Reflexive and Selective Competitive Behaviors—Inertia, Imitation, and Interfirm Rivalry

ABSTRACT

Competitive dynamics research has established the important impact that the level of firm competitive activity has on rival response and firm performance. Less understood, however, are inputs that influence firm activity, specifically, the extent to which firms reflexively repeat prior activity versus selectively taking actions. Drawing from the awareness–motivation–capability framework, we develop and test theory that firm decision makers are not only predisposed to behave reflexively, but are also influenced by contextual factors, suggesting cognitive selection. Utilizing a longitudinal sample of marketing activity of 58 firms and 2,164 firm–rival dyads in 11 industries, we find that firms undertake both reflexive and selective competitive processes. Positive effects of prior levels of activity are moderated by the firm’s own prior performance, as well as the rivals’ similarity and industry standing.

KEYWORDS:

• Competitive dynamics
• reflexive competitive behavior
• selective competitive behavior
• awareness-motivation-capability (AMC)
• interfirm rivalry

Notes

¹ The term reflexive is also found in the book The Alchemy of Finance, by George Soros (1987). In that original work, Soros used the term in connection with the theory of reflexivity to describe the recursive interplay between observers of events and events being observed. More recently, the Journal of Economic Methodology devoted a special issue to the concepts and development of the theory; interested readers may refer to a paper by Soros (2013) included in the issue for a greater summary and clarification. Our separate use of the term here derives more directly from dictionary definitions associated with reflex actions in describing the tendency of firms to repeat past behaviors. We are grateful to an anonymous reviewer for calling attention to the other use of the term.

² It is notable that rather than corporate-level strategic actions, such as acquisitions or alliances, this study purposefully focuses on other discrete competitive actions, consistent with product introduction activity (Katila, 2002; Li et al., 2013). The choice to focus on the discrete marketing activity of firms represents a conservative test of theory, given that firm behaviors such as mergers and acquisitions may more expectedly draw attention because of their potential impact on industry structure.

Additional information

Notes on contributors

David Lanier Major

David Lanier Major, PhD, is an assistant professor of strategic management and entrepreneurship at Indiana University Kelley School of Business and Dean’s Council Fellowship recipient. He received his PhD in strategic management from the Robert H. Smith School of Business at the University of Maryland and MBA and BSc from Carnegie Mellon University. His scholarly research in the areas of competitive dynamics and venture capital globalization has been presented at conferences of the Strategic Management Society, Academy of Management, and the Academy of International Business. He can be reached at [email protected].

Patrick G. Maggitti

Patrick G. Maggitti, PhD, is Provost of Villanova University. He previously served as the Helen and William O’Toole Dean of the Villanova School of Business and was the founder and Carmen and Sharon Danella Director of the Center for Innovation, Creativity, and Entrepreneurship (ICE Center) at Villanova University. His scholarly research and teaching focus on strategy, innovation, and entrepreneurship and he has been published in a variety of outlets including the Academy of Management Journal, Research Policy, and the Journal of Management Studies. He can be reached at [email protected].

Ken G. Smith

Ken G. Smith, PhD, is professor emeritus of business strategy at the Robert H. Smith School of Business, University of Maryland. He earned a PhD in business policy from the University of Washington. His research interests include strategic decision making, competitive dynamics, and the management of knowledge and knowledge creation. He can be reached at [email protected].

Curtis M. Grimm

Curtis M. Grimm, PhD, is the Dean’s Professor of Supply Chain and Strategy at the Robert H. Smith School of Business, University of Maryland. He received his PhD in economics from the University of California, Berkeley, with primary focus on industrial organization. His research has focused on the interface of business and public policy with strategic management, with a particular emphasis on competition and competition policy. He can be reached at [email protected].

Pamela J. Derfus

Pamela J. Derfuss received her PhD in strategic management from the Robert H. Smith School of Business at the University of Maryland. Her research interests lie in the areas of competitive dynamics, strategy implementation, and cooperation between firms. She can be reached at [email protected].