The impact of temporal framing of competitive actions on rivals’ responses

Abstract

Building on temporal construal and framing theories, we theorize and test how a focal firm’s framing of the future temporal distance (short versus long time horizon) of its competitive actions influences rivals’ responses. Based on the analyses of 2840 competitive action announcements of 28 duopoly firms from 14 industries, we found that a focal firm’s use of longer temporal distance in its competitive action announcements related negatively to rivals’ response speed and the likelihood of matched action from rivals, but positively to the strategic significance of rivals’ responses. These results offer two broad insights to existing research in competitive dynamics. First, the results highlight the role of language as a competitive vehicle in inter-firm rivalry and point to dilemma faced by focal firms in temporal distance framing. Second, the results suggest that using longer temporal distance may benefit the focal firm by delaying rivals’ response speed and preventing matched responses, but may hurt the focal firm by prompting rivals to undertake responses with greater strategic significance and to engage in competitive differentiation (unmatched responses). Thus, these results point to the complexities and dilemma facing focal firms in using temporal distance framing in their competitive announcements.