The Profitability of Competitive Aggressiveness: the Moderating Effect of Industry-Related and Organizational Factors

Abstract

The literature on competitive dynamics emphasizes the positive performance effects of competitive aggressiveness. The more actions a firm takes with the greater speed of execution, the better is the profitability and bigger the market share. However, some studies have questioned the claim of this statement. Competitive aggressiveness might not be required at all times and its benefits might depend on organizational and environmental conditions. This study looks into the industry-related and organizational conditions under which firms benefit from being competitively aggressive and when a more restrained approach is more profitable. More precisely, this study examines the moderating effects of industry growth, market position, firm age and firm size on the relationship between competitive aggressiveness and firm performance.

The research model and the hypotheses are derived from the research on entrepreneurial orientation and competitive dynamics. A quantitative study is based on a sample of 821 firms from 21 different industries in Finland. The empirical data is collected by StartMark 2012 online survey conducted to investigate the current state of strategic marketing in Finland. The proposed model of this study is tested with a confirmatory factor analysis. Subsequently, a moderated multiple regression analysis (MMR) is used to test the hypotheses.

The findings suggest that competitive aggressiveness is positively connected to a better performance under most circumstances. The results indicate a significant moderating effect of firm size. Thus, this study argues that the profitability of competitive aggressiveness is context dependent. By combining the industry-related and organizational moderating effects in a framework, that integrates with competitive aggressiveness and firm performance, this study enriches our knowledge on the implications of competitive aggressiveness.