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Action Characteristics as Predictors of Competitive Responses

Author

Listed:
  • Ming-Jer Chen

    (Graduate School of Business, Columbia University, New York, New York 10027)

  • Ken G. Smith

    (College of Business and Management, University of Maryland, College Park, Maryland 20742)

  • Curtis M. Grimm

    (College of Business and Management, University of Maryland, College Park, Maryland 20742)

Abstract

A central question in competitive dynamics is whether a competitive response can be predicted. This study links various characteristics of actions with the total number and the time lag of competitors' responses. The hypothesized relationships were tested with a sample of competitive moves among U.S. airlines. The results suggested that responses are influenced by the characteristics of the actions that evoked them. Specifically, the total number of competitors affected by an action and the importance to these competitors of the markets under attack by the action increase the number of competitive responses. Strategic, as opposed to tactical, actions or actions which require substantial implementation efforts reduce the number and delay the timing of rivals' counteractions. Finally, contrary to prediction, competitors who have a high stake in the markets under attack by a competitive move react slowly.

Suggested Citation

  • 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.
    • Handle: RePEc:inm:ormnsc:v:38:y:1992:i:3:p:439-455
    DOI: 10.1287/mnsc.38.3.439
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