Sleeping with the enemy

Purpose: This paper highlights cooperation as an important moderating condition of competitive action and response. Drawing on a new perspective of collective identity on competitive dynamics, the purpose of this paper is to stress the impacts of market commonalities and resource similarities on competitive actions and responses and focus on the moderating effect of cooperation on the relationships mentioned above. Design/methodology/approach: This study employs logistic regression analysis to test the hypotheses in the Taiwanese flour industry at the period 2002–2005. Findings: The results indicate market commonalities and resource similarities have a negative effect on the likelihood of a price-competitive action and a price-competitive response. Moreover, the level of cooperation among firms moderates the relationships among market commonalities, resource similarities, price-competitive actions, and price-competitive responses. Practical implications: To understand and predict competitive behavior help firms to control and avoid unnecessary rivalry and therefore maintain mutual forbearance with competitors. Originality/value: This study provides a new angle on cooperation-level analysis, contributing the use of collective identity theory to analyze the moderating effects of cooperation on competitive actions and responses.