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The impact of performance distress on aggressive competitive behavior: a reconciliation of conflicting views

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  • Walter J. Ferrier

    (Gatton College of Business and Economics, University of Kentucky, Lexington, KY, USA)

  • Cormac Mac Fhionnlaoich

    (Smurfit Graduate School of Business, University College Dublin, Blackrock, County Dublin, Ireland)

  • Ken G. Smith

    (R.H. Smith School of Business, University of Maryland, College Park, MD, USA)

  • Curtis M. Grimm

    (R.H. Smith School of Business, University of Maryland, College Park, MD, USA)

Abstract

Prior research on how ex ante performance impacts competitive behavior has led to conflicting conclusions. Prospect theory, for example, suggests that poor performance promotes aggressive behavior, whereas threat-rigidity theory predicts the opposite. We attempt to reconcile these conflicting views by incorporating a contingency perspective that empirically tests, specifically, how top management team heterogeneity and a favorable industry context moderate the relationship between poor performance and competitive aggressiveness. Our findings suggest that performance-distressed firms managed by heterogeneous top management teams are less likely to compete aggressively. However, contrary to predictions, performance-distressed firms competing in competition-buffered industries are more likely to compete aggressively. Copyright © 2002 John Wiley & Sons, Ltd.

Suggested Citation

  • 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.
    • Handle: RePEc:wly:mgtdec:v:23:y:2002:i:4-5:p:301-316
    DOI: 10.1002/mde.1067
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    References listed on IDEAS

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    Cited by:

    1. Yang, Wei & Meyer, Klaus E., 2020. "How do local and foreign firms compete? Competitive actions in an emerging economy," International Business Review, Elsevier, vol. 29(3).
    2. Claudio Giachetti & Giovanni Battista Dagnino, 2014. "Detecting the relationship between competitive intensity and firm product line length: Evidence from the worldwide mobile phone industry," Strategic Management Journal, Wiley Blackwell, vol. 35(9), pages 1398-1409, September.
    3. Claudio Giachetti, 2013. "Competitive Aggressiveness and Performance of Developed Country-Based Firms in the Chinese Emerging Economy: The Moderating Effect of Institutional Voids and Entry Mode Degree of Control," Working Papers 1, Venice School of Management - Department of Management, Università Ca' Foscari Venezia.
    4. Yang, Wei & Meyer, Klaus E., 2019. "How does ownership influence business growth? A competitive dynamics perspective," International Business Review, Elsevier, vol. 28(5), pages 1-1.
    5. Lei Chi & T. Ravichandran & Goce Andrevski, 2010. "Information Technology, Network Structure, and Competitive Action," Information Systems Research, INFORMS, vol. 21(3), pages 543-570, September.
    6. 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.
    7. Carla D. Jones & Phillip M. Jolly & Connor J. Lubojacky & Geoffrey P. Martin & Luis R. Gomez-Mejia, 2019. "Behavioral agency and corporate entrepreneurship: CEO equity incentives & competitive behavior," International Entrepreneurship and Management Journal, Springer, vol. 15(3), pages 1017-1039, September.
    8. Dara G. Schniederjans & Mehrnaz Khalajhedayati, 2021. "Competitive sustainability and stakeholder engagement: Exploring awareness, motivation, and capability," Business Strategy and the Environment, Wiley Blackwell, vol. 30(2), pages 808-824, February.
    9. Saim Kashmiri & Cameron Duncan Nicol & Sandeep Arora, 2017. "Me, myself, and I: influence of CEO narcissism on firms’ innovation strategy and the likelihood of product-harm crises," Journal of the Academy of Marketing Science, Springer, vol. 45(5), pages 633-656, September.
    10. Claudio Giachetti, 2016. "Competing in Emerging Markets: Performance Implications of Competitive Aggressiveness," Management International Review, Springer, vol. 56(3), pages 325-352, June.
    11. MUEHLFELD, Katrin & VAN DOORN, Jenny & VAN WITTELOOSTUIJN, Arjen, 2011. "The effects of personality composition and decision-making processes on change preferences of self-managing teams," ACED Working Papers 2011009, University of Antwerp, Faculty of Business and Economics.
    12. Lohrke, Franz T. & Kreiser, Patrick M. & Weaver, K. Mark, 2006. "The influence of current firm performance on future SME alliance formation intentions: A six-country study," Journal of Business Research, Elsevier, vol. 59(1), pages 19-27, January.
    13. Zucchini, Leon & Kretschmer, Tobias, 2011. "Competitive Pressure: Competitive Dynamics as Reactions to Multiple Rivals," Discussion Papers in Business Administration 12308, University of Munich, Munich School of Management.
    14. Weinzimmer, Laurence & Esken, Candace A. & Michel, Eric J. & McDowell, William C. & Mahto, Raj V., 2023. "The differential impact of strategic aggressiveness on firm performance: The role of firm size," Journal of Business Research, Elsevier, vol. 158(C).
    15. Jianhong Chen & Wan‐Chien Lien & Danny Miller & Tianxu Chen, 2024. "Competitive Actions under Analyst Pressure: The Role of CEO Time Horizons," Journal of Management Studies, Wiley Blackwell, vol. 61(5), pages 1916-1945, July.
    16. Mariadoss, Babu John & Johnson, Jean L. & Martin, Kelly D., 2014. "Strategic intent and performance: The role of resource allocation decisions," Journal of Business Research, Elsevier, vol. 67(11), pages 2393-2402.
    17. Patrick M. Kreiser & Donald F. Kuratko & Jeffrey G. Covin & R. Duane Ireland & Jeffrey S. Hornsby, 2021. "Corporate entrepreneurship strategy: extending our knowledge boundaries through configuration theory," Small Business Economics, Springer, vol. 56(2), pages 739-758, February.
    18. He, Jinyu & Mahoney, Joseph T., 2006. "Firm Capability, Corporate Governance, and Firm Competitive Behavior: A Multi-theoretic Framework," Working Papers 06-0103, University of Illinois at Urbana-Champaign, College of Business.
    19. Wang, I. Kim & Qian, Lihong & Lehrer, Mark, 2017. "From technology race to technology marathon: A behavioral explanation of technology advancement," European Management Journal, Elsevier, vol. 35(2), pages 187-197.
    20. Hughes-Morgan, Margaret & Kolev, Kalin & Mcnamara, Gerry, 2018. "A meta-analytic review of competitive aggressiveness research," Journal of Business Research, Elsevier, vol. 85(C), pages 73-82.
    21. Luis R. Gómez-Mejia & Francesco Chirico & Geoffrey Martin & Massimo Baù, 2023. "Best Among the Worst or Worst Among the Best? Socioemotional Wealth and Risk-Performance Returns for Family and Non-family Firms Under Financial Distress," Entrepreneurship Theory and Practice, , vol. 47(4), pages 1031-1058, July.
    22. Chemma Nawal & Abdelatif Kerzabi, 2016. "Innovative disruption and competitive dynamics case of Algerian companies [Rupture innovante et dynamique concurrentielle des entreprises algériennes]," Post-Print hal-02541564, HAL.
    23. Erk P. Piening & Ferdinand Thies & Michael Wessel & Alexander Benlian, 2021. "Searching for Success—Entrepreneurs’ Responses to Crowdfunding Failure," Entrepreneurship Theory and Practice, , vol. 45(3), pages 626-657, May.
    24. Cord H. Burchard & Juliane Proelss & Utz Schäffer & Denis Schweizer, 2021. "Bad news for announcers, good news for rivals: Are rivals fully seizing transition‐period opportunities following announcers' top management turnovers?," Strategic Management Journal, Wiley Blackwell, vol. 42(3), pages 579-607, March.

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