Competitive Actions under Rival's Attack

Abstract

This paper examines the effects of two resource-based factors, technological prestige and free cash flow(FCF), on competitive actions under rival's attack. Building on competitive dynamics perspective and resource based view, this study propose that each of two resource- based factors has curvilinear effects on competitive actions, and these effects become strengthened by rival's attacks. The findings support the proposition that when rival's attack is low, each of two resource-based factors has the U-inverted influence on competitive actions. That is, greater resource impedes the competitive actions. When rival's attack is high, it reverses the directionality of the prestige-action relationship into J-shape relationship, and the FCF- action relationship into U-shape relationship. That is, greater prestige is associated with more competitive actions, whereas, low and high levels of FCF enable firms to take more competitive actions.