Using the weapons you have: the role of resources and competitor orientation as enablers and inhibitors of competitive reaction to new products

M.S.M. Debruyne, R.T. Frambach, R.K. Moenaert

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

It is a well-accepted notion that to respond to competitive attacks firms need the necessary resources to do so. However, the presence of resources may not be a sufficient condition to enhance competitive responsiveness. Following a managerial decision-making approach, the present paper investigates how the availability of resources affects decision makers' assessment of a competitor's new product and their subsequent reaction to it. This study posits that competitive reaction follows from a decision maker's assessment of a competitive action. This assessment contains a motivation dimension and an ability dimension. The effect of three types of resources - financial, marketing, and technological - are examined. A quasi-experiment with the Markstrat business game as an empirical setting provided 339 questionnaires containing information on 29 different new product introductions. The motivation and ability dimensions are confirmed as important antecedents explaining reaction behavior. The results show that resources possess a dual, and opposing, role in influencing competitive reaction to new products. On the one hand, resources enhance decision makers' belief that they are able to react effectively to competitive attacks, but the presence of resources also makes them less motivated to react. The paper introduces two explanations for this: the liability-of-wealth hypothesis and the strong-competitor hypothesis. The addition of competitor orientation as a moderator allows us to discern between the two competing rationales for the existence of a negative effect of resources on the expected likelihood of success of a competitive new product introduction, supporting the liability-of-wealth hypothesis. The paper demonstrates the key role of competitor orientation and formulates implications from that. © 2010 Product Development & Management Association.
Original languageEnglish
Pages (from-to)161-178
JournalJournal of Product Innovation Management
Volume27
Issue number2
DOIs
Publication statusPublished - 2010

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Moderators
Product development
Marketing
Decision making
Availability
Industry
Experiments
Competitor orientation
New products
Inhibitor
Enablers
Resources
Decision maker
Attack
New product introduction
Wealth
Liability
Competitors

Cite this

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title = "Using the weapons you have: the role of resources and competitor orientation as enablers and inhibitors of competitive reaction to new products",
abstract = "It is a well-accepted notion that to respond to competitive attacks firms need the necessary resources to do so. However, the presence of resources may not be a sufficient condition to enhance competitive responsiveness. Following a managerial decision-making approach, the present paper investigates how the availability of resources affects decision makers' assessment of a competitor's new product and their subsequent reaction to it. This study posits that competitive reaction follows from a decision maker's assessment of a competitive action. This assessment contains a motivation dimension and an ability dimension. The effect of three types of resources - financial, marketing, and technological - are examined. A quasi-experiment with the Markstrat business game as an empirical setting provided 339 questionnaires containing information on 29 different new product introductions. The motivation and ability dimensions are confirmed as important antecedents explaining reaction behavior. The results show that resources possess a dual, and opposing, role in influencing competitive reaction to new products. On the one hand, resources enhance decision makers' belief that they are able to react effectively to competitive attacks, but the presence of resources also makes them less motivated to react. The paper introduces two explanations for this: the liability-of-wealth hypothesis and the strong-competitor hypothesis. The addition of competitor orientation as a moderator allows us to discern between the two competing rationales for the existence of a negative effect of resources on the expected likelihood of success of a competitive new product introduction, supporting the liability-of-wealth hypothesis. The paper demonstrates the key role of competitor orientation and formulates implications from that. {\circledC} 2010 Product Development & Management Association.",
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Using the weapons you have: the role of resources and competitor orientation as enablers and inhibitors of competitive reaction to new products. / Debruyne, M.S.M.; Frambach, R.T.; Moenaert, R.K.

In: Journal of Product Innovation Management, Vol. 27, No. 2, 2010, p. 161-178.

Research output: Contribution to JournalArticleAcademicpeer-review

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