16732: When Rival is in Deep Water: Increasing Competitive Actions After Rival’s Misconduct (session 25540)

In this study, we draw on the competitive dynamics perspective to research a focal firm’s competitive action following a rival firm’s misconduct. We argue that rival misconduct creates a window of opportunity for the focal firm to capitalize on the situation by taking more aggressive actions; however, the focal firm must also consider whether doing so may evoke potential negative spillovers. We identify two conditions under which concerns about spillover effects may prompt the focal firm to restrain its actions: (1) when the rival and the focal firm’s competitive actions have shown high action concurrency, and/or (2) when their competitive action repertoires exhibit significant similarity. We hypothesize a positive relationship between a rival firm’s involvement in a public misconduct and a focal firm’s subsequent intensity of competitive actions. In addition, we hypothesize that this positive relationship will be less pronounced if the two firms have high action concurrency, or if the two firms show higher action repertoire similarity. Keywords: organizational misconduct; negative spillover; competitive dynamics; competitive actions

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