Are competitive reactions changing over time?
ISSN: 0025-1747
Article publication date: 18 April 2016
Issue publication date: 18 April 2016
Abstract
Purpose
The purpose of this paper is to answer why the predominant competitive reaction (CR) is non-reactive one in the previous literature by showing that some fluctuations of CR may average out to zero.
Design/methodology/approach
This research proposes a model for measuring CR volatility to examine whether a firm’s CR differs over time. A rolling-windows time series approach is applied to three different data sets.
Findings
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.
Practical implications
This study may help understand the gap between academic findings (i.e. no-reaction) and managerial reality (i.e. marketing wars).
Originality/value
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.
Keywords
Acknowledgements
The authors thank an anonymous reviewer for constructive suggestions on the discussion of impact of CRV on consumer purchase. The authors also thank an anonymous reviewer for pointing out this important issue.
Citation
Park, J. and Yoo, S. (2016), "Are competitive reactions changing over time?", Management Decision, Vol. 54 No. 3, pp. 683-699. https://doi.org/10.1108/MD-08-2015-0357
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited