Wharton’s Strategic Management has published “How Companies Use (and Abuse) Law for Competitive Gains,” an extended excerpt from a new book by Wharton legal studies professor G. Richard Shell, called Make the Rules or Your Rivals Will. I expect that the book will create a lot of interest and controversy.
From the story:
“Shell?s thesis centers on what he calls ?competitive legal strategy? ? the use of contracts, courts, regulation, and lobbying to secure competitive advantage in business. He shows how Sumner Redstone, Rupert Murdoch, Andy Grove, and Bill Gates, among others, have forced rivals to the bargaining table with litigation, defined the boundaries of their markets with regulations and used politics to fight competitive battles. Nor, Shell notes, is this a recent development. Long before SCO Group tried to gain control over the Linux market with copyright lawsuits, the first manufacturers of sewing machines, automobiles, radios, and even airplanes perfected litigation strategies to control their respective industries. Shell uses examples from business history to illustrate his thesis.”
A concluding point that is worth taking some time to think about:
“Law is perhaps the most hidden of all competitive strategy tools. Many in business fear getting tangled up with lawyers, lobbyists, and bureaucrats, so they keep their distance from legal matters. But it is just this aversion that makes legal knowledge such a rich source of competitive advantage for those who take the time to understand how legal systems really work.”
What comes first – legal strategy classes in business schools or business strategy classes in law schools?