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Competition | Peer-Reviewed Research

Compliments Of The Chef

What Happens When Food Trucks Mix Business, Peer Pressure And Deliciously High Standards?

Based on research by Scott Sonenshein Otilia Obodaru (former Rice Business Professor) and Kristen Nault

What Happens When Food Trucks Mix Business, Peer Pressure And Deliciously High Standards?

  • Competition is usually viewed as a ruthless battle to capture scarce resources. But in some cases, mutual interests inspire rivals to cooperate.
  • Competing businesses can form strategic groups that maintain each company’s identity while acknowledging and upholding standards for collective benefit.
  • These rivals cooperate to preserve the group’s overall reputation for excellence, and compete inwardly to best exemplify its core traits.

“Bury your competition,” former GE CEO Jack Welch famously told aspiring business leaders. A generation of executives accordingly set forth to do business with instructions fit for a Viking. In an existential battle for market share, Welch taught, only those willing to “steal their employees” or “steal their salespeople” would survive. Business schools advanced this gospel, developing theories with firms categorized as “attackers” or “defenders.” No one, though, delivered the manifesto to food-truck owners–entrepreneurs on wheels who are both changing the way we eat and rewriting the rules of competition.

When current Rice Business school professor Scott Sonenshein and former Rice Business professor Otilia Obodaru joined research analyst Kristen Nault in a study of food trucks in a major Southern city, they found a surprise. The food trucks operated in a business environment where would-be competitors not only welcomed newcomers, but actively supported one another. Doing so, the professors discovered, wasn’t merely an ethos of one or two angelic individuals. It was embedded in the group’s DNA. The members had crafted a strategic group identity, one that shaped both its competitive and cooperative behaviors.

When competition did occur, the researchers found, members competed to be the best in the group rather than over resources.

Food trucks are the fastest growing sector within the restaurant industry, generating approximately $850 million in revenue in 2015. It’s no longer unusual to read about emerging culinary stars who left more traditional corporate jobs to take up a life on wheels. In fact, 46 percent of the study’s informants had no prior experience in the broader food-services industry. Some first entered the food truck business because they lost their jobs in other fields such as education or information technology; others saw themselves as businesspeople seeking new ventures.

No matter how varied their backgrounds, all the food truck operators told the researchers they’d felt drawn to a collective identity, regularly referring to their peers as their “community.” Indeed, success seemed to demand this. In the food truck business, natural barriers to entry are such that without the group’s help, a newcomer probably won’t advance very far. Violate the taboos, and a would-be food truck operator may find herself shunned. These unwritten rules include a commitment to serving non-fast-food-quality fare and to keeping the trucks immaculate. “Trucks that are dirty…. That would be when you get kind of the cold shoulder,” one truck operator said.

Perhaps most distinctively, the group’s identity revolved around a belief that the market is a pie big enough for all. It’s pretty to think so, of course. But how well does this ideal actually translate into action? Overwhelmingly, it turns out. Buoyed by their sense of communal identity, members regularly help each other, even at a great cost to themselves.

Parking is a case in point. The scarcest resource for food truck operators, and one limited by laws of time, space and ordinance, parking could easily be a source of competitive secrecy and a flashpoint for conflict. Yet newcomers told the researchers that established operators “were more than willing” to help them secure parking permission in different locations. This generosity extended to ingredients and other resources as well. In a pinch, food truck owners often donated cooking or cleaning supplies to others who ran out. And everyone seemed to abide by the rule that if someone else got to a spot first, you drove to another location.

The trucks certainly competed with each other, but the rivalry had a unique flavor. Rather than trying to crush their rivals, members of the group competed to whip up the most mouth-watering foods, move through the city most nimbly or invent the most novel delicacy. By supporting any colleagues who embraced their core tenets, members protected local food trucks’ reputation as purveyors of some of the tastiest food in town.

They also crafted a business culture that needn’t be restricted to food. A group commitment to decency, cooperation and industry excellence, the truck operators have found, naturally leads to higher demand and innovation. And with inventions like the Korean taco, it’s not just the vendors who win.

Scott Sonenshein is the Henry Gardiner Symonds Professor of Management

Otila Obodaru is a former assistant professor of management at Jones Graduate School of Business at Rice University. Kristen Nault is a research analyst at Rice University.

To learn more, please see: Sonenshein, S., Nault, K., & Obodaru, O. (2017). Competition of a different flavor. How a strategic group identity shapes competition and cooperation. Administrative Science Quarterly. 41. 629–658

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