Competitive Pressure: Competitive Reactions At The Group-Level

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.