Big splash, no waves? Cognitive mechanisms driving incumbent firms' responses to low-price market entry strategies

• 成果类型: Article
• 署名作者: Luoma, Jukka; Falk, Tomas; Totzek, Dirk; Tikkanen, Henrikki; Mrozek, Alexander
• 署名单位: Aalto University; University of Passau; Alphabet Inc.; Google Incorporated
• 刊物名称: STRATEGIC MANAGEMENT JOURNAL
• ISSN/ISSBN: 0143-2095
• DOI: 10.1002/smj.2763
• 发表日期: 2018
• 页码: 1388-1410
• 关键词: behavioral strategy; COMPETITIVE DYNAMICS; Experimental study; Market entry; pricing

摘要

Research Summary: Low-price market entries, aiming for rapid sales growth, tend to prompt strong competitive reactions. This research explores whether and how firms using low-price entry strategies can mitigate retaliatory incumbent reactions. An experiment with 656 managers shows that entrants can attenuate the strength of incumbents' responses by fostering perceptions of high aggressiveness or low commitment. Entrants may be able to accomplish this by adjusting their entry strategy to embed (subtle) cues of aggressiveness and (lack of) commitment. A replication experiment with university students reinforces our overall theoretical argument. However, the results also indicate that the interpretation of cues embedded in the entry strategy may be affected by the experience of incumbent firm managers. Overall, these results clarify the cognitive foundations of competitive responses to market entry. Managerial Summary: What drives incumbents to respond strongly to market entries, and what can the entrant, if anything, do to mitigate those responses? This research offers empirical evidence and theoretical insights for managers faced with these questions by shedding light on the thinking processes preceding competitive responses. The study shows that while managers are motivated to respond strongly to market entries that appear to be highly consequential to their business, these responses may be mitigated if the entrant manages to foster perceptions of high aggressiveness or low commitment to the market. Managers form these perceptions in part on the basis of the entrant's behavior, creating an opportunity for entrants to adjust their entry strategies in a manner that demotivates strong competitive responses.