We offer a new perspective on competitive dynamics research by analyzing firms’ reactions to groups of rivals, both at the industry and the strategic group level. We propose that firms observe a buildup of rival actions and perceive increasing ‘competitive pressure’ to respond, which results in greater action volume. Data on the German mobile telephony supports our argument: the volume of firms’ actions is influenced by a buildup of actions by multiple rivals, and firms react more strongly to rivals in their own strategic group.
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Zucchini et al. (2018) studied this question.
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