Abstract
We investigate competitive interactions in the context of inventory management by examining how the leader firm's past inventory management affects the challenger firm's current inventory management and how the challenger firm's past inventory management affects the leader firm's current inventory management. The leader and the challenger firms in an industry are respectively the firms holding the highest and second highest market share. We also investigate the moderating effects of market share gap and industry growth on this dynamic relationship. Based on a sample of 4897 firm-year observations in the U.S. manufacturing sector and covering the period 1987–2015, we find that the inventory management decisions of a firm are significantly affected by the actions of its main rival. This dynamic relationship, triggered as a result of competitive imitation in inventory management, is found to be significantly moderated by market share differences between the two firms. We also offer a mathematical model that illustrates the competitive action-reaction cycle regarding inventory decisions, and we extend the existing literature on competitive dynamics to recognize strategic and tactical inventory decisions.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
