Glue or Gasoline? The Role of Interorganizational Relationships in the Spillover of Price Wars

Tieying Yu, Wei Guo, Yu Zhang, Javier Gimeno

Research output: Chapter in book / Conference proceedingConference article published in proceeding or bookAcademic researchpeer-review

Abstract

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.

Original languageEnglish
Title of host publicationAcademy of Management Proceedings
PublisherAcademy of Management
ISBN (Electronic)2151-6561
ISBN (Print)0065-0668
DOIs
Publication statusPublished - Aug 2019
Event79th Annual Meeting of the Academy of Management - Boston, Massachusetts, United States
Duration: 9 Aug 201913 Aug 2019

Conference

Conference79th Annual Meeting of the Academy of Management
Country/TerritoryUnited States
CityBoston, Massachusetts
Period9/08/1913/08/19

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