Enemy Mine? When and How Incumbents Place Market Entrants Under Competitive Managerial Attention

Abstract

To engage in effective competitive action, incumbent firms have to identify market entrants as competitors. To advance our understanding of when and how incumbents identify entrants as competitors, we revert to the literatures on competitive dynamics, team faultlines, and managerial attention. Building on these literatures, we hypothesize that two dimensions of an entrant’s market growth strategy–speed and irregularity–interact with the entrant’s market scope in shaping incumbent’s competitive managerial attention. Furthermore, as management teams differ in their ability to process information, we argue that these effects are contingent on the incumbent’s management team faultlines. To test our hypotheses, we use unique 10-year panel data from the European airline industry, covering the entry and growth of the Gulf carriers in the European market. Our data draws on multiple sources, such as flight-schedule data, airline annual reports, CEO press interviews, and biographical databases. Results largely supp...