Are competitive reactions changing over time?

Abstract

Purpose 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. Design/methodology/approach 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. 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.