How Do Groups Matter?

Abstract

The purpose of this study is to examine the relationship between competitive responses and performance, subject to environmental dynamism and strategic action types, to understand competitive responses under moderating effects. This study employed a structured content analysis of coding data from multiple sources and collected competitive actions and responses for the period between 1999 and 2011 in the Taiwanese banking industry. The results show that response likelihood, response imitation and response speed are positively associated with firm performance and that environmental dynamism weakens the relationships among firm performance, response likelihood and response speed. Furthermore, the intensity of strategic action strengthens the relationship between response imitation and firm performance. This study first investigates the roles of environmental dynamism and action types on the relationship between competitive response characteristics and firm performance. This study considers not only the impact of individual firms' responses on their performance but also the impact of collective actions taken by other firms, thus providing new insights in competitive dynamics research.