Time to Act: Competitive Responses to the Executive Turnover of Rivals

This study intends to explain how a firm competitively reacts to its rival's executive turnover. From an awareness-motivation-capability perspective, I contend that a firm's executive turnover impairs its capacity for competitive responses, owing to the temporary instability in coordination among its executives. Accordingly, since its rival's executive turnover is recognized as an opportunity to attack, a focal firm would engage in competitive actions against its rival more frequently when it experiences greater executive turnover. This relationship is strengthened by the non-routineness of the selection of the rival's incoming executives, but is weakened by the focal firm's market share relative to the rival. Empirical tests using a sample of the leaders and challengers of 13 duopolistic industries in Japan from 1997 through 2006 lend support to the hypothesized relationships.