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The role of irreversibilities in competitive interaction: behavioral considerations from organization theory

Author

Listed:
  • Ming-Jer Chen

    (Darden Graduate School of Business, University of Virginia, USA)

  • S. Venkataraman

    (Darden Graduate School of Business, University of Virginia, USA)

  • Sylvia Sloan Black

    (School of Business and Economics, North Carolina Agricultural and Technical State University, USA)

  • Ian C. MacMillan

    (The Wharton School, University of Pennsylvania, USA)

Abstract

Using behavioral insights from organization theory, this paper examines the significance of the irreversibility of an attacker's competitive move in interfirm competitive interaction. The study suggested that irreversibility is a multifaceted construct that is broadly composed of two dimensions: internal commitment (which is based on organizational inertia) and public commitment (which is based on the degree of publicity or public exposure received). It hypothesized that these two irreversibilities would have opposite effects on competitors' responses. The hypotheses were tested with data on competitive moves and countermoves exchanged by major US airlines. As predicted, the results reveal that internal commitment tended to reduce the likelihood of response, increased the response delay, and decreased the probability that the initial move will be matched; on the contrary, the impacts of public commitment were exactly the opposite. Copyright © 2002 John Wiley & Sons, Ltd.

Suggested Citation

  • Ming-Jer Chen & S. Venkataraman & Sylvia Sloan Black & Ian C. MacMillan, 2002. "The role of irreversibilities in competitive interaction: behavioral considerations from organization theory," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(4-5), pages 187-207.
    • Handle: RePEc:wly:mgtdec:v:23:y:2002:i:4-5:p:187-207
    DOI: 10.1002/mde.1061
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    References listed on IDEAS

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    2. Ian MacMillan & Mary Lynn McCaffery & Gilles Van Wijk, 1985. "Competitors' responses to easily imitated new products—exploring commercial banking product introductions," Strategic Management Journal, Wiley Blackwell, vol. 6(1), pages 75-86, January.
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    2. Christian Hofer & Jordan M. Barker & Laura D'Oria & Jonathan L. Johnson, 2022. "Broadening our understanding of interfirm rivalry: A call for research on how supply networks shape competitive behavior and performance," Journal of Supply Chain Management, Institute for Supply Management, vol. 58(2), pages 8-25, April.
    3. Sandra A. Vannoy & A. F. Salam, 2010. "Managerial Interpretations of the Role of Information Systems in Competitive Actions and Firm Performance: A Grounded Theory Investigation," Information Systems Research, INFORMS, vol. 21(3), pages 496-515, September.
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    6. Barker, Jordan M. & Gibson, Andrew R. & Hofer, Adriana R. & Hofer, Christian & Moussaoui, Issam & Scott, Marc A., 2021. "A competitive dynamics perspective on the diversification of third-party logistics providers’ service portfolios," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 146(C).

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