Deterrence, reputations and competitive cognition

This dissertation examines an aspect of competitive interactions among firms that has attracted increasing research attention, the relationship between deterrence and competitive reputations in a marketplace. I develop a psychologically-based conceptual model of the antecedents and consequences of a competitive reputation for being what I call a credible defender, someone who is willing and able to fight attackers, and test it empirically in two different settings, a simulation game and an experiment.;The deterrence literatures imply that a reputation for being a credible defender should deter action against the credible firm. I examine (1) this deterrence-reputation link, (2) how a firm might acquire a reputation as a credible defender, and (3) two possible components of such a reputation, a firm's aggressiveness and intelligence. Previous research suggests, among others, three possible antecedents to this reputation: the firm's level of activity, the consistency of that level over time, and the firm's previous success in the marketplace. The dissertation explores the effect of managerial perception on deterrence and reputations in the larger context of a manager's competitive cognition about the markets he or she faces.;The first phase of the dissertation was run using the marketing simulation game, Markstrat2. Subjects were MBA students and executives. I surveyed subjects about their impressions of their competitors in the game, and collected information on competitor interactions. The results suggest an interaction effect of reputation on deterrence: a reputation for being a credible defender has no effect against someone who considers the firm a main competitor, but does affect someone who considers the firm a minor competitor. The study also offers support for the consistency and success hypotheses.;The second phase of the dissertation was an experiment asking MBA students to judge the attractiveness of hypothetical markets and competitors. The experiment again finds an interaction effect of reputation on deterrence depending on whether the perceiver considers the firm a main or minor competitor, but only for the aggressiveness component of credibility. The interaction varies across MBA class. Results of the experiment also support the three hypothesized antecedents.