas would really move into clothing. Adi Dassler figured that shoes only show on television from time to time, but an athletes clothing would be on television the whole time. So Adidas made deals with entire sport teams and federations, instead of targeting individual athletes (Smit, 2008).

At the time of Adi Dasslers dead, 1978, Nike had become a big competitor, and would soon replace Adidas as the largest sports shoe brand. In a response to the rise of Nike, the new management tried to do things differently. They expanded into leisurewear, which was a rejection of Adi’s heritage. As a result, the company lacked resources to compete in these markets, the employees were confused with the new direction, the quality went down and opportunities were missed (Smit, 2008). When Nike first started to rise, Adidas didn’t take the American shoe makers too seriously. Nike started to increase its profits with the start of the jogging boom, while Adidas claimed that “jogging was not a sport”. When they finally realised the huge market potential, they still were not able to create what the customers wanted. Blinded by their rivalry with Puma, they would not see Nike as a competitor (Smit, 2008).

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22 two unique capabilities. With the heritage of their founder, they already had all the capabilities they needed (Adi’s philosophy of industrialized craftsmanship and their focus on quality).

4.2.3. Puma

After the split of Adidas and Puma, most of the original sales people joined Rudolf, so their sales rapidly took off. Being to self-confident, Rudolf Dassler blew his relationship with the German-soccer team, leaving the sponsorship open for Adidas. At this point, Puma became second after Adidas (Smit, 2008).

Puma found itself in a thriving competitive fight with Adidas. The strive for innovative new shoes and the strive to contract the best athletes and a strive for the global market. At different Olympics, Puma used the same strategy as Adidas, handing out free shoes to the athletes. In many cases, Adidas won, so Puma had to focus on a few promising athletes (Smit, 2008).

As the competing war between Adidas and Puma continued, Nike started to rise in the American market. Missed opportunities in the American market (the fitness revolution) resulted that Nike started to outperformed Puma. During the rise of Nike, and after Rudolf Dassler’s dead, Puma’s profits steadily declined, until the early 1990’s, when they were non-existent (Smit, 2008).

For Puma, it was time for new leadership, which came in the form of a vice-president of international marketing and sales, Zeitz. After taking the necessary reorganization measures and replacing

inflexible structures, Puma started to perform again. An important part of this was the positioning of the brand as an international brand for high quality athletic shoes, apparel and accessories. The innovation was focused on the latest trends and customer needs, like in the beginning of the

company. The company was turned from a low-price brand into a sport lifestyle company and one of the three leading companies in the sporting goods industry (about.puma.com, 2015).

4.2.4. Nike

In 1964, athlete Phil Knight and his coach Bill Bowerman founded a company named Blue Ribbon Sports (BRS) (which they changed to Nike in 1971, named after the Greek goddess of victory). At the time the company started, Adidas was market leader, with their high quality shoes. They saw a niche for low-cost but high quality shoes (Katz, 1994).

In 1966, Bowerman created his first design and had them produced by the Japanese company, Tiger. In 1971, when they had sold a million dollar worth of shoes, the company was still reliable on the somewhat shaky relationship with the Japanese producer. Knight thought it was time to launch their own line of footwear, which would wear the now famous swoosh symbol.

Bowermann also started light jogging programs for non-competitive runners. Instead of running as a competitive sport, where you always have to go faster, jogging became a new, easy-going, running session for middle-aged man and women. As Nike stated, one thing that all consumers share is their fear of death. The strive for physical self-improvement and health became the basis for the fitness-revolution. Many authors state that Nike started this revolution, but Knight says that “at least we were right there, and rode it for one hell of a ride” (Katz, 1994: p66).

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23 status of heroes, and the people would listen to what those athletes had to say. Knight believed that the superior abilities of the athletes could speak to anyone’s belief in their own capacity to escape the disappointment and general clutter of daily life. Knight said: “nobody roots for a product”, but they can root for an athlete or a team (Katz, 1994).

In 1988, Nike started its first campaign with its now famous slogan “Just do it”. This new slogan, together with Michael Jordan- commercials and shoes (Air Jordan), resulted in a big commercial bang. Even children in China knew who Michael Jordan was and wanted to wear his shoes (Katz, 1994). This way, Nike became the largest retailer for athletic shoes and apparel.

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4.3. Case analysis

The case analysis is divided in two parts, first, the within case analysis, followed by the between case analysis. The case can be divided into four time zones, which are as follow:

 1920’s - 1940’s The world wars

The case starts in the 1920’s, with the founding of the Gebrüder Dassler Schuhfabrik, since the Dassler brothers were the first to use personal interactions with athletes to produce better shoes. This time zone is characterized by the recovery of the first world war, the leading to the second world war and its outbreak and recovery.

 1950’s and 1960’s Demand for high quality and brand awareness

The second period starts in the 1950’s, when there is a rising demand for high quality shoes and companies start to focus on brand awareness.

 1970’s and 1980’s New marketing opportunities

The third period is characterised by new marketing opportunities, like the use of commercials and slogans.

 From 1990’s Fierce global competition

This thesis ends around the 1990’s, with the start of a new time zone. More and more market players start to sell sporting goods, which lead to the time zone of fierce global competition.

4.3.1. Within case analysis

This section follows the three dimensions of organisational change, described by Pettigrew (1987). Pettigrew (1987) makes a distinction between content, context and process. The content relates to the question ‘what has changed?’. This relates to the changes in the companies. The context relates to the question ‘why did the organisations change?’ The inner context relates to the changes within the organisations, where the outer context relates to changes in the general environment. The

process is about the ‘how’ of the co-evolution.

Since Adidas and Puma started as one company, this section starts with the Gebrüder Dassler Schuhfabrik, followed by the within case analysis of Adidas, Puma and Nike.

Gebrüder Dassler Schuhfabrik 1920’s - 1940’s - The world wars

The outer context of this period is characterised by the recovery of the first- and the start and duration of the second world war. The recovery of the first world war led to an increase in interest for sports. By playing sport, people could forget about their misery and focus on the moment. When the second world war started, the industry collapsed very quickly, since all resources were needed for the Army. The inner context of the company is characterised by Adi Dassler’s focus on the individual needs of the athletes. Here lies the foundation of his latter company, Adidas.

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Content Inner Context Outer Context Process

The first production of athletic shoes, formed for the specific needs of athletes, worn by golden medallist winners.

Development of the focus on the specific needs of the athletes. Split of the brothers (1948), into Adidas and Puma.

Recovery from the first world war, which lead to increasing demand for athletic shoes.

Olympic games in Berlin. Start of the second world war, which led to a collapse of the market for athletic shoes.

First personal interactions with athletes, by observing and talking to them.

Table 1. Gebrüder Dassler Schuhfabrik 1920's - 1940's

Adidas

1950’s and 1960’s - Demand for high quality and brand awareness

Adidas’ first success was at the 1954 soccer world cup, where the West-German soccer team won, while wearing Adidas shoes. This success led to more attention for high quality athletic shoes, increasing the demand for these high quality athletic shoes.

After its big success at the world cup, Adidas started to expand their brand recognition by recruiting successful athletes to wear their shoes. Representatives of Adidas (Horst Dassler, son of Adi) and Puma (Armin Dassler, son of Rudolf) were present at the Olympics, which lead to a fierce battle to contract the best athletes. Horst Dassler was the better of the two, which lead to more brand recognition for Adidas. This lead to increasing demand for high-quality athletic footwear. Under the leadership of Adi Dassler, Adidas focused on improved quality of their products, which lead to a worldwide competitive advantage above their competitors.

Besides this continues focus on quality, Adidas started to expand to athletic apparel. Adidas figured that shoes with their logo on it were not much shown on television. If they also produced track-suits with their logo on it, it would be much better visible.

More attention for athletic shoes, designed for individual needs, which lead to more demand for athletic shoes.

Focus on more brand awareness.

Focus on quality. Product differentiation: also the production of athletic apparel.

Continuous focus on the need of the athletes, which led to successful shoes for the West-German soccer team. Adidas starts to hand out free athletic shoes at Olympic games. Hiring retired athletes, with ongoing

connections.

Recovery from the second world war, which lead to an increasing demand for athletic shoes. West-Germany won the world cup (1954).

Demand for high-quality athletic footwear. Continuous focus on athlete sponsorships and expenditure to apparel. Expenditure to the American market. Sponsorship war with Puma.

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1970’s and 1980’s - New marketing opportunities

While Adidas dominated the global market of athletic shoes, they were still in fierce competition with Puma. The feud that once tore the two brothers apart was still noticeable in their strategy. They mostly competed with each other, neglecting the rise of a new competitor, Nike.

The outer context of this period is characterised by the rise of jogging and the start of the ‘fitness revolution’ in the American market. While Adidas was mainly competing with Puma, Nike responded to the fitness revolution. Because Adidas did not actively respond to this revolution, Nike was able to become a big competitor and eventually suppress Adidas as market leader in 1988.

Besides neglecting to see Nike as a real competitor, Adidas was never able to fully play into the new characteristic of the American market. With the rise of the of jogging and the start of the ‘fitness revolution’, demand for athletic footwear was rising. Because of crucial differences between the markets, Adidas was never fully able to create an athletic shoe that would fulfil the demands of the customers. This way, Adidas missed several opportunities.

In this time, the profits of Adidas had declined which started with the death of the founder of the company. Adidas lost its focus on its once so high quality and on the individual athlete. Advised by two former Nike managers, Adidas started to focus on its previous core-competences, created by founder Adi Dassler.

Not able to play into the new market characteristics. The company lost focus and dominant market position.

Still the focus on their ‘main’ competitor, Puma. Neglected to improve shoes for the American market. Passing of Adi Dassler (1978). Rise of Nike in the American market.

Jogging and the fitness revolution. Rise of Nike as global market leader. New marketing opportunities.

By not understanding the American market and neglecting to see Nike as a competitor, Adidas lost its dominant market position.

Restating its own core competences.

Two former Nike managers join the company.

Adidas started to look back at its original core competences.

Reinventing, by focussing on core-competences, created by the founder.

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From 1990’s - Fierce global competition

The current sporting goods industry is extremely large worldwide and still growing in developing countries. The market is characterised by fierce competition and heavily segmentation among markets. The degree of rivalry has increased in the recent years, by the number and size of active players in the market. Because the market his heavily segmented, it is different for retailers to effectively differentiate themselves, which in turn intensifies the rivalry.

Adidas, now number two in the market and is trying to win the war with Nike, to become number one once again.

Global competition.

Trying to make Adidas the global leader in the sporting goods industry again.

High degree of rivalry. Heavily segmented market.

Fierce global competition.

Table 4. Adidas From 1990’s

Puma

Back when the two brothers were still running a business together, Rudolf Dassler was in charge of the sales of the company. So when the two brothers split up, most of the sales people took his side. For the beginning years, Puma had an advantage over Adidas, because their shoes were much lighter and remarkably sleek. It went wrong for Puma when Rudolf Dassler blew his relationship with the German soccer coach. After a dispute, the soccer coach turned to Adidas, on which shoes the German soccer team would win the world cup in 1954.

Representatives of Adidas (Horst Dassler) and Puma (Armin Dassler) were present at the Olympics, which lead to a fierce battle to contract the best athletes. Horst Dassler was the better of the two, which lead to more brand recognition for Adidas. Puma tried to compete with Adidas, but the company had less means at its disposal, therefore, Puma had to focus. By focussing only on the most promising athletes, Puma tried to gain some sponsorships which would be able to gain brand

awareness.

Puma expanded to the American market, which was a success, so far.

Trying to gain more brand awareness. Trying to get

sponsorships with only the most promising athletes.

Sales took of rapidly, because most of the sales people joint Puma.

End of important relationship with West-German soccer coach.

Recovery from the second world war, which lead to an increasing demand for athletic shoes.

First world cup West-Germany was allowed to participate (1954). Demand for high-quality athletic footwear. Expenditure to the American market. Sponsorship war with Adidas.

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Puma was still focussing on its main competitor, Adidas. Just like Adidas, Puma neglected the rise of the new company in the American market. They also didn’t really comprehend this new market, by not playing into new trends as jogging and the fitness revolution. When they finally recognized Nike as a real competitor, it was too late. The profits had declined and were at some point even non-existent. The decline started with the death of the founder of the company.

Puma was not only outperformed by Adidas, but also by Nike. After a new manager came to the company, Zeitz, Puma started to perform better again. After taking the necessary reorganization measures and replacing inflexible structures, Puma started to perform again. An important part of this was the positioning of the brand as an international brand for high quality athletic shoes, apparel and accessories. The innovation was focused on the latest trend and customer needs, like in the beginning of the company.

Competing only with Adidas and neglecting specific demand for the American market. Deep downfall regarding profits

Fierce rivalry with Adidas.

Losing in the American market. Passing of Rudolf Dassler (1974).

Rise of Nike in the American market. Jogging and the fitness revolution. Rise of Nike as global market leader. New marketing opportunities.

By not understanding the American market and neglecting to see Nike as a competitor, Puma lost market share.

New brand direction. Introducing new manager.

Relocate the brand.

Relocate the brand, to start making profit again.

Table 6. Puma 1970’s and 1980’s

Since the scope of this Thesis ends with the beginning of this time zone, the characteristics of this time zone are the same as described for Adidas.

Puma changed their strategy and is trying to become ‘the fastest brand in the world’. They do this through the use of a sponsorship with the ‘fastest man on earth’ Usain Bolt.

Global competition.

Trying to become ‘the fastest brand in the world’.

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Nike

In the American market, in 1964, a new company was founded, Blue Ribbon Sports (later renamed as Nike). The founders of the company saw a market-niche for high-quality, but low cost running shoes. In these beginning years, the shoes were sold from the back of the car of the founders. In this period, Nike was still a small niche player.

New product, lighter running shoes.

Founded in 1964. Created a new design for lighter running shoes.

Market-niche for high-quality, but low cost running shoes.

Importing lighter running shoes from Japan.

Table 8. Nike 1950’s and 1960’s

In 1972, Nike started to produce shoes with its own logo on it, the swoosh, starting the rise of the company. The outer context of this period is characterised by the rise of jogging and the start of the ‘fitness revolution’ in the American market. Bowerman, co-founder of Nike, started jogging programs for non-professional athletes. With these new programs, jogging was not only for professional athletes anymore, but available for anyone. Increasing interest for health improvement led to the fitness revolution.

While Adidas and Puma were competing each other, Nike responded to the fitness revolution. Because Adidas and Puma did not actively respond to this revolution, Nike was able to become a big competitor for both companies. Especially when Nike started their successful commercials with athletes Michael Jordon and Bo Jackson and their new motto “Just do it”, Nike gained worldwide brand recognition. In 1988, Nike replaced Adidas as market leader. Nike was not chasing anymore, but leading.

Rising of Nike as a global brand. Continued growth.

Introducing new logo and slogan “Just do it”. New products (Air Jordan) and commercials with Michael Jordan and Bo Jackson.

Going beyond the development of athletic shoes and design a shoe for fashion.

Introducing of Jogging (running is not only for professionals)

Increasing interest for health improvement, leading to the Fitness revolution.

Demand for both athletic shoes and fashion. New marketing opportunities.

By playing into the demands of the American market, Nike suppressed Adidas as market leader. Position the brand as dominant market leader.

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Since the scope of this Thesis ends with the beginning of this time zone, the characteristics of this time zone are the same as described for Adidas and Puma.

Nike, as market leader, is using a strategy to “create the world’s most innovative products for consumers across the globe”, to maintain their dominant market position.

Global competition.

Using a strategy to “create the world’s most innovative products for consumers across the globe”.

Fierce global competition.

Table 10. Nike From 1990’s

4.3.2. Between case analysis

This between case analysis describes the co-evolution of the relationship between companies and athletes.

1920’s - 1940’s - The world wars

This first period is characterized by the recovery of the first world war, the leading to the second world war and its outbreak and recovery. This created a shifting in demand for athletic shoes, which made it hard for companies to survive this period.

Because of this changing outer context, the adaption to this context is not the most important characteristic of this time zone. Here, the interaction between the company and the athletes is important. Adi Dassler is claimed to be the first person who really focused on the needs of the individual athlete. He went to see the athletes, observed them and interacted with the athletes. This way, he gained new insights which helped him producing new shoes.

Although this started as a one-way interaction, where Adi Dassler went to the athletes, after shoe companies gained more brand awareness, some athletes found their way to the producers. Instead of just buying what was available in the stores, some athletes came to see the shoe producers to see if they could produce shoes of higher quality.