Understanding Word Responses in Competitive Dynamics

Second‐order effects of CEO characteristics: How rivals' perceptions of CEOs as submissive and provocative precipitate competitive attacks

“…Yet, certain elements doubtlessly differ. At the same time, verbal attacks amongst firms' decisionmakers are common and such “war of words” may be motivated much like intimidation—to be seen in a light that affects rivals' subsequent actions (Gao et al, ). Taken together, identifying CEO's language usage and parsing out more specifically the timing of language, firm actions, and other variables associated with intimidation can add nuance to our understanding.…”

“…A related way is expanding on the nature of the attacks. Gao et al () develop a 2 × 2 matrix highlighting how attacks firms face vary in size of resources committed and complexity, and their insights offer means to understand differences in attacks firms face as well. Moreover, the data we use is aggregated both over a given year and combines all attacks on a focal firm.…”

“…Beyond the reality that executives are gathering information about rivals and using it in decisions about how to engage those rivals' firms (Fuld, ; Ilian, ), there are theoretical reasons to expect CEOs to act in these ways as well. A central tenet of competitive dynamics theorizing is that executives gather information about their counterparts and base strategic actions accordingly (e.g., Gao et al, ; Smith et al, ). Social comparison theories offer complementary rationale, suggesting CEOs perceive themselves as part of an elite group who not only pay attention to and socialize with others in the group but also compare themselves to and compete with each other (Finkelstein et al, ).…”

“…Despite this practical reality, however, neither upper echelons theory (which articulates the role of executives in firm action; Hambrick & Mason, ) nor competitive dynamics research (which focuses on understanding firms' competitive actions vis‐à‐vis rivals; Ketchen, Snow, & Hoover, ; Smith, Ferrier, & Ndofor, ) advance theoretical explanations of how this phenomenon unfolds. Moreover, although competitive dynamics research builds on the premise that “expectations about how rivals will respond drive competitive decision making” (Gao, Yu, & Cannella, , p. 132), empirical research supporting this notion is lacking.…”

“…First, leveraging perceptions of rivals' traits when planning competitive actions is a long‐held practitioner notion—for example, Sun Tzu's Fifth Century BC text (Tzu, ) and Machiavelli's writings during the Renaissance (Machiavelli, ) both advocate weighing rival decisionmakers' likely moves in strategic decisions. Offering theoretical grounding and empirical evidence for long‐held insights both central to competitive dynamics (Gao et al, ) and relevant to practitioners (Fuld, ; Ilian, ) is an important step in a more socialized view of competitive attacks. The clearer picture of CEOs' roles in precipitating competitive actions offers a basis for research on attacks firms face and CEOs' roles therein, providing many avenues for future investigation.…”