Abstract
Among theoretical perspectives that focus on understanding competitive actions of firms, the resource-based view and competitive dynamics are highly influential (Chen, Su, and Tsai, 2007; Grimm, Lee, and Smith, 2006). The resource-based view primarily addresses resources, or the tangible and intangible factors firms control, and indicates that the potential for sustainable competitive advantage are largely attributable to firms’ idiosyncratic resources (Barney, 1991; Karnani and Wernerfelt, 1985; Peteraf, 1993). Owning or having access to valuable and rare resource is necessary for competitive advantage, yet alone it is insufficient; such resources must be effectively leveraged and deployed to exploit opportunities and/or mitigate threats in specific competitive engagements for a firm to realize competitive advantages (Lavie, 2006; Sirmon, Gove, and Hitt, 2008). On the other hand, competitive dynamics research focuses on competitive actions, or the “specific and detectable competitive moves. . .initiated by a firm to defend or improve its relative competitive position” (K. G. Smith, Grimm, Gannon, and Chen, 1991: 61). This research integrates these two perspectives and takes a significant step forward toward a more holistic understanding of how resources shape the competitive behaviors of firms, which in turn affect performance. This dissertation includes two main themes organized as follows. The first theme focuses on the impacts of firm resource on competitive initiatives. Moreover, a firm’s competitive moves are strongly influenced by its rivals’ behavior; in the first theme, I also explore how rivals’ attacks affect a firm to deploy resources in its competitive initiatives. Integrating insights from competitive dynamics and resource-based views, I argue that both technological and financial resources are critical strategic assets in responding to rivals’ attacks. This study proposes an inverted U-shaped relationship in how a firm’s resources (technological prestige and financial strength) affect its competitive initiatives. Results based on 184 U.S. communication equipment firms support all hypotheses. I found that when facing a low level of threat from rivals, firms with an intermediate level of resources are more likely to compete aggressively while firms with little or abundant resources are not. However, if rivals unleash a high volume of attacks, the resource-competitive initiative relationship reveres into a U-shaped curve which imply that intensive rivals’ attacks provoke firms with most and least resources to compete aggressively. The second theme focuses on how firms deploy resource in strengthening their competitive initiatives and defending against rivals’ actions. This study distinguishes competitive behaviors of firms as competitive initiatives and vulnerability, and examines how technological diversity, open innovation strategies, and technological crowding moderates the effects of competitive behaviors on firm performance. Results show that a firm that has a more diversified technological portfolio, engages in inbound open innovation strategy, and locates in a less crowded area of technology, will benefit more from taking competitive initiatives; whereas outbound open innovation strategy will diminish the outcomes of competitive initiatives. Moreover, inbound open innovation strategy and a less crowded network play a critical role in mitigating the negative effect of vulnerability on firm performance. In sum, this dissertation contributes to competitive dynamics and resource-based view by providing an integrated perspective of competitive behavior within the broad context of resource portfolios, open innovation strategy, network position, and firm performance; and underscoring the role of rivals’ attacks as an activation trigger in firms’ competitive initiatives.