PLAYING DIRTY OR BUILDING CAPABILITY ? CORRUPTION AND HR TRAINING AS COMPETITIVE ACTIONS TO THREATS FROM INFORMAL AND FOREIGN FIRM RIVALS RUNNING HEAD Non - Market and Resource Market Actions

Please do not cite or distribute without the permission of the authors. This article has been accepted for publication and undergone full peer review but has not been through the copyediting, typesetting, pagination and proofreading process, which may lead to differences between this version and the INTRODUCTION Nearly 50% of the respondents in a survey conducted in India by Ernst & Young and FICCI said " their companies have lost business to their competitors due to the latter's unethical conduct " such as engagement in corruption (Singh et al., 2013, p. 19). Indian IT firms invest a substantial percentage of their revenue on human resource (HR) training, an investment that has been growing at double digit rates in percentage terms. However, there is also a wide variation among IT firms in the training they provide to their employees (Bapna et al., 2013). Competitive rivalry/dynamics research has focused predominantly on competitive actions in the product market space, such as product/service introductions, price cuts, and promotion activities (Chen et al., 1992). Recently strategy scholars have started advancing theoretical understanding about firms' non-market competitive actions in the political/governmental spaces (e.g., engaging in corruption, lobbying, pursuing lawsuits) and resource market competitive actions (e.g., HR training, poaching employees from rivals) that they take to improve their competitive position against rivals (Capron et al., 2008; Markman et al., 2009). Yet the field is still nascent and our knowledge on why and when these actions are taken is fairly limited. Specifically, one of the questions in this research stream has to do with why competitive rivalry pushes some firms to engage in non-market actions, such as corruption, while it pushes other firms to engage in resource market actions, such as HR training. While both corruption and HR training – competitive actions of interest in this study in the non-market and resource market arenas, respectively – may be used to gain advantage over competitors, they are inherently different and even contradictory to each other. Corruption is generally illegal in many countries, and managers must consider the possibility of reputation damage and even imprisonment when they engage in corruption to gain competitive benefits by influencing government officials' decisions in their favor (Mishina et al., 2010). In contrast, while HR training is legal, it often takes time to develop human resources and associated technological capabilities to gain competitive advantage over rivals (Dierickx et al., 1989). Further, both actions need investment …