Matching response to competitors’ moves under asymmetric market strength

Abstract

This paper investigates a firm`s inclination to match a rival`s strategic move under asymmetric market strength. Drawing from the awareness-motivation-capability framework, we theorize that a firm is more likely to match modestly weaker competitors to sustain its current lead and match modestly stronger competitors to eschew lagging further behind; conversely, a firm is less likely to match far weaker competitors due to its lack of attention and match far stronger competitors due to its inability to compete. Event history analysis of a set of IT companies’ entry moves into various locations in China exhibits support for our hypotheses. Our findings suggest that a firm`s matching response most often occurs under a moderate level of asymmetric market strength.