Anticipating Competitive Tension: A Psychology-based Awareness-Motivation-Capability Perspective

The study links the social cognitive and social identity theories with the awareness-motivation-capability (AMC) perspective to explore the antecedents and consequences of top management teams' (TMT) perceived tension in interfirm rivalry. Analytical results based on a sample collected from Taiwan and analyzed with a structural equation modeling (SEM) conducted by the partial least square (PLS) approach shows that a TMT's perception of its direct rivals' competitive inertia (awareness) exerts a negative effect while both their perceptions of own identity domain (motivation) and collective efficacy (capability) produce positive effects on competitive tension, which in turn promotes action aggressiveness. The study contributes to the field of competitive dynamics, or specifically the AMC perspective, by examining how TMTs' interpretations of their own and competitors' socio-psychodynamic processes affect a firm's perceptions of its relationships with competitors and, hence, impact subsequent competitive behaviors and, ultimately, firm performance. It also brings value to the upper-echelons perspective by bridging top executives' psychological characteristics with firm competitive initiatives in the marketplace.