Response Strategy for Corporate Litigation: A Reputational View of Competitive Dynamics

Why does a firm aggressively respond to actions of certain attackers while being accommodative to actions of others? Prior research in competitive dynamics has largely ignored social evaluations, such as how stakeholders perceive the attacker and the responder in competitive interactions. Building on social evaluations theory and the Awareness-Motivation-Capability framework, we examine how a firm’s reputation for innovation affects its response to a particular attack—patent infringement claim. We propose and find that a firm’s reputation for innovation affects its response aggressiveness in opposing ways. Specifically, the relationship is positive for opportunistic and competitive attackers, but negative for attackers whose claims appear to be sincere. We discuss contributions to research in competitive dynamics, social evaluations, and corporate litigation.