The role of industry perceptions in competitive responses

Abstract

PurposeThe purpose of this paper is to examine the impact of managerial perceptions of the competitive environment on shaping the way firms respond to their rivals in terms of speed, intensity, innovativeness and breadth of competitive responses.Design/methodology/approachThe paper develops a research model based on current literature of competitive dynamics and then test this model in 174 firms selected from 22 manufacturing, trade and service sectors in Greece.FindingsThe results indicate that managerial perceptions regarding the competitive environment affect the competitive response behaviour of companies in terms of specific characteristics and thus can be used as predictors of responses to competitive actions. This is in line with recent research in competitive dynamics, arguing that managers decode cues of their competitive environment in terms of threats and opportunities and respond to them accordingly.Research limitations/implicationsThis study could benefit from a larger sample and replication in more countries. Moreover, more perceptional influences on competitive response characteristics should be examined in depth in future research with a view to enhancing awareness of competitive interactions.Practical implicationsManagers will develop a better understanding of factors influencing competitive response characteristics and will be able to better predict rivals' retaliation schemes when initiating competitive actions and foresee forthcoming industry changes.Originality/valuePrevious research in competitive dynamics is associated with measuring the impact of various measurable situational and environmental characteristics, such as industry growth and organizational age, in competitive response characteristics. It instead focus on the role of managerial interpretations of the competitive environment and how they affect the way they respond to a firm's competitors.