Competitive Dynamics Research Research Articles

To attack or not attack? The role of relative status, awareness, and motivation

Competitive dynamics research has often used the AMC framework—awareness, motivation, and capability—to explain how different factors influence the identification of specific other firms as competitors and the likelihood of future competitive interactions with them. However, this stream of research has largely overlooked the role of social evaluations in determining which firms are targeted. We study how a specific form of social evaluation—relative status—impacts the firm's awareness of specific competitors and the motivation to attack them. Whereas prior research has principally viewed the AMC framework as a Gestalt-like black box, our research setting enabled us to measure and explore the interrelationships that occur within the AMC framework. We pose our theory as competing logics: Awareness mediates the relationship between relative status and motivation versus relative status moderates the relationship between awareness and motivation. We tested these competing arguments using a unique dataset of food trucks in a mid-sized city in the U.S. We find that low-status firms exhibit a strong motivation to attack higher-status competitors primarily due to the greater attention the high-status firms garner. Further, we find no support for a moderation effect. Our study helps arrive at a better understand the interplay between awareness and motivation in the context of social evaluations.

Thriving in the global competitive landscape: competitive dynamics and longevity of emerging market firms

Drawing on the competitive dynamics perspective, this study examines how competitive aggressiveness and complexity affect the longevity of emerging market firms. In a longitudinal and survival analysis of 570 publicly listed Korean firms from 1998 to 2017, I theorize and reveal that emerging market firms pursuing competitive aggressiveness and complexity are more likely to survive longer, particularly those competing in industries with high competitive pressure stemming from industry globalization. Broadly, I contribute to the competitive dynamics literature by extending the scholarly understanding of the long-term survival implications of firms’ competitive initiatives, unveiling a new boundary condition—competitive pressure from industry globalization, and broadening the spectrum of competitive dynamics research from Western to non-Western contexts.

Why do High-Status Firms Become Targets of Competitive Attacks? An Examination of Two Explanations

Competitive dynamics research has often used the AMC framework—awareness, motivation, and capability—when theorizing how different factors influence firms’ proclivities to launch competitive moves against other firms. However, this stream of research has mostly overlooked the role of social evaluations in determining which firms are targeted. We study how a specific form of social evaluation, relative status, impacts motivation to act competitively against other firms. Research is divided on how relative status affects competitive moves. Some research suggests that awareness mediates the relationship between relative status and motivation. Other research suggests that relative status moderates the relationship between awareness and motivation. It is important to resolve the relationship between relative status, awareness, and motivation because it can help firms take actions to lower the likelihood that they will become targets of competitive attacks by other firms. Teasing out the effects of the two competing explanations has been difficult, however, because relative status, attention, and motivation are typically not measured directly. We test both mechanisms in a unique dataset of food trucks in a mid-sized city in the U.S. that allows us to overcome this limitation. We find that high-status food trucks elicit greater competitive motivation from other food trucks primarily due to the greater attention the high-status food trucks garner. Further, we find no support for a moderation effect. Our study helps understand the interplay between awareness and motivation in the context of social evaluations.

Competitive Rationales: Beneath the Surface of Competitive Behavior.

Competitive dynamics research has focused on studying whether rivals are able and likely to carry out competitive actions, typically by examining indirect reasons such as characteristics of the actions themselves, the firms involved, or the competitive context. We explore why rivals initiate a specific competitive action at a particular time and situation. Drawing from the philosophy of action literature, we introduce the concept of competitive rationales to examine the primary reasons that cause tactical actions. Given the rapid exchanges characterizing tactical competitive dynamics, we conducted an inductive, multicase study to explore the reasons behind over 800 discrete tactical decisions carried out by 9 professional basketball coaches during 15 basketball games. To garner insight, we develop a conceptual framework revealing their types and scope. Even during intense head-to-head rivalry, most rationales were not rivalrous but were instead organizational-to optimize resource use, strategic consistency, and reputation-or social-to manage relationships. Moreover, the three main types of rationales varied in scope, extending beyond immediate competitive situations and rivals to address longer term, strategic outcomes, and assorted stakeholders. Thus, our analysis reveals these rationales to be complex and potentially difficult for rivals to decipher. It also recasts each component of the dominant awareness-motivation-capability (AMC) model of rivalry, suggesting that awareness is challenged by subtle rationales, motivation drives not only action but also forbearance, and capability is both a requirement and product of action.

The synergistic effect of ego-network stability and whole network position: a perspective of transnational coopetition network

PurposeThe authors selected global automobile manufacturing firms whose sales ranked within 100 in the five years from 2014 to 2018 in the Factiva database to examine how the characteristics of a firm's whole network and ego-network in a transnational coopetition network influence network performance.Design/methodology/approachThe authors analyzed the public news of the sample firms about the coopetition by structural content analysis to build the coopetition networks and access to data on the competitive actions of firms. Then, to measure the variables associated with the coopetition network, such as the structural hole, centrality and ego-network stability, the authors use UCINET 6 that is a widely used piece of software for social network analysis to establishing five undirected binary adjacency matrices.FindingsThe authors find that a firm's competitive aggressiveness mediates the relationship between a firm's whole network position and network performance that emphasizes the need for integrating competitive dynamics research and coopetition research and shows how valuable insights can be gained through such integration. And the interaction of structural hole and centrality impacts competitive aggressiveness and network performance, and the interaction is different under high and low ego-network stability. The integration of whole network and ego-network literature studies provides new insights into firm network literature.Practical implicationsIn the process of cooperation, firms should consider whether they can occupy the structural hole and center as important indicators for partner selection. Too stable relationship will prevent firms from obtaining new resources. Firms should weigh the period of cooperation according to specific situation.Originality/valueThese results indicate that ego-network stability, as an important complementary characteristic of coopetition network, has a significant synergistic effect with structural holes and centrality on competitive aggressiveness and network performance. And these findings expand the current literature on the relationship between characteristics of network, competitive aggressiveness and network performance.

Alert! Treating the language game in competitive interaction seriously

Competitive dynamics research has recently conceptualized, in line with Wittgensteinian tradition, competitive interaction between rival firms as a “language game” – interaction in which speech acts play a visible and influential role. However, extant competitive dynamics research comprises two separate streams of research: the language game school which focuses on rivalry as verbal challenges and responses, and the traditional, theoretically more developed school which studies rivalry as an exchange of “concrete” actions while occasionally including a bulk “signaling” category for speech acts. Our purpose in this paper is to lay groundwork for rigorous and nuanced theorization about why and how companies use speech acts. We present an initial attempt to bring the language school of competitive dynamics research to an equal footing with the traditional school.

Cognitive Complexity, Digitized Analytics Capability, CEO Incentives and Competitive Aggressiveness

The competitive dynamics research has shown that firms with more aggressive competitive behaviors exhibit better performance. However, limited studies have explored the antecedents of a firm's competitive behavior. In this study, we analyze the competitive behavior of firms through a cognition perspective and focus on two dimensions of cognitive complexity: (1) differentiation and (2) connectedness. Differentiation refers to the breadth or variety of environmental, strategic, and organizational concepts embedded in the cognitive framework, and connectedness refers to the development of connections and sophistication among the various concepts. We argue that the biases embedded in complex cognitive structures would influence a firm's competitive behavior, and digitized analytics capability and CEO incentives could modulate these biases. We test our hypotheses using data for 334 U.S. firms from 2008 to 2015. We find that highly differentiated cognitive structures will enable firms to increase competitive aggressiveness while highly connected ones will inhibit firms from taking competitive actions aggressively. Furthermore, we find that firms with higher digitized analytics capability would be capable of competing more aggressively when their cognitive framework is complex. Finally, we find that risk incentives could reduce shirking, and hence, positively moderate the relationship between differentiation and competitive aggressiveness but negatively moderate the relationship between connectedness and competitive aggressiveness. We discuss the theoretical and practical implications of our findings and draw guidelines for future research.

Making Sense of Factor Market Blind Spots: Evidence from Personnel Mobility Networks, 2008-2015

A foundational assumption of competitive dynamics research holds that competition in product markets antecedes awareness of competitive threats, and thus factor market threats are most salient among product market rivals. However, changing economic and technological conditions of digital arenas are enabling threats to encroach from seemingly unrelated domains. Addressing the problem of factor market blind spots (i.e., competitive threats in factor markets without corresponding product market overlap), this study applies a sensemaking lens to develop a model for attentional triangulation, which integrates multilevel, relational cues—firm status, dyadic category similarity, and triadic closure—for triangulating areas of high factor market threat despite low product market awareness. We find support for our hypotheses using a multiplex network sample that combines customer-oriented competitive relations and personnel mobility network data in the information technology arena during 2008-2015.

Retaliation Effectiveness and Acquisition Performance: The Influence of Managerial Decisions and Industry Context

AbstractDespite extensive interest in how acquisitions can increase firm competitiveness, research has given competitive retaliation to acquisitions limited attention. Consistent with process research on managerial decisions during acquisitions, we simultaneously consider the effects of retaliation and internal integration decisions on retaliation effectiveness and acquisition performance. From an international survey in Europe, we demonstrate how managerial integration decisions and the external environment influence retaliation effectiveness to acquisitions and their performance. Specifically, longer integration duration and an open merger and acquisition (M&A) strategy are associated with increased retaliation effectiveness. Meanwhile, a high level of industry M&A activity lowers it. We also confirm that increased retaliation effectiveness is associated with lower acquisition performance. These findings help balance an internal focus in acquisition research, and they clarify the performance implications of acquirer choices that may lead to competitive retaliation effectiveness, as predicted by competitive dynamics research.

Fighting with the Fourth Estate: A Framework of Organization-Media Rivalry for Narrative Control

In this article, I develop a theoretical framework to explain rivalry for narrative control between transgressing organizations and media outlets. I do so by integrating and advancing key insights from competitive dynamics and crisis management research. The first part of this framework conceptualizes the unique tensions, actions, and reactions that characterize rivalry for narrative control following organizational transgressions and distinguishes it from other forms of rivalry. The second part of the framework conceptualizes the role of both journalists’ and organizational leaders’ perceptions in shaping actions and reactions during rivalry for narrative control. This framework expands competitive dynamics research to account for a unique form of rivalry between dissimilar actors and, in doing so, broadens research on crisis management following transgressions to account for such rivalry.

When Do Incumbents Identify Entrants as Competitors?

Incumbent firms frequently fail to identify relevant entrants as competitors. Established research largely falls short to explain this phenomenon. We theorize whether and when entrant’s actions within an incumbent’s market—in particular the pace and irregular rhythm of capacity expansion—emanate signals that eventually result in the entrant being identified as a competitor. We further argue that these effects are contingent to the entrant’s scope in the incumbent’s market, as well as faultlines within the incumbents’ top management team. Using the entry and growth of Middle Eastern airlines into the European airline market as our empirical setting, multi-source 10-year panel data—covering flight-schedules, airline annual reports, CEO press interviews, and biographical data—largely support our hypotheses. We offer contributions to the competitor identification literature, competitive dynamics research, and research on top management teams.

Love Self so Shoot High? CEO Narcissism and Firm Competitive Actions Toward Industry Leaders

Having an inflated sense of self and wanting to have that self-view continually reinforced, narcissistic CEOs are interesting characters and can be formidable rivals in interfirm competitions. Extending prior research on CEO narcissism, we investigate how firms with narcissistic CEOs engage in competitive actions. Using videometric survey methodology on 185 Fortune 500 CEOs from the years 2000—2017, we find that narcissistic CEOs tend to take on industry leaders by entering into the leaders’ markets and competing more aggressively with higher volume of actions than the leaders. We also investigate how managerial discretion may moderate the effect of CEO narcissism on aggressive competitive actions toward industry leaders and find that narcissistic CEOs’ aggressive competitive actions are not constrained by certain factors that are expected to reduce managerial discretion. Our findings contribute to CEO narcissism, upper echelon, and competitive dynamics research.

Toward a routine-based view of interfirm rivalry

Although organizational routines have attracted increasing attention in strategy and organization research, they have received surprisingly limited attention in competitive dynamics scholarship. Our essay seeks to advance a routine-based view of interfirm rivalry by bridging the competitive dynamics and routine literatures. We put forward a conceptual model of the routine-based view of interfirm rivalry that is centered on “competitive action routines.” The model clarifies the roles that managers play in driving a firm’s competitive behavior, challenges the assumption of routine-based rigidity in competitive behavior, and adds nuance to our understanding of managerial cognition in competitive dynamics. Moreover, the routine-based view offers new insights regarding the awareness-motivation-capability framework, and amplifies previous calls to broaden the methodological repertoire of competitive dynamics research.

Rivals’ Negative Earnings Surprises, Language Signals, and Firms’ Competitive Actions

Research in competitive dynamics has primarily analyzed how characteristics of observable attacks influence firms’ competitive responses. Why and how firms take action in response to critical event...

Et tu, Brute? Surprising Actions and Their Market Reaction

We contribute to competitive dynamics research by using an Event System Theory lens to explain how surprising competitive actions explain market value for both the actors and the actee firms. We propose that surprising competitive actions produce a negative impact on a surprised firm while the firm conducting the action receives a positive impact to their abnormal returns. Conducting an event study over a five-year period, we found that the impact of surprising actions is greater than the impact of nonsurprising actions. Our findings also provide justification for firms to invest in competitive intelligence functions for environmental scanning.

Competitive Pressure: Competitive Reactions at the Group-Level

We offer a new perspective on competitive dynamics research by analyzing firms’ reactions to groups of rivals, both at the industry and the strategic group level. We propose that firms observe a buildup of rival actions and perceive increasing ‘competitive pressure’ to respond, which results in greater action volume. Data on the German mobile telephony supports our argument: the volume of firms’ actions is influenced by a buildup of actions by multiple rivals, and firms react more strongly to rivals in their own strategic group.

Rock the Boat: Competitive Repertoire Rhythm and Interfirm Rivalry

In this study, we introduce the concept of rhythm to competitive dynamics research and ask: How can a focal firm disrupt the rhythm of a given rival’s strategic action repertoire? Using a sample of...

Factor market rivalry and interindustry competitive dynamics

We study competitive dynamics by using 10 years of data from the biotech industry on patent infringement lawsuits because they capture offensive actions and defensive responses. Results suggest that larger patent portfolios, long‐term partnerships, and short‐term agreements lead to factor market rivalry. Specifically, long‐term research partnerships are associated with lower proclivity and vulnerability to attack, while short‐term licensing and marketing agreements with increased proclivity and vulnerability to attack. Lastly, although nonbiotech companies attack biotech firms, the proclivity of the latter to launch cross‐industry attacks is not significant. We discuss how the results contribute to competitive dynamics research and theory.

Competitive pressure: competitive reactions at the group-level

ABSTRACTWe offer a new perspective on competitive dynamics research by analyzing firms’ reactions to groups of rivals, both at the industry and the strategic group level. We propose that firms observe a buildup of rival actions and perceive increasing ‘competitive pressure’ to respond, which results in greater action volume. Data on the German mobile telephony supports our argument: the volume of firms’ actions is influenced by a buildup of actions by multiple rivals, and firms react more strongly to rivals in their own strategic group.

The Effects of TMT Faultlines and CEO-TMT Power Disparity on Competitive Behavior and Firm Performance

Although upper echelons scholars have drawn from the demographic faultlines concept to study top management team (TMT) subgroup dynamics, the effects of TMT faultlines on competitive behavior and performance outcomes have not been well documented. To gain greater insight, we develop a model that connects TMT faultlines, CEO-TMT power disparity, competitive behavior, and firm performance. We hypothesize that TMT faultlines and CEO-TMT power disparity jointly determine a firm’s competitive aggressiveness and simplicity, and these two competitive behaviors influence firm performance. Using a sample of 295 U.S. firms in 146 industries from 2000 to 2013, our findings indicate that (a) TMTs with strong faultlines take fewer and simpler competitive actions, and CEO-TMT power disparity further worsens the negative effect on the volume of competitive actions, and (b) fewer and simpler competitive actions benefit short-term firm performance; however, they hurt the long-term firm performance trend. These findings contribute to the upper echelons and competitive dynamics research and suggest important managerial implications.