This study attempts to answer why the predominant competitive reaction is non-reactive one in the previous literature by showing that some fluctuations of competitive reactions (CR) may average out to zero.
This research proposes a model for measuring competitive reaction volatility to examine whether a firm’s CR differs over time. A rolling-windows time series approach is applied to three different datasets.
The results show that firms indeed react to each other, but the types of reactions vary over time, thereby creating a misunderstood “no-reaction” in the literature.
This study may help understand the gap between academic findings (i.e., no-reaction) and managerial reality (i.e., marketing wars).
Although a firm’s CR should be understood as a series of managerial actions that may change over time, the extant literature has not considered this temporal variation of CR. This paper provides a systematic review of the empirically based literature and provides insights into the importance of strategic variation in competitive dynamics.
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