The impact of performance distress on aggressive competitive behavior: a reconciliation of conflicting views

Walter J. Ferrier, Cormac Mac Fhionnlaoich, Ken G. Smith and Curtis Grimm
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Walter J. Ferrier: Gatton College of Business and Economics, University of Kentucky, Lexington, KY, USA, Postal: Gatton College of Business and Economics, University of Kentucky, Lexington, KY, USA
Cormac Mac Fhionnlaoich: Smurfit Graduate School of Business, University College Dublin, Blackrock, County Dublin, Ireland, Postal: Smurfit Graduate School of Business, University College Dublin, Blackrock, County Dublin, Ireland
Ken G. Smith: R.H. Smith School of Business, University of Maryland, College Park, MD, USA, Postal: R.H. Smith School of Business, University of Maryland, College Park, MD, USA

Managerial and Decision Economics, 2002, vol. 23, issue 4-5, 301-316

Abstract: Prior research on how ex ante performance impacts competitive behavior has led to conflicting conclusions. Prospect theory, for example, suggests that poor performance promotes aggressive behavior, whereas threat-rigidity theory predicts the opposite. We attempt to reconcile these conflicting views by incorporating a contingency perspective that empirically tests, specifically, how top management team heterogeneity and a favorable industry context moderate the relationship between poor performance and competitive aggressiveness. Our findings suggest that performance-distressed firms managed by heterogeneous top management teams are less likely to compete aggressively. However, contrary to predictions, performance-distressed firms competing in competition-buffered industries are more likely to compete aggressively. Copyright © 2002 John Wiley & Sons, Ltd.

Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:23:y:2002:i:4-5:p:301-316

DOI: 10.1002/mde.1067

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