Competitive Dormancy in Interfirm Rivalry: Consequences for Rival Actions

In this study, we examine the implications of competitive dormancy, defined as a situation in which a focal firm’s observed time span of inaction following its prior action has exceeded the firm’s typical duration between successive actions. We argue that competitive dormancy may be perceived as inconsistent with a rival’s expectations and may be associated with an interpretive process concerning the rival’s subsequent actions. Integrating expectancy violation theory (EVT) and competitive dynamics research, we propose that the relationship between a focal firm’s competitive dormancy and the likelihood of rivals’ subsequent actions varies with their relative market standing and strategic resource commitment. Using a sample of 78,055 daily observations from 28 firms across 14 industries from 2000 to 2017, we find support for our hypotheses.