Competitive inter‐firm interactions: determinants of divergence versus convergence

This paper is a study of competitive and cooperative interactions among members of a competitive industry group. There are few strategic, tactical or market moves that do not affect competition in any industry. Competitive and cooperative interactions among competitive firms are studied to determine how the reactions of competitors to an initiator of an action cause convergent or divergent patterns. It is hypothesized that the patterns, or cycles, of competitive and cooperative interactions are a function of complexity of the interaction cycle, degree of offensiveness of participants’ moves, action reversibility, previous interaction experience, interaction cycle visibility and response time. An empirical test of the hypothesis revealed that the two most strongly supported hypotheses were: interaction cycle complexity increases the likelihood of interaction cycle convergence, and interaction cycle visibility increases the likelihood of interaction cycle divergence.