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Competitive Pressure: Competitive Dynamics as Reactions to Multiple Rivals

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  • Leon Zucchini
  • Tobias Kretschmer

Abstract

Competitive dynamics research has focused primarily on interactions between dyads of firms. Drawing on the awareness-motivation-capability framework and strategic group theory we extend this by proposing that firms? actions are influenced by perceived competitive pressure resulting from actions by several rivals. We predict that firms? action magnitude is influenced by the total number of rival actions accumulating in the market, and that this effect is moderated by strategic group membership. We test this using data on the German mobile telephony market and find them supported: the magnitude of firm?s actions is influenced by a buildup of actions by multiple rivals, and firms react more strongly to strategically similar rivals.

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Bibliographic Info

Paper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 12-03.

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Date of creation: 2012
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Handle: RePEc:aal:abbswp:12-03

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Web page: http://www.druid.dk/

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Keywords: Competitive rivalry ; competitive dynamics ; strategic groups ; mobile;

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  1. William P. Barnett & Olav Sorenson, 2002. "The Red Queen in organizational creation and development," Industrial and Corporate Change, Oxford University Press, vol. 11(2), pages 289-325.
  2. Edward C. Norton & Hua Wang & Chunrong Ai, 2004. "Computing interaction effects and standard errors in logit and probit models," Stata Journal, StataCorp LP, vol. 4(2), pages 154-167, June.
  3. Walter J. Ferrier & Cormac Mac Fhionnlaoich & Ken G. Smith & Curtis M. Grimm, 2002. "The impact of performance distress on aggressive competitive behavior: a reconciliation of conflicting views," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(4-5), pages 301-316.
  4. Ming-Jer Chen & Ken G. Smith & Curtis M. Grimm, 1992. "Action Characteristics as Predictors of Competitive Responses," Management Science, INFORMS, vol. 38(3), pages 439-455, March.
  5. Lukasz Grzybowski & Pedro Pereira, 2007. "The Complementarity between Calls and Messages in Mobile Telephony," Working Papers 27, Portuguese Competition Authority.
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Cited by:
  1. Baumann, Florian & Heine, Klaus, 2012. "Innovation, tort law, and competition," DICE Discussion Papers 78, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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