Over the past decades, the competitive dynamics literature has analyzed different antecedents that could affect a firm’s competitive behavior. However, how firms make sense of their environment and the role of managerial cognition in the competitive behavior of firms has received limited attention. In this study, we synthesize the competitive dynamics literature with the attention-based view of firm behavior to explore the antecedents of competitive response by firms. We find that both active and passive cognition could encourage firms to respond to a rival’s strategic moves and that digitized capability differential between the firm and its rival will have a curvilinear relationship with response likelihood; firms with capability parity with rivals are more likely to respond, while others may not. Furthermore, we find that alliance with the rival negatively moderate the relationship between digitized marketing capability differential and response likelihood. We also find that common shareholding between rivals will negatively moderate the relationship between digitized R&D capability differential and response likelihood. We discuss the theoretical and practical implications of our findings and draw guidelines for future research.
Ravichandran, T. (Ravi) and Zhao, Liang, "Managerial Cognition, Digitized Capabilities, and Competitive Response" (2021). ECIS 2021 Research Papers. 142.
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