Firms with high strategic stakes in achieving success in an industry generally are destabilizing because they may be willing to accept unreasonably low profit margins to establish themselves.

Question

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Firms with high strategic stakes may be willing to accept unreasonably low profit margins to gain a foothold in the industry and achieve long-term success. This can create instability as it puts pressure on other firms to also accept lower profit margins to remain competitive.

Firms with High Strategic Stakes in Achieving Success in an Industry