Managerial beliefs, competitive response, and interfirm rivalry

Existing research has demonstrated that executive decision making and organizational action are both influenced to a large extent by the cognitive orientation of strategists. Applying a managerial cognition perspective, I explore how the subjective and idiosyncratic beliefs held by top managers impact both individual instances of competitive response, and the longer-term patterns of interfirm rivalry that emerge in the marketplace.; Specifically, I explored six separate but interrelated research questions. First, how do strategists' personal and subjective beliefs impact the types of competitive action to which they commit their firm to respond? Second, how can strategists utilize knowledge of their competitors' beliefs, as evidenced through public statements and action, to identify the firms that are likely to contest specific types of competitive action? Third, what team, organizational, institutional and competitive factors moderate the influence of managerial beliefs on subsequent patterns of competitive response? Fourth, do patterns of perceptual agreement and disagreement between strategists at different firms, concerning the importance of actions, impact the likelihood that pairs of firms engage in interfirm rivalry? Fifth, do patterns of perceptual agreement and disagreement between strategists at different firms, concerning the importance of actions, influence the specific types of action through which interfirm rivalry is manifested? And finally, what types of competitive action can strategists undertake to de-escalate interfirm rivalry?; Hypotheses were tested using data from ten large firms in the U.S. major airline industry over the period from 1993 to 1999. The findings suggest that existing managerial beliefs do impact the types of competitive action to which firms respond in the marketplace, and that the influence of those beliefs are highly contextual. Results highlight the central role of cognitive disagreement in competitive dynamics research, as well as the critical role of strategic action in mobilizing the influence of managerial beliefs. Most importantly, the data demonstrate that strategists can exploit knowledge of their competitors stated beliefs to decrease the level of rivalry to which their firms are subjected.