The impact of managerial perceptions on competitive response variety

Purpose - The purpose of this paper is to study the impact of managerial perceptions regarding the competitive environment and organizational capabilities on the way firms respond to their rivals' competitive actions. Design/methodology/approach - The authors draw on competitive dynamics theory to develop a model that is empirically tested in 174 firms from 22 manufacturing, trade and service sectors in Greece. Findings - The results show an association between managerial perceptions on the one hand and the innovativeness and breadth of competitive responses on the other. More specifically, perceptions of competition intensity, substitution threats and increased buyer powers are associated with broader and more innovative competitive reactions. Similarly, perceptions of strong internal, mediating (managerial) and external (market sensing) capabilities also affect the breadth and innovativeness of competitive responses. Originality/value - Further to advancing theory in competitive dynamics, the authors contribute to a deeper understanding of the drivers of competitive retaliation that managers can use to anticipate their rivals' retaliation schemes when initiating competitive actions.