Are competitive reactions changing over time?. Issue 3 (18th April 2016)

• Record Type: Journal Article
• Authors: Park, Jimi; Yoo, Shijin
• Is Part Of: Management decision. Volume 54:Issue 3(2016)
• Page Start: 683
• Page End: 699
• Publication Date: 2016-04-18
• Subjects: Marketing strategy -- Competitive reaction volatility -- Time series models -- Competitive reaction; Management -- Periodicals; 658.403
• DOI: 10.1108/MD-08-2015-0357
• Languages: English
• ISSNs: 0025-1747

Abstract

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.