Academy of Management Journal
Despite their prevalence and significance, competitive wars have received limited attention from the strategy literature. Our knowledge of how inter-organizational linkages influence competitive wars is particularly lacking. Drawing on the social embeddedness perspective, we argue that both direct linkages (i.e., strategic alliances) and indirect linkages (i.e., common ownership ties and common analyst ties) reduce the likelihood of war, thereby functioning as the glue that binds firms together. Yet once competitive wars are launched in related markets, indirect linkages through common third parties may continuously function as glue, reducing the likelihood of war spillover, whereas direct linkages, such as strategic alliances, may facilitate the spillover of competitive wars, akin to adding gasoline to a fire. Using data from the U.S. domestic airline industry between 1991 and 2010, our empirical evidence offers strong support for our predictions.
79th Academy of Management Annual Meeting
This study investigates the role of self-enforced and third party-enforced interorganizational relationships (IORs) in influencing the spillover of price wars. Unlike previous research that emphasized economic factors (e.g., demand fluctuations and firm financial health) that precipitate price wars, this study underscores the relational aspect of price wars. Specifically, we argue that although self-enforced and third party-enforced relationships among competitors may both reduce the likelihood of price wars; once a war has started, third-party- enforced relationships will reduce the likelihood that a price war will spread into additional markets, while self-enforced relationships will increase the likelihood of such spillover. Using data from the United States (US) domestic airline industry from 1992 to 2010, our empirical evidence offers strong support for our predictions. By signifying the importance of IORs in the spillover of price wars, we hope to contribute to research on interorganizational relationships, as well as research on competition.