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

Author

Listed:
  • 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

    as
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