Abstract
In competitive environments, firms take strategic action in pursuit of superior returns or market power that will enhance returns. Drawing upon decades of competitive dynamics research, a model linking strategic action to shifts in market share and returns is presented. Research shows that firms take strategic action when aware of opportunities or threats, able to take action, and motivated to do so. Competitive actions that are not met with responses by rivals generate the most favorable consequences for actors. The greater the number of competitors' responses, and the more quickly they respond, the greater the attenuation of the initiators' gains from their action. Significant strategic actions that are difficult to implement and demonstrate strategic commitment on the part of the actor discourage response. Complex and unpredictable strategic actions promote market share gains, and the number of moves a firm makes is positively associated with profitability. Directions for future research are discussed.
Published Version
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