Does It Pay to Compete Aggressively? Contingent Roles of Internal and External Resources

Abstract

We examine, in hypercompetitive environments, why some firms fail to benefit from competitive aggressiveness while others experience superior profits. We explore the relationship between competitive aggressiveness and performance in a sample of 141 firms from three hypercompetitive industries-personal computers, computer-aided software engineering, and semiconductors-from 1995 to 2006. Contrary to the predominant view within competitive dynamics research, we find that competitive aggressiveness is not a universally effective strategy. For some firms, excessive competitive aggressiveness can escalate costs and diminish performance. Using polynomial regression analysis and response surface methodology, we identify the conditions under which competitive aggressiveness enhances firm performance. Our findings reveal that firms benefit from competitive aggressiveness when they have specialized technological resources and support from a dense network of alliance partners.Competitive aggressiveness is a strategic competitive behavior that reflects a firm's propensity to challenge rivals by rapidly carrying out numerous competitive actions, such as new products, marketing campaigns, market entries, and price cuts (M. J. Chen, Lin, & Michel, 2010;M. J. Chen & Miller, 2012). Incorporating time and speed as essential attributes, Acknowledgments: We thank action editor Devi Gnyawali and two anonymous reviewers for their constructive and insightful comments and suggestions.

“Don’t leave me this way!” Drivers of parental hostility and employee spin-offs’ performance

“…This interpretation suggests that future work should consider flexibility and the development of novel resources and competences as a mediator between parental hostility and employee spin-off performance. At the same time, similar to competition and retaliation scholars, our findings suggest that by departing from their parental heritage and thus creating novel competencies, employee spin-offs can not only reduce the effectiveness of their parents' retaliatory actions (Chen 1996) and thus increase their chances of survival (Fan 2010), but even improve their performance in these competitive circumstances (Andrevski and Ferrier 2019). Finally, by hindering spin-offs' establishment parent companies may actually endorse them and spark investors' and consumers' interest.…”

“…In trying to explain the robust positive effect of parental hostility on employee spin-off performance, we advance the relevance of autonomy and competence building as a potential mediator in this relationship (e.g., Chesbrough 2003;Cirillo et al 2014;McGrath 2001). We argue that autonomy and competence building are crucial for employee spin-offs in developing a more aggressive market entry strategy, which increases their chances of successfully competing against the parent, and of surviving and performing well (e.g., Andrevski and Ferrier 2019). Also, we suggest that retaliatory parental reactions against a spin-off's establishment, contrary to expectations, endorse a spinoff's reputation, which may help to attract outside investors and customers.…”

“…We can expect, however, that this risk of inertia will prevail far less when spin-offs are confronted with hostile parental reactions, as hostility will not only enable but also force spin-offs to develop novel capabilities. The resulting flexibility and access to new networks is expected to lead to a more aggressive competition strategy, which in turn can contribute to a more successful market entry (e.g., Agarwal et al 2004;Andrevski and Ferrier 2019). More precisely, as "firms with similar resource profiles are likely to have comparable capabilities and competitive stances" (Chen et al 2007, p. 106), only by developing new capabilities employee spin-offs can reduce the effectiveness of their parents' retaliation and fare better in competing against them (Chen 1996;Kuester et al 1999).…”

Innovation and R&D in the Upper Echelons: The Association between the CTO's Power Depth and Breadth and the TMT's Commitment to Innovation

“…However, R&D intensity, the dependent variable, is available both for firms that have CTOs and for those that do not, so it does not drive the sample selection, minimizing endogeneity concerns. (See Andrevski and Ferrier [] for a similar argumentation. )…”

Is competition among cooperative banks a negative sum game?

“…3 Shyam Kumar (2010) documents how cooperative behavior can result in a positive sum game in Joint Ventures Daskalaki (2010). finds that cooperation boosts innovation in creative industries.4 According to some authors, the specificity of network effects -particularly, network intensity and presence of a dominant design in the market -would have implications also for Real Options calculations and market entry decisions(Chintakananda and McIntyre, 2014).5 These negative effects of competition in networks would go beyond those found for non-network industries (e.g.,Andrevski and Ferrier, 2016).…”