Competency, prior performance, opportunity framing, and competitive response: Exploring some behavioral decision theory perspectives

Theoretical perspectives from behavioral decision research and strategic management are employed to make competing predictions of managers' competitive response decisions. Results indicate that responses of greater magnitude are more likely when an ambiguous situation surrounding the market entry of a new competitor is framed as an opportunity rather than as a threat and when the prior performance and competency of the firm are at high levels. Faster responses are more likely under high levels of competency, especially when prior performance has been good. These results run counter to two of three predictions of behavioral decision research and raise questions about limits to the generalizability of these theoretical perspectives.