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Values-Based Rivalry: A Theoretical Framework of Rivalry Values-Based Rivalry: A Theoretical Framework of Rivalry

Between Activists and Firms Between Activists and Firms

Theodore L. Waldron

Chad Navis

Olivia Aronson University of Richmond, oaronson@richmond.edu

Jeffrey G. York

Desiree F. Pacheco

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Recommended Citation Recommended Citation Waldron, Theodore L., Chad Navis, Olivia Aronson, Jeffrey G. York, and Desiree F. Pacheco. “Values-Based Rivalry: A Theoretical Framework of Rivalry Between Activists and Firms.” Academy of Management Review 44, no. 4 (October 2019): 800–818.

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Q Academy of Management Review2019, Vol. 44, No. 4, 800–818.https://doi.org/10.5465/amr.2017.0205

VALUES-BASED RIVALRY: A THEORETICAL FRAMEWORK OFRIVALRY BETWEEN ACTIVISTS AND FIRMS

THEODORE L. WALDRONTexas Tech University

CHAD NAVISClemson University

OLIVIA ARONSONUniversity of Richmond

JEFFREY G. YORKUniversity of Colorado Boulder

DESIREE F. PACHECOPortland State University

In this article we develop a theoretical framework to explain values-based rivalry be-tween activists and firms by integrating and advancing key insights from competitivedynamics and social activist research. The first part of our framework conceptualizesthe unique tensions, actions, and responses that characterize values-based rivalryand distinguish it from rivalry between firms. The second part of our frameworkconceptualizes the role of managers’ perceptions in shaping their firms’ likelihood ofresponding to activists’ actions during values-based rivalry. Overall, our conceptu-alization primarily expands competitive dynamics research to account for rivalrybetween dissimilar actors and, in doing so, broadens social activist research to accountfor such rivalry.

Rivalry between activists and firms ariseswhen activists press firms to adopt more sociallyresponsible practices and firms look to mitigatethe impact of such efforts on their market advan-tages (Markman, Waldron, & Panagopoulos,2016). For instance, People for the Ethical Treat-ment of Animals and Jimmy’s FamousSeafood—alocal seafood restaurant in Baltimore, Maryland—engaged in a “war of words” over how Jimmy’sprepared marine animals for consumption, witheach side trading blows and refusing to backdown. Such rivalry carries significant conse-quences, such as the stigmatization or sanctifi-cation of the combatants, the cultivation orerosion of status for winners and losers, and theimplementation or preservation of practices that

shape supply chains and industry norms (Waldron,Fisher, & Navis, 2015).Competitive dynamics research has recently

begun to examine rivalry between activists andfirms. Scholars have explored the empirical fea-tures of such rivalry (Pacheco & Dean, 2015),without elaborating its theoretical foundations.We consequently know little about the uniquetensions, actions, and responses that characterizerivalry between activists and firms or the factorsthat trigger firms’ responses to activists’ actions.Our purpose is to develop a framework that ad-dresses these explanatory constraints, distin-guishes rivalry between activists and firms fromrivalry between firms, and informs richer explo-ration of this phenomenon. The importance ofdeveloping this framework rests on the growingprevalence and impact of rivalry between activ-istsand firms (Guay,Doh,&Sinclair, 2004;Hendry,2005; Waldron, 2011), as well as calls for compet-itive dynamics research to account for rivalrybetween dissimilar actors (Chen & Miller, 2012,2015; Markman et al., 2016).

We thank Cindy Devers for serving thoughtfully, construc-tively, and supportively as our editor, as well as three anony-mous reviewers for their valuable advice throughout thereview process. We also appreciate our colleagues MikePfarrer, Gideon Markman, Allen Amason, Andrew Ward, AnnBuchholtz, and Scott Graffin for encouraging our effort to de-velop the interdisciplinary theory proposed in this article.

800Copyright of theAcademy ofManagement, all rights reserved. Contents may not be copied, emailed, posted to a listserv, or otherwise transmittedwithout the copyright holder’sexpress written permission. Users may print, download, or email articles for individual use only.

Our framework,which integratesandadvancescompetitive dynamics and social activist re-search, consists of two parts. The first part of theframework conceptualizes the tensions, actions,and responses that characterize rivalry betweenactivists and firms. We posit that the control andsupremacy sought by activists and firms fuel thetensions they experience, as well as that claimsand counterclaims constitute the actions and re-sponses through which the two sides engage inrivalry. The role of values in such tensions, ac-tions, and responses leads us to refer to rivalrybetween activists and firms as values-based ri-valry. The second part of the framework concep-tualizes the role of managers’ perceptions inshaping their firms’ responses to activists’ claimsduring values-based rivalry. We posit that sa-lience, threat, and feasibility perceptions, shapedby attributes associated with rival activists andtheir claims, determine the likelihood that firms’managers will counter the activists’ claims withtheir own.

Our theoretical framework makes three pri-mary contributions to competitive dynamics re-search, as well as associated contributions tosocial activist research. First, in recognizing ac-tivists and firms as rivals, our framework ac-counts for rivalry between dissimilar actors.Second, in conceptualizing the tensions, actions,and responses that characterize values-based ri-valry, our framework establishes that these corecomponents of rivalry take different forms duringrivalry between activists and firms than theydo during rivalry between firms. Third, in elabo-rating the impact of managers’ perceptions—informed by activist-related attributes—on theirlikelihood of responding to activists’ claims, ourframework advances understanding of the roleof managerial cognition in discerning firms’ like-lihood of responding to rivals’ actions.

THEORETICAL BACKGROUND

Competitive dynamics research has histori-cally examined rivalrous interactions betweenfirms (Chen & Miller, 2015). Scholars originallystudied the interplay of rival firms’ competitiveactionsas theypursue the samesources ofmarketadvantage (Chen & Miller, 2012), both in productmarkets for consumers and in factor markets forresources (Capron & Chatain, 2008; Chen, 1996;Markman, Gianiodis, & Buchholtz, 2009). Suchwork has recognized that organizational and

behavioral attributes influence interactions be-tween rival firms as they pursue product- andfactor-market advantages (Chen, 1996; Chen &Miller, 2012). During product-market rivalry, forinstance, larger firms take more significant andvisible actions than do smaller firms against ri-vals (Chen & Hambrick, 1995), with the signifi-cance and visibility of these actions increasingtotal responses from rivals (Chen & MacMillan,1992). During factor-market rivalry, firms attemptto secure advantages by cultivating better re-sources than their rivals and by rendering theirrivals’ extant resources inoperable or inaccessi-ble (Markman et al., 2009).Toestablish that rivalry ispredicatedonhuman

agency and cognition, a parallel stream of com-petitive dynamics research has emerged that ex-plores howmanagers’ perceptions influence theirfirms’actionsand responsesduring rivalry (Chen,1996). Scholars have identified the tension thatmanagers perceive to exist with rival firms as anantecedent of their firms’ responses to the rivals’actions, identifying a positive correlation be-tween tension and response likelihood (Chen,Kuo-Hsien, & Tsai, 2007). Tension in this context“refers to the strain between a focal firm and agiven rival that is likely to result in the firm takingaction against the rival” (Chen et al., 2007: 101).Actions are “specific and detectable marketmoves initiated by a firm, such as introducing anew product or entering a new market, to erode arival’s market share or reduce its anticipatedreturns” (Chen & Miller, 2012: 141–142). In turn,responses are “specific and datable counter-moves, prompted by an initial action that a firmtakes to defend or improve its share or profit po-sition in its industry” (Chen & Miller, 2012: 142).Tensions, actions, and responses constitute thecore components of rivalry and are of central in-terest in our framework.We interpret tension to be necessary—yet in-

sufficient by itself—to lead managers to respondto actions by their rivals. The conversion of ten-sion into response may be predicated on aware-ness, motivation, and capability (AMC), whichplay important, interconnected roles in explain-ing managers’ response likelihood during rivalry(Chen, 1996; Chen et al., 2007; Chen&Miller, 1994).Although scholars have conceptualized AMC invarious ways, they have typically focused onmanagers’ awareness of rivals and their ownfirms’motivation and capability to respond to therivals’ actions (Chen, 1996; Chen & Miller, 1994,

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2012). Managers becomemore likely to respond torivals as, informed by evaluations of rival-relatedattributes, they recognize rivals and their actions(awareness), see net benefits associated with re-sponse (motivation), and believe their firms pos-sess adequate ability to respond (capability; cf.Chen, 1996; Chen & Miller, 1994). In shaping theirfirms’ responses to rivals’ actions, managers’AMCprovides a catalyst to transform tension intoresponse—a premise that informs the develop-ment of our framework. Implicit is that managerscan perceive tension with rivals in the presenceor absence of action against their firms, where-as AMC hinges on managers’ evaluations of theimplications of rivals’ actions for their firms.

Departing from attention to rivalry betweenfirms, scholars have begun to explore rivalry be-tween activists and firms. During such rivalry,activists press for firms to adopt more sociallyresponsible practices, and firms look to mitigatethe impact of such efforts on their market advan-tages (Markman et al., 2016). Rivalry between ac-tivists and firms has grown in prevalence andimpact (Guay et al., 2004; Hendry, 2005; Waldron,2011), occurring between diverse actors and pro-ducing diverse consequences for the combatants.In initial competitive dynamics research on thisphenomenon, like in early competitive dynamicsresearch on interfirm rivalry, scholars have ex-amined select empirical correlates of practicechange by firms—the focal outcome of rivalrywith activists. For instance, Markman et al. (2016)proposed that strategic aggressiveness influ-enceshow readily firmsenact thepractice change

sought by activists. Similarly, Pacheco and Dean(2015) found that market dependence and com-petitor behavior shape firms’ adoption of thepractice change sought by activists. Table 1 pro-vides examples of the rivalry between activistsand firms considered in such work.Despite their attentiveness to empirical con-

nections between the features and outcomes ofrivalry between activists and firms, competitivedynamics scholars have not established the the-oretical foundations of this phenomenon. Extantwork does not conceptualize the tensions, actions,and responses that characterize such rivalry,which, because of differences between activistsand firms, may look distinct from those thatcharacterize rivalry between firms. It also doesnot conceptualize the nature of managers’ per-ceptions, the factors that shape theseperceptions,or the impact of such perceptions on their firms’likelihood of responding to activists’ actions; in-stead, it attends to the outcomeof such rivalry andleaves the catalyst that transforms tension intoresponse unspecified. Our objective is to developa framework that resolves these explanatoryconstraints, establishes the theoretical founda-tions of rivalry between activists and firms, andprovides a richer understanding of such rivalry.

THEORETICAL FRAMEWORK

Our framework synthesizes and extends re-search from the competitive dynamics and socialactivist domains. The core premise of our frame-work is that tension precedes firms’ responses to

TABLE 1Examples of Rivalry Between Activists and Firms

Activist Firm Focus Duration Winner

RAN Weyerhaeuser Procurement of wood from ancient, old-growth forests

6 years Weyerhaeuser

Oxfam Starbuck’s Wages paid to coffee farmers inimpoverished countries

2 years Oxfam

PETA KFC Treatment of chickens raised onsuppliers’ farms

17 years KFC

Friends of the Earth Ace Hardware Sale of garden products containingneonic pesticides

3 years Ace

Greenpeace Trader Joe’s Sale of fish harvested in unsustainableways

2 years Greenpeace

GLAAD New York Times Use of derogatory terms forhomosexuality

, 1 year GLAAD

Note: We selected examples where activist organizations and firms engaged in rivalry for clarity of illustration. However, ourtheory pertains to activists of any form—ranging from individuals to social movements—engaged in rivalry with firms.

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rivals’actions,with firmmanagers’perceptions ofrivals and their actions catalyzing the conversionof tension into response.We build on this premiseto conceptualize the tensions, actions, and re-sponses that characterize rivalry between activ-ists and firms, as well as the role of managers’perceptions in shaping their firms’ likelihood ofresponding to activists’ actions. To develop ourtheory, we build on research from the variousdomains that have traditionally researched so-cial activism against firms (e.g., social move-ments, institutions, stakeholders, and nonmarketstrategy)—described henceforth as social activistresearch. Drawing on social activist research toenrich the competitive dynamics domain bolstersthe capacity of both domains to explain rivalrybetween activists and firms, honoring calls toengage in interdisciplinary theory development(Durand, Grant, & Madsen, 2017).

Tensions, Actions, and Responses During RivalryBetween Activists and Firms

The first part of our framework conceptualizesthe tensions, actions, and responses that charac-terize rivalry between activists and firms (Chen &Miller, 2012). We establish that these core com-ponents of rivalry take different forms during ri-valry between activists and firms than they doduring rivalry between firms. Our frameworkelaborates the unique sources of tension for ac-tivists and firms, contrasting the forms of controland supremacy sought by firmswith those soughtby activists and firms. It also elaborates theunique actions and responses through which ac-tivists and firms engage in rivalry, contrastingsuch actions and responses with those used byfirms to engage in rivalry.

Sources of tension for activists and firms. Ac-cording to competitive dynamics research, firmsexperience tension when they seek control overthe same consumers and resources, as well assupremacy in common product and factor mar-kets (Chenetal., 2007). Implicit is that such tensionhinges on the potential implications of (not) win-ning these battles for competitive positioning, fi-nancial performance, and operational integrity.Competitive dynamics research has also recog-nized the object of rivalry between activists andfirms—namely, the nature and implications of thefirms’ practices for society and the environment(Markman et al., 2016). However, such work hasoffered much less insight about the tension

underpinning battles over these practices,which, relative to rivalry between firms, mayemanate from the desire for control of a differentform and supremacy in a different context.Social activist research tells us that activists

and firms seek to control firms’ practices for ac-quiring consumers, accessing resources, and us-ing resources, among others (den Hond & deBakker, 2007). Whereas rival firms seek to controlcommon “objects” (e.g., consumers and resources),rivalactivistsand firmsseek tocontrol “behaviors”for interacting with those common objects (e.g.,practices for accessing resources). Activists seekto control firms’ practices that create negativesocial or environmental externalities and/or vio-latemoral standards (cf. Frooman, 1999;Markmanet al., 2016). In turn, firms seek to preserve controlof their practices that play key roles in their op-erations and that contribute to their advantagesrelative to competing firms (Markman et al., 2016).PETA and Jimmy’s Seafood, for instance, soughtto control how Jimmy’s prepared shellfish andother marine animals for consumption.As they seek control over practices, activists

and firms may also seek supremacy in values do-mains. Values domains describe sociocognitivemarkets (cf. Porac, Thomas, & Baden-Fuller, 1989;Porac, Thomas, Wilson, Paton, & Kanfer, 1995),which transcend the boundaries between productand factor markets and broader society, wherevarious actors look to establish the dominance oftheir values. Actors cognitively and socially con-struct the boundaries and features of values do-mains through observation and interaction witheach other, much like firms define product andfactor markets (cf. Porac et al., 1995). These in-teractions facilitate the dissemination and ac-ceptance of values such that greater acceptancethroughout values domains corresponds to theheightened dominance of actors’ values andthe elevation of their social positions in valuesdomains. Actors that achieve these outcomesreceive an array of social advantages, such asimproved reputations, gained power and influ-ence, higher valuation, and better access to re-sources (French, Raven, & Cartwright, 1959;Podolny, 1993). When activists and firms seek su-premacy in values domains, then, they seek toensure the dominance of their values, enhancetheir social positions, and accrue the social ad-vantages associated with these positions. PETAand Jimmy’s Seafood, for instance, sought to se-cure broader acceptance of the values associated

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with their respective stances on Jimmy’s treat-ment of marine animals.

Analogous to tension between rival firms, ten-sion between rival activists and firms hingeson the interconnected implications of (not) secur-ing the control over practices and supremacy invalues domains sought by activists and firms.Winning control over practices signifies thedominance of the winners’ values to the actorscomprising values domains, providing the impe-tus for these actors to accept the winners’ valuesand elevate their social standing. Conversely,winning supremacy in values domains comeswith social advantages, including support fromactors in those settings, that may increase thewinners’ influence during efforts to control rivals’practices. Implicit here is that activists’ and firms’values inform and are reflected in their actionsand responses during rivalry, a premise weelaborate on in more length in the next section.The preceding logic indicates that the potentialimplications of controlling practices and gainingsupremacy in values domains, as well as the in-terplay between these pursuits, constitute theunique sources of tension experienced by rivalactivists and firms. Given the fundamental rolethat values play in rivalry between activistsand firms, we refer to such rivalry as values-based rivalry.

Nature of actions and responses by activistsand firms. According to competitive dynamicsresearch, actions and responses between rivalfirms entail tactics for controlling the resourcesand consumers necessary to attain supremacyin product and factor markets, including prod-uct introductions, advertising campaigns, marketentry, pricing changes, and facility redesigns/relocations, among others (Chen & MacMillan,1992; Chen & Miller, 2012; Smith, Grimm, Wally,& Young, 1997). Without mentioning actions andresponses, competitive dynamics research onactivist-firm rivalry has described activists’ tac-tics for influencing firms and has not addressedthe mechanisms of influence or the tactics thatfirms use in response, instead attending to anoutcome of such rivalry—practice change likeli-hood (Markman et al., 2016).

Social activist research may help to elucidatethe unique nature of the actions and responsestaken by activists and firms to control commonpractices. Scholars have recognized that activistsmake claims through visible demonstration tac-tics (e.g., advertisements, press releases, protests,

boycotts, and shareholder proposals) that contesttarget firms’ practices (Briscoe & Gupta, 2016).In harnessing various frames (Briscoe, Gupta, &Anner, 2015), rhetorical arguments (Waldron et al.,2015), and logics (York, Hargrave, & Pacheco,2016) to stigmatize firms in public arenas, activ-ists’ claims threaten firms’ reputations, poten-tially constraining their access to consumers andresources of competitive importance (Baron &Diermeier, 2007; Eesley & Lenox, 2006; Frooman,1999; McDonnell & King, 2013; Waldron, Navis,& Fisher, 2013). Potential reputational harm andits consequences pressure firms to cede controlover their practices (Waldron et al., 2013). Whenfaced with such pressure, firms counter suchclaims with their own to mitigate the potentialeffect of activists’ claims on their reputations andthe associated pressure to cede control of theirpractices (Coupland, 2005).1 PETA and Jimmy’sSeafood, for instance, publicly exchanged claimsand counterclaims as they pursued control overJimmy’s seafood preparation practices.Claims may also constitute the means through

which activists and firms pursue supremacy invalues domains. Values inform and are reflectedin the content of activists’ claims and firms’counterclaims (cf. Benford&Snow, 2000; denHond& de Bakker, 2007; Waldron et al., 2015), with thelink between values and claims varying acrossorganizations and claims (cf.Waldron et al., 2013).As activists’ and firms’ values more strongly in-form their claims and counterclaims, the claimsmay more strongly reflect the two sides’ values,signifying these values to other actors in valuesdomains. The signification of values in claimsenables activists and firms to jockey for theacceptance of their values and the conferralof favorable social standing by the actors invalues domains, aswell as the social advantagesassociated with these outcomes. Given theirroles in controlling practices and gaining su-premacy in values domains, claims constitute theunique “actions” and “responses” that charac-terize values-based rivalry between activists andfirms. PETA’s and Jimmy’s Seafood’s claims and

1Counterclaims constitute firms’ responses to activists’claims during rivalry, whereas practice change by firms—orlack thereof—constitutes an outcome of such rivalry. Givenour interest in the former, our theory focuses on scenarioswhere activists’ claims incite firms’ counterclaims, rather thanscenarios where activists’ claims immediately lead firms tochange their practices.

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counterclaims, for instance, were informed bytheir respective values and signified these valuesto other actors.

To recap, the first part of our framework estab-lished the foundational components of rivalrybetween activists and firms, attending to thetensions and actions characterizing such battles.In terms of tension, as activists and firms seekcontrol over common practices, they may also beseeking supremacy in values domains. We con-sequently refer to this phenomenon as values-based rivalry. In terms of action, we propose thatactivists and firms battle to control the latter’spractices and to secure supremacy in values do-mains through claims and counterclaims.

Managerial Perception and Firm ResponseLikelihood During Rivalry With Activists

The second part of our framework conceptual-izes the role of managers’ perceptions in shapingtheir firms’ likelihood of responding to rival ac-tivists’ claims with their own, specifying the cat-alyst that converts the latent tension experiencedby firms into response during values-based ri-valry. Although values factor prominently into thetensions, actions, and responses that characterizerivalry between activists and firms, they play alesser role in catalyzing firms’ counterclaims toactivists’ claims. The complexities associatedwith understanding activists and their claimsmay require firms’managers to draw on a diverseset of perceptual lenses that play more directand explicit roles than their firms’ values inshaping the managers’ perceptions of, and asso-ciated counterclaims to, rival activists’ claims.We consequently identify the perceptions thatcharacterize managerial sensemaking duringvalues-based rivalry and link these perceptionsto extant conceptions of AMC. We then eluci-date the interconnected roles of managers’ per-ceptions in determining their firms’ likelihood ofresponding to activists’ claims through counter-claims. We conclude by elucidating how attri-butes associated with activists and their claimsinform managers’ perceptions. Figure 1 illus-trates the second part of our framework.

Managers’ perceptions of rival activists. Ac-cording to competitive dynamics research, firmsbecome more likely to respond to rivals’ actionsas their managers become more aware, moti-vated, and capable of dealing with their rivals(Chen, 1996; Chen et al., 2007; Chen&Miller, 1994).

Notably, the AMC perspective on firms’ responselikelihood has not been extended to competitivedynamics research on rivalry between activistsand firms. Such work has more descriptivelyrecognized that firms with market dependenciesand first-mover tendencies are more likely tochange as sought by activists (Markman et al.,2016; Pacheco&Dean, 2015). It has thus overlookedthe fundamental impact of managerial cognitionon the exchanges that make up such rivalry(i.e., claims/counterclaims), instead attending tothe empirical determinants of an outcome of suchrivalry (i.e., practice change).Social activist research provides further insight

into what managers’ sensemaking efforts entailand how they influence their firms’ likelihoodof responding to activists during values-basedrivalry. Waldron et al. (2013) posited that thelikelihood firms will adopt the practice changesought by activists corresponds to firmmanagers’perceptions of the threat posed by activists suchthat change likelihood increases with perceivedthreat. According to Waldron et al.’s theory,managers’ threat evaluations consider two fac-tors: the potential reputational impact of the ac-tivists’ efforts on their firms and the importanceof the practices contested by the activists totheir firms. Managers are more likely to perceivethreats from activists that appear to harm theirfirms’ reputations, with these perceived threatsbecoming more salient as managers believe thecontested practices more reflect their firms’ de-finingqualities.Overall, despite holding constantthe external factors associated with activists’efforts that may influence managers’ percep-tions and focusing on practice change by firms,Waldron et al.’s (2013) theory identifies some keymanagerial perceptions of relevance to firm re-sponse likelihood.This theoretical account provides a starting

point to link the traditional conceptions of mana-gerial AMC to themanagerial perceptions at playduring values-based rivalry. First, managers’threat perceptions constitute their motivation forresponding to activists’ claims. Our frameworkthus focuses on managers’ perceptions of thethreat posed by activists. Second, formanagers todetermine the threat posed by activists, theymustbe aware of the activists and designate them assalient. Awareness constitutes a cognitive pre-condition for managers to gauge the salienceof activists to their firms. Our framework thusfocuses on managers’ perceptions of activists’

2019 805Waldron, Navis, Aronson, York, and Pacheco

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salience. Third and finally, social activist re-search does not explicitly conceptualize capabil-ity as a facet of managerial sensemaking. Suchwork assumes that, given their resource endow-ments, firms can enact the practice changessought by activists (Waldron et al., 2013). How-ever, consistent with managers’ perceptions ofresponse capability during rivalry with otherfirms, managers also gauge such capability dur-ing rivalry with activists. Managers gauge thefeasibility of enacting the practice change soughtby activists (cf. Schwartz, 2010), in part to de-terminewhether they should counter the activists’claims with their own. The distinction betweencapability and feasibility is that capability dealswith idealistic perceptions of response capac-ity, whereas feasibility deals with realistic per-ceptions of response capacity. Our frameworkfocuses on managers’ feasibility perceptions.

Impact of managers’ perceptions on firms’likelihood of responding to rival activists. Ourcontention is that managers’ salience, threat, andfeasibilityperceptions—hallmarksofmanagerialsensemaking during values-based rivalry—playdistinct and interconnected roles in shaping theirfirms’ likelihood of responding to activists’ claimswith their own. Competitive dynamics researchoffers little precedent to explain these roles. Ex-tant work has recognized that the confluence ofmanagers’ AMC perceptions explains firms’ like-lihood of responding to rivals, without exploringor explaining the interplay of each perceptualdimension and the implications for responselikelihood. Social activist research offers moreinsight, since it emphasizes the direct effect ofmanagers’ perceptions of activists as threats ontheir likelihood of changing practices in responseto activists’ efforts (Waldron et al., 2013). This ef-fect translates to our account of response likeli-hood, leading us to suggest that managers’ threatperceptions influence their likelihood of counter-ing activists’ claims during values-based rivalry.Of note is that these threat perceptions may in-fluence whether firms act on the latent tensionthey perceive to exist with activists. Building onthe preceding logic, we propose the following.

Proposition 1: Managers’ threat per-ceptions positively relate to their firms’response likelihood during values-based rivalry.

Additionally, social activist research recog-nizes that managerial salience perceptions are

interwoven with the threat-response link suchthat managers perceive more salient threats asactivists contest practices of greater importanceto their firms (Waldron et al., 2013). However,managers may more instinctively and immedi-ately consider external factors, such as the repu-tations of rival activists, when determining thesalience of the activists to their firms (Pacheco,York, & Hargrave, 2014). Implicit here is thatmanagersmaydeemactivists tobeworthyof theirattention, a correlate of salience (cf. Nigam &Ocasio, 2010), before designating the activists asthreats. Moreover, managers’ perceptions of ac-tivists’ salience do not directly affect their firms’likelihood of countering activists’ claims, in-stead providing the impetus for themanagers tocultivate the threat perceptions that influencesuch response likelihood. Specifically, man-agers become more likely to consider the threatposed by activists as they assign more salienceto them. Of note is that salience perceptionsmay influence managers’ attention to and con-sideration of the latent tension they perceive toexist with activists. We therefore propose thefollowing.

Proposition 2: Managers’ salience per-ceptions precede and catalyze theirefforts to make sense of threats fromactivists during values-based rivalry.

Finally, although not explicitly addressed bysocial activist research, managers are likely togauge the feasibility of practice change as theyconsider the threat from activists and beforedeciding to respond through counterclaims (cf.Schwartz, 2010). Managers’ efforts to gauge fea-sibility are interwovenwith, rather than catalyzedby, their efforts to gauge the threat posed by ac-tivists (cf. Dutton & Duncan, 1987). The feasibilityof practice change, or lack thereof, may influencemanagers’ baseline tendency to respond tothreats from activists, rather than directly influ-ence this response tendency.Whereas perceivingactivists to be noteworthy threats does motivatemanagers to respond, perceiving the practicechange demanded by activists to be feasible doesnot provide such motivation. At the same time,perceiving practice change to be feasible leadsmanagers to feel more empowered to counter theactivists’ claims with their own claims. Know-ing that change is feasible may mitigate theperceived risk associated with making counter-claims, regardless of the content of those claims,

2019 807Waldron, Navis, Aronson, York, and Pacheco

amplifying managers’ likelihood of respondingto perceived threats. Notable here is that feasi-bility perceptions may play a supplementary rolein converting the latent tension managers per-ceive to exist with activists into responses to ac-tivists’ claims. Thus, we posit the following.

Proposition 3: Managers’ feasibilityperceptions positively moderate therelationship between their threat per-ceptions and response likelihood dur-ing values-based rivalry.

Activist-related attributes that shape man-agers’ perceptions. Having conceptualized howmanagers’ salience, threat, and feasibility per-ceptions shape their likelihood of responding toactivists’ claims, there remains an unansweredquestion about the external factors that shapeeach of these perceptions. Competitive dynamicsresearch offers little direct insight here sinceit focuses on firm-related factors that are not rel-evant for managers to evaluate during rivalrywith activists. Social activist research has em-phasized internal factors, such as firms’ definingqualities, that shape managers’ efforts to makesense of activists’ impact on their firms’ reputa-tions (McDonnell & King, 2013; Waldron et al.,2013). Such work has not addressed the externalfactors—notably, activist-related attributes—thatmanagers consider during their sensemakingefforts or the mechanisms through which theseattributes influence managers’ perceptions.

In the remainder of this section, we elucidatethese proposed connections between activist-related attributes and managerial perceptionsduring values-based rivalry, discerning theseattributes from prior theoretical explanationsand empirical findings in competitive dynamicsand social activist research. This facet of ourconceptualization is guided by the premise thatmanagers’ perceptions of rival firms are predi-cated on evaluations of the attributes of the rivalsand their actions (Chen & Miller, 2012, 2015). Weattend to analogous attributes—those associatedwith rival activists and their claims—that man-agers consider during values-based rivalry. Ourtheory posits that key attributes associated withactivists’ reputed influence, their diagnosticclaims, and their prognostic claims inform man-agers’ salience, threat, and feasibility percep-tions, respectively, during values-based rivalry.

Activists’ influence and salience perceptions.Managers’ evaluations of activists’ influencemay

inform their perceptions of the activists’ salience.Both competitive dynamics and social activistresearch have shown that firms are more likely torespond to rivals possessing the means to inflictharm on their firms (e.g., Boyd & Bresser, 2008;Chen & Miller, 1994; Chen, Smith, & Grimm, 1992;Eesley & Lenox, 2006; Lenox & Eesley, 2009). Em-bedded in these effects is the premise that firmsattribute more salience to rivals that could poten-tially influence them. We contend that managers’perceptions of salience during values-based ri-valry hinge on evaluations of rival activists’ po-tential to influence their firms such that managersattribute more salience to activists who appear tocarry more influence.What managers know aboutactivists’ efforts and achievements during priorrivalry against their firms or others informs imme-diate and instinctive assessments of how note-worthy the activists are to their firms.Managers may evaluate three reputational at-

tributes, informed by media coverage or personalexperience, to approximate the rival activists’ po-tential influence—namely, their historical effec-tiveness, disruptiveness, and support in catalyzingpractice change by prior rival firms. Basically,managers determine activists’ potential to influ-ence their firms by evaluating information on theactivists’ historical effectiveness, disruptiveness,and support. Of interest to our conceptualizationis how evaluations of these three attributesuniquely shape managers’ perceptions of the ac-tivists’ power, urgency, and legitimacy, contribut-ing to their overall perceptions of the activists’salience (cf. Mitchell, Agle, & Wood, 1997).Activists’ effectiveness describes managers’

evaluations of activists’ historical proficiency incatalyzing practice change by firms. Neithercompetitive dynamics research nor social activistresearch has offered much overt insight into howrivals’ proficiency in this regard influences man-agers’ sensemaking efforts. However, scholarshave reported that prior interactions increaserival firms’ attention to each other (Kilduff,Elfenbein, & Staw, 2010). This effect may inten-sify for firms that have performed worse than, oreven lost to, their rivals during prior interactionsand may weaken for firms that have performedbetter than, or even won against, rivals. Out-comes of prior interactions provide managerswith information on their rivals’ power suchthat more unfavorable outcomes contribute to per-ceptions that rivals are more powerful. That is,believing rivals have beaten or influenced their

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firms or other firms in some way—namely, thatrivals have been effective in their efforts—leadsmanagers to believe that the rivals are more pow-erful than their own firms and, consequently, wor-thy of attention. This logic indicates thatmanagersmay evaluate activists’ effectiveness during priorrivalry with their firms or other firms to gauge thepowerfulness of the activists’ current efforts, con-tributing to the managers’ overall perceptions ofthe activists’ salience. Activists appear to be morepowerful—and, consequently, more salient—rivals when managers perceive the activists tohavebeenmoreproficienthistorically incatalyzingpractice change by firms. Building on this logic, wepropose the following.

Proposition 4: Managers’ perceptions ofactivists’ effectiveness positively relateto their perceptions of the activists’salience.

Activists’ disruptiveness describes managers’evaluations of the severity of the impact that ac-tivists have historically had on rival firms’ oper-ations. Whereas effectiveness deals with theoutcomes that activists appear to have achievedduring prior rivalry, disruptiveness dealswith theimpediments that activists appear to have gen-erated when such rivalry was ongoing. Competi-tive dynamics research has reported that firmsconsider the adverse social and economic im-pact of rival firms’ actions on their firms (Chen& Miller, 2012; Chen et al., 1992; MacMillan,McCaffery, & Van Wijk, 1985). Social activist re-search has proffered that activists’ efforts impedefirms’ operations (Baron & Diermeier, 2007; Eesley& Lenox, 2006; Frooman, 1999; King, 2008; King &Soule, 2007). Our conception of actions and re-sponses recognizes that activists’ repertoires ofclaims, along with the demonstration tactics fordisseminating them, during prior rivalry may in-form managers’ evaluations of how severely theactivists could impact their firms’ operationsduring ongoing rivalry. Managers may evaluatehow activists have engaged prior rival firms,embodied in impressions of the activists’ reper-toire of claims and tactics, to gauge how muchimpact the activists had on those firms and howmuch impact the activists could have on their ownfirms. Notably, managers’ evaluations of activ-ists’ historical disruptiveness may rely on theirgeneral impressions, rather than specific knowl-edge, of the nature and impact of activists’ be-havioral tendencies during prior rivalry.

We contend that activists’ disruptiveness dur-ing prior rivalry may contribute to managers’perceptions of the activists’ salience to their firmsduring ongoing rivalry. Whereas the outcomes ofactivists’ prior rivalry with firms enables man-agers to gauge the power of their rivals, the se-verity of the impact on firms during such rivalryenables managers to gauge the urgency of theirrivals. Competitive dynamics research has re-ported that firms tend to respond faster as rivalsappear to be poised to impact their operationsmore broadly and deeply (Chen & Miller, 2012).This effect may implicitly hinge on the tendencyfor managers to perceive more disruptive rivalsas more urgent concerns, as reflected in theirheightened response speed. Adapting this logicto managers’ evaluations of rival activists’ dis-ruptiveness suggests that managers may per-ceive activists to be more urgent rivals as theactivists appear to have been more disruptiveduring prior rivalry. When activists appear tohave been more historically disruptive to firms,managers anticipate analogous disruptions totheir firms and perceive the activists to be moreurgent—and, consequently, more salient—rivals.In contrast, as activists appear to have been lesshistorically disruptive to firms, managers antici-pate an analogous lack of disruption to their firmsand perceive the activists to be less urgent—and,consequently, less salient—rivals. Building onthe preceding logic, we propose the following.

Proposition 5: Managers’ perceptionsof activists’ disruptiveness positivelyrelate to their perceptions of the activ-ists’ salience.

Activists’ support describes managers’ evalua-tions of the pervasiveness of the collective actionthat activists have historically mobilized againstrival firms. Though not of interest in competitivedynamics research, social activist research haslong emphasized the importance of collective ac-tion to activists’ efforts (Briscoe & Gupta, 2016).Such work posits that, to overcome resource con-straints, activists attempt to mobilize broad anddiverse support for their efforts against firms(Bartley & Child, 2011; King, 2008; Walker, Martin,& McCarthy, 2008). The extent of collective actionmobilized by activists may reflect their broadersocial acceptance such that activists appearmorelegitimate when they appear to mobilize morepervasive collective action. Managers may con-sequently evaluate activists’ support during prior

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rivalry with their own firms or others to gauge thebroader legitimacy of the activists’ efforts, whichcontributes to managers’ overall perceptions ofthe activists’ salience (cf. Mitchell et al., 1997).Activists appear to be a more legitimate—and,consequently, a more salient—concern to man-agers as the managers perceive the activists tohave historically mobilized more extensive col-lective action against rival firms. Such manage-rial perceptions may emanate from evidence ofsupport for the rival activists, such as when ce-lebrities endorse the activists’ efforts or the ac-tivists reference such support in their claims (cf.Waldron et al., 2015). Building on this logic, wepropose the following.

Proposition 6: Managers’ perceptionsof activists’ support positively relateto their perceptions of the activists’salience.

Activists’ diagnostic claims and threatperceptions. Whereas evaluations of activists’reputed influence inform managers’ perceptionsof how much attention to pay to rival activists,evaluations of activists’ diagnostic claims in-form managers’ perceptions of how much threatthey face from the activists. Competitive dy-namics researchers have begun to recognize thatmanagers consider rivals’ claims (Gao, Yu, &Cannella, 2017; Guo, Yu, & Gimeno, 2017), with-out attending to the perceptual impact of suchclaims or to claims explicitly about their firms.Somewhat analogously, social activist researchershave descriptively recognized that activistsmakediagnostic and prognostic claims about firms(Benford & Snow, 2000; Briscoe & Gupta, 2016),without attending to the unique and direct impactof each claim type on firm managers’ sense-making efforts. Our conception of actions andresponses proposes that activists’ claims consti-tute their actions for engaging in values-basedrivalry with firms. Scholars have recognized thatdiagnostic and prognostic claims perform distinctyet complementary roles during such rivalry(Battilana, Leca, & Boxenbaum, 2009; Benford &Snow, 2000). Diagnostic claims identify problemswith firms’ practices, and prognostic claimsspecify desired changes to these practices (cf.Benford & Snow, 2000).

Because diagnostic claims stigmatize whatfirms do in public arenas, they have more poten-tial than prognostic claims to harm firms’ repu-tations (Briscoe &Gupta, 2016) and, consequently,

to fuel managers’ perceptions of the activists asthreats (Waldron et al., 2013). That is, the potentialto harm firms’ reputations,whichwealternativelydescribe as reputational pressure, constitutes themechanism through which activists’ diagnosticclaims shape managers’ threat perceptions. Threeattributes of activists’ diagnostic claims—focus,tone, and reach—may inform managers’ percep-tionsof the threats posedby thepotential impact ofthese claims on their firms’ reputations. As withconceptions of action attributes in competitivedynamics research (Chen & Miller, 2012), the at-tributes of activists’diagnostic claims can apply toindividual claims, repertoires of claims, or (longi-tudinal) patterns of claims. We presume that themore managers believe a diagnostic claim attri-bute applies across these aggregation levels, themore likely managers are to experience the pro-posed perceptual effects.Diagnostic focus describes managers’ evalua-

tions of attributions of blame in activists’ claimsabout problems with their firms’ practices—specifically in terms of who or what causes theseproblems. The assumption in social activist re-search is that, when attempting to harm firms’reputations, activists blame the firms for prob-lems with their practices (e.g., King & Soule,2007; McDonnell & King, 2013). Empirical findingsfrom such work suggest that activists may alsoestablish how the firms’managers and industriescontribute to the firms’ problematic behavior(Waldron et al., 2015). The implication for ourtheory is that activists’ diagnostic claims mayblame firms’ individual managers for allowingsuch behavior to continue, the firms themselvesfor engaging in such behavior, or the industrieswhere the firms belong for accepting such be-havior. The focus of activists’ diagnostic claims,then, refers to the actors—ranging from individ-uals to industries—the activists blame for prob-lems with firms’ practices.We contend that the focus of activists’ di-

agnostic claims may contribute to managers’perceptions of the threat posed by these claims.Competitive dynamics research has reportedthat firms are more likely to respond to rivalrythat affects commercial or psychological spacesof greater importance (Baum & Korn, 1996;Livengood & Reger, 2010; Pacheco & Dean, 2015).Managers’ threat perceptions provide the implicitmechanism to explain this effect—that is, man-agers perceive more intense threats from rivalswho hit “closer to home” or encroach upon their

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firms’ “home turf” (cf. Livengood & Reger, 2010).Adapting this logic to managers’ evaluations ofrival activists’ diagnostic claims suggests thatmanagers may perceive more intense threatsas the activists blame them more individuallyfor problems with their firms’ practices. More in-dividual diagnostic focus removes ambiguityaround managers’ roles in their firms’ problem-atic behavior, leading the managers to viewthemselves as more responsible for putting theirfirms’ reputations at risk and to perceive moreintensive threats from these claims. Moreover,individual blame makes it challenging formanagers to remain anonymous within their or-ganizations or among other industry members,reducing their likelihood of avoiding or displac-ing blame. In contrast, as diagnostic focusbecomes more organizational or industrial, man-agers perceive themselves as less responsible forputting their firms’ reputations at risk, more ca-pable of blending in with the collectives beingblamed, and less threatened by these claims.Building on this logic, we propose the following.

Proposition 7: Managers’ perceptionsof activists’ diagnostic focus influencetheir perceptions of the activists asthreats such that threat perceptions in-tensify as diagnostic focus becomesmore individual.

Diagnostic tone describes managers’ evalua-tions of the emotion used to problematize theirfirms’ practices in activists’ claims. Positive di-agnostic claims emphasize the potential benefitsof resolving problems associated with firms’practices, whereas negative diagnostic claimsemphasize the potential costs associated withfailing to resolve these problems (cf. Aslani, King,& Foroughi, 2013; Waldron et al., 2015). Social ac-tivist researchers have recognized that, to harmfirms’ reputations, activists attempt to stigmatizefirms in public arenas (Baron & Diermeier, 2007;Eesley & Lenox, 2006; Frooman, 1999; King, 2008;King & Soule, 2007). Although such stigma canbe created through positive or negative claimsabout firms’ practices, negative claims aremore likely to fuel managers’ apprehension thattheir firms’ practices will pervasively be viewedas inappropriate (cf. Jackson & Dutton, 1988;Waldron et al., 2015). The implication for ourtheory is that managers’ evaluations of activists’diagnostic tone—the emotion used to problem-atize their firms’ practices—inform managers’

evaluations of the threats posedbyactivists suchthat more negative claims contribute to greaterperceived threats. We consequently propose thefollowing.

Proposition 8: Managers’ perceptions ofactivists’ diagnostic tone influence theirperceptions of the activists as threatssuch that threat perceptions intensify asclaims become more negative in tone.

Diagnostic reach describes managers’ evalua-tions of the diversity of actors exposed to, affectedby, and interested in activists’ claims aboutproblems with their firms’ practices. Diagnosticreachdiffers fromactivists’ support in that it dealswith evaluations of potential interest in activists’ongoing efforts, rather than evaluations of his-torical support for activists’ prior efforts. Broad-reach claims are those managers believe appealto heterogeneous actors, whereas narrow-reachclaims are those managers believe appeal to ho-mogeneous actors. Social activist researchershave recognized that activists’ efforts to harmtheir firms’ reputationsmaycreate the impressionof collective action, contributing to perceptionsof the activists as threats (Waldron et al., 2013).Implicit here is that managers may evaluate thecontent of activists’ diagnostic claims about theirfirms’ practices, such as the logics, frames, andrhetorical arguments employed, to approximatethe breadth of resonance of their diagnosticclaims. As such, managers’ evaluations of activ-ists’ diagnostic reach—as captured in contentthat reflects how broadly their diagnostic claimsresonate—further inform their evaluations ofthreats from activists such that claims withbroader reach contribute to greater perceivedthreats. This effect hinges on managers’ appre-hension that claims with broader reach, relativeto those with narrower reach, are more likelyto spread doubt among other actors about theappropriateness of their firms’ practices and tointensify collective action against their firms.We thus propose the following.

Proposition 9: Managers’ perceptions ofactivists’ diagnostic reach influencetheir perceptions of the activists asthreats such that threat perceptions in-tensify as claims become broader inreach.

Activists’ prognostic claims and feasibilityperceptions. Whereas evaluations of activists’

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diagnostic claims inform managers’ perceptionsof how much threat they face to change, evalua-tions of activists’ prognostic claims inform man-agers’ perceptions of how realistic it is to change.That is, managers may evaluate activists’ prog-nostic claims, which specify the desired changesto their firms’ practices, to determine the feasi-bility of such changes. Neither competitive dy-namics nor social activist research has explicitlyaccounted for how managers incorporate thenature of rivals’ prognostic claims into theirsensemaking efforts. However, the essence ofperceptual constructs like capability and feasi-bility is that firms gauge their capacity to re-spond to rivals’ actions (Chen, 1996; Chen et al.,2007). As mentioned, capability deals with idealcapacity to respond (i.e., everything else heldconstant), and feasibility deals with realisticcapacity to respond (i.e., considering practicalconstraints).

The implication for our theory is thatmanagers’perceptions of feasibility hinge on their realisticcapacity to accommodate the practice changespecified in activists’ prognostic claims. Man-agers assign more feasibility to practice changethat they can enact without causing extreme dis-ruptions, whether economic or social, to theirfirms (Howard-Grenville, 2007; York et al., 2016).It is worth reiterating that managers consider thefeasibility of practice change as part of their effortto determine whether to counter the activists’claims with their own such that managers feelmore empowered to respond as change appearsto be more feasible. Managers may evaluate twoattributes of activists’ prognostic claims—scopeand alignment—to approximate the feasibility ofenacting the practice change specified in thoseclaims.Of interest to our conceptualization is howevaluations of these two attributes shape man-agers’ perceptions of the internal costliness andappropriatenessof practice change for their firms,contributing to their perceptions of the feasibilityof the activists’ demands. Considering the in-ternal costliness of change helps managers toapproximate whether they can change, and at-tending to the internal appropriateness of changehelps managers to approximate whether theyshould change.

Prognostic scope describes managers’ evalua-tions of theproportion of their firms’ supply chainsaffected by the practice change proposed in ac-tivists’ claims. Prognostic scope differs from di-agnostic reach in that it deals with evaluations of

the internal impact of change, rather than evalu-ations of external interest in problems. Prognosticscope increases as managers deem practicechange to affect greater proportions of their firms’supply chains. Greater prognostic scope entailschange that spans from the cultivation of raw re-sources to the provision of offerings, whereaslesser prognostic scope entails change to isolatedactivities. Our attention to prognostic scope em-anates from the premise, common to competi-tive dynamics and social activist research, thatfirms consider the resource commitments ofpotential courses of action (Chen & MacMillan,1992), such as enacting the practice changesought by activists (Eesley & Lenox, 2006;Schwartz, 2010). Efforts to gauge such resourcecommitments factor into more holistic effortsto gauge economic, psychological, and socialcosts (cf. Chen, Venkataraman, Sloan Black, &MacMillan, 2002).The implication for our theory is that managers

may evaluate activists’prognostic scope to gaugethe internal costliness of change, contributing tomanagers’ overall perceptions of the feasibility ofaccommodating their rivals. Activists’ prognosticclaims appear to be costlier—and, consequently,less feasible—to enact when managers perceivethe supply chain scope of practice change to beincreasing (cf. York, Vedula, & Lenox, 2018). Spe-cifically, as practice change affects greater pro-portions of supply chains, such change alsobecomes costlier to enact because it requiresfirms to modify a wider variety of their own ac-tivities and to influence transaction partners at, orbeyond, the boundaries of their control. This effectmay intensify as the anticipated costs of practicechange extend beyond the costs of not changing.Building on the preceding logic, we propose thefollowing.

Proposition 10: Managers’ perceptionsof activists’prognostic scopenegativelyrelate to their perceptions of the feasi-bility of accommodating the practicechange proposed in activists’ claims.

Prognostic alignment describes managers’ eval-uations of the compatibility between the practicechangeproposed inactivists’claimsandtheir firms’defining qualities. Competitive dynamics and so-cial activist researchers have recognized that firms’defining qualities, as codified in organizationalidentities, identity domains, value propositions,and other constructs, shape the importance that

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managers assign to their firms’ contexts, offerings,and activities (cf. York & Lenox, 2014). For instance,managersviewmarket contextsandorganizationalpractices that are more reflective of their firms’ or-ganizational identities as more important to theirfirms (Livengood & Reger, 2010). Research hastreated these attributions of importance as lensesfor managers to determine the salience of, andthreat posed by, rival actors such that rivals be-come more salient and threatening as they affectmore important organizational phenomena.

However, our theory contends that externalfactors like the attributes of rivals and theirclaims may shape managers’ salience andthreat perceptions, with internal factors likefirms’ defining qualities shaping managers’feasibility perceptions. We suggest that inshaping managers’ beliefs about the relativeimportance of their firms’ practices, their firms’defining qualities provide managers with a lensto gauge the internal appropriateness of newpractices. When considered through the lens oftheir firms’ defining qualities, practices becomemore appropriate to managers as the practicesmore strongly reinforce their firms’ definingqualities (cf. Livengood & Reger, 2010). The im-plication for our theory is that managers mayevaluate activists’ prognostic alignment togauge the internal appropriateness of practicechange for their firms, contributing to the man-agers’ perceptions of the feasibility of accom-modating their rivals’ prognostic claims.Activists’ prognostic claims seem more appro-priate—and, consequently, more feasible—toenact whenmanagers perceivemore alignmentbetween the practice change sought by activ-ists and their firms’ defining qualities. Build-ing on the preceding logic, we propose thefollowing.

Proposition 11: Managers’ perceptionsof activists’ prognostic alignment posi-tively relate to their perceptions ofthe feasibility of accommodating thepractice change proposed in activists’claims.

DISCUSSION

The purpose of this article was to conceptual-ize values-based rivalry between activists andfirms. We integrated and extended competi-tive dynamics and social activist research to

construct a two-part theoretical framework ofvalues-based rivalry. The first part of our frame-work detailed the tensions, actions, and re-sponses that characterize values-based rivalry,including the ways values contribute to such ri-valry. The second part of our framework attendedto firms’ likelihood of responding to rival activists’claims during values-based rivalry, explainingwhen firms make counterclaims. We establishedthe interplay amongmanagers’ salience, threat,and feasibility perceptions in shaping theirfirms’ responses, as well as the mechanismsthroughwhich activist-related attributes informeach of these perceptions. Our frameworkmakes three primary contributions to competi-tive dynamics research, as well as associatedcontributions to social activist research, witheach contribution offering additional insightsfor those fields.

Establishing Activists As Rivals to Firms

First, our framework designates activists as ri-vals to firms, broadening the assumption incompetitive dynamics research about who con-stitutes a rival. In this research scholars havetypically conceptualized similar actors as rivals(i.e., firms), yet our theory conceptualizes dissim-ilar actors as rivals (i.e., activists and firms). Ourbroader conception of who constitutes a rivalemerges from our proposal that rivalry betweenactivists and firms reflects the core components ofrivalry, albeit in ways that differ from rivalry be-tween firms. Defining rivals based on the corecomponents of rivalry, rather than on the types ofactors involved, creates a wealth of possibilitiesfor scholars to study rivalry between diversetypes of actors.Viewing activists as rivals to firms also ad-

vances conceptualizations of activists in socialactivist research. Such work has presented ac-tivists as altruistic, selfless actors destined toremedy social and environmental injustices. Al-though this portrayal of activists holds merit, ourtheory recognizes that activists may also exhibita rivalrous, self-interested side, as reflected intheir interconnected desires to secure controlover firms’ practices and to achieve supremacyin values domains. This proposal coincideswith,and helps to explain why, activists’ efforts tochange firms’ practices are connected to activ-ists’ efforts to achieve elevated social standingrelative to firms (Waldron et al., 2015).

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Specifying the Core Components ofValues-Based Rivalry

Second, our framework conceptualizes the corecomponents of rivalry as they uniquely pertain tovalues-based rivalry, expanding competitive dy-namics research’s conception of the tensions, ac-tions, and responses that characterize rivalrybetween firms. In terms of tension, competitivedynamics researchers have posited that rivalfirms experience tension when they seek to con-trol the same consumers and resources and tosecure supremacy in product and factor markets,pursuing commercial advantages in those set-tings (Capron & Chatain, 2008; Chen & Miller,2015; Markman et al., 2009). We posit that rivalactivists and firms experience tension when theyseek to control the firms’ practices and to securesupremacy in values domains, pursuing socialadvantages in those settings. This proposal un-derscores that the control sought by rivals canextend beyond objects (e.g., consumers andresources) to include behaviors for interactingwith those objects (e.g., practices for accessingresources). Additionally, it recognizes that thesupremacy sought by rivals can take commer-cial and social forms, indicating that rivalrycan transcend the boundaries of traditionalproduct and factor markets to include socio-cognitive markets, such as values domains. Fi-nally, in establishing the reciprocity betweencontrol and supremacy during rivalry, our pro-posal indicates that control does not necessarilylead to supremacy.

In terms of actions and responses, competitivedynamics researchers have recognized that firms’actions and responses take the form of market-based tactics designed to protect or secure fa-vorable consumers and resources (Chen &MacMillan, 1992; Chen & Miller, 2012; Smithet al., 1997), facilitating supremacy in product andfactor markets. We posit that activists’ and firms’actions and responses during values-based ri-valry take the form of claims and counterclaimsdesigned to attach or avoid stigmatization and tosignify values to other actors, facilitating controlover practices and supremacy in values domains.This proposal underscores that the nature of ac-tions and responses used by rivals can extendbeyond what they do to include what they say.Additionally, it establishes that actions and re-sponses influence rivals not onlybyharming theiroperations but also by potentially affecting their

reputations. Finally, in conceptualizing that ri-vals’ claims signify their values to other actors invalues domains, our proposal underscores thesymbolic functionality of actions and responses,extending attention to the substantive function-ality of such behaviors.Our proposals about the tensions, actions, and

responses in values-based rivalry also hold im-plications for social activist research. First, weposit that tension between activists and firmsemanates from their pursuit of control over prac-tices and supremacy in values domains, not onlythe former (Briscoe & Gupta, 2016). Second, inpositing that activists and firms seek to securesupremacy in values domains, we recognize thatrivalry between these actors is predicated onmore than mere differences in their values (Levy,Reinecke, & Manning, 2016). Third, in positingthat activists’ and firms’ claims also signifyvalues to other actors in values domains, we rec-ognize that such claimsdomore thandisseminatecontent about the firms’ practices (Guerard, Bode,& Gustafsson, 2013). These contributions collec-tively offer insights to social activist researchabout the core components of rivalry betweenactivists and firms, moving beyond examina-tion of how one actor—activists—influences theother—firms (den Hond & de Bakker, 2007).

Explicating the Role of Managerial Perception inValues-Based Rivalry

Third, our framework conceptualizes the inter-play amongactivist-related attributes,managers’perceptions, and firms’ response likelihood dur-ing values-based rivalry, expanding competitivedynamics research’s proposals about responselikelihood. In terms of the link between percep-tions and response likelihood, competitive dy-namics research has posited that the confluenceof AMC, as perceived by managers, shapes thelikelihood their firms will respond to rivals’ ac-tions. We posit that the interplay of salience,threat, and feasibility—contextualized specifica-tions of AMC—constitutesmanagers’ perceptionsthat shape their firms’ likelihood of respondingto activists’ claims during values-based rivalry.This proposal acknowledges that although AMCmatters in any form of rivalry, salience, threat,and feasibility may play a more direct role indetermining firm response likelihood duringvalues-based rivalry. It also underscores thevalue of considering the interplay of managers’

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perceptions in facilitating firms’ response likeli-hood (Chen&Miller, 2012), rather than focusing onthe aggregate impact of managers’ perceptionson such behavior (Chen, 1996; Chen et al., 2007).Implicit is the notion that managers’ perceptionsindependently and interconnectedly, rather thanaggregately, factor into their firms’ responselikelihood.

In terms of the link between attributes andperceptions, competitive dynamics researchershave recognized that attributes of rival firms andtheir actions may influence managers’ AMC per-ceptions without conceptualizing these attributesor the nature of their influence. We posit that at-tributes associated with activists’ reputed influ-ence, diagnostic claims, and prognostic claimsdistinctly shape managers’ perceptions of sa-lience, threat, and feasibility, respectively. Inrecognizing that managers consider activists’ in-fluence over prior rival firms to determine thesalience of activists to their firms, this proposalindicates that managerial sensemaking includesrivalry in other settings, not only the rivalry theirfirms are presently engaged in (Chen & Miller,2012). Additionally, in recognizing that managers’perceptions of threat and feasibility are predi-cated on activists’ prognostic and diagnosticclaims during rivalry, this proposal indicates thatmanagers consider what rivals say about theirown firms, not only what their rivals say aboutthemselves (Gao et al., 2017; Guo et al., 2017).

Our proposals about managerial percep-tions and firm response likelihood also hold im-plications for social activist research. First, inconceptualizing firms’ likelihood of responding toactivists’ claims during rivalry, we attend to thenature of the exchanges that comprise rivalrybetween activists and firms, moving beyondthe predominant emphasis on the outcomes ofsuch rivalry—namely, practice change (Briscoe &Gupta, 2016; den Hond & de Bakker, 2007). Second,our proposals about the impact of managers’salience, threat, and feasibility perceptions ontheir firms’ likelihood of responding to rival ac-tivists enrich extant proposals about the impactof managers’ perceptions on their firms’ likeli-hood of practice change (Waldron et al., 2013).Notably, conceptualizing the interplay betweenthese perceptions improves on the sense-making processes proposed in prior research.For instance, different from the proposal thatsalience perceptions moderate threat percep-tions (Waldron et al., 2013), we propose that

managers must perceive rival activists to besalient before evaluating the threat to theirfirms. Third, our proposals about the activist-related attributes that shape managers’ percep-tions during values-based rivalry enrich extantresearch that has looked at these internallyfocused perceptions in isolation from the exter-nally situated factors that may influence them(McDonnell & King, 2013; Waldron et al., 2013).

Future Research

Our theoretical framework provides a robustfoundation for future research in the competitivedynamics and social activist domains. Recogniz-ing activists and firms as rivals provides theimpetus to study underexplored or unexpectedforms of rivalry, such as between activists, be-tween politicians and firms, or between activistsand governments. Our framework relaxed theassumption that rivalry occurs between firmsin product and factor markets, providing a tem-plate to elaborate the unique tensions, actions,responses, and perceptions that characterizeother forms of rivalry. Additionally, attending tothe impact of managers’ perceptions on firms’likelihood of responding to rival activists’ claimsinforms further inquiry into the nature of the ex-changes between these actors. One option is toexamine how the processes of rivalry betweenactivists and firms contribute to the outcomesof such rivalry, considering the ongoing inter-play among the two sides’ claims, counterclaims,and perceptions. Other options include explor-ing scenarios where firms attempt to preemptrivalry with activists, or where such rivalry mayinfluence firms’ current and subsequent interac-tions with traditional rivals in product and factormarkets. Finally, conceptualizing the impact ofactivist-related attributes on managers’ percep-tions of salience, threat, and feasibility providesa startingpoint to conceptualize the impact of firm-related attributes on these perceptions from theactivists’ perspective. It also provides a platformto discern the contextual utility of the AMC andsalience, threat, and feasibility perspectives—thetwo interconnected sets ofmanagerial perceptionsat play during rivalry—in facilitating firm re-sponse likelihood, as well as to discern the exter-nal factors that shape perceptions during otherforms of rivalry. One option is to conceptualize thefirm-related attributes that influence these per-ceptions during rivalry between firms.

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CONCLUSION

Values-based rivalry is becoming more perva-sive and influential. We created a theoreticalframework that conceptualizes the unique ten-sions, actions, and perceptions at play duringvalues-based rivalry, as well as the impact ofmanagers’ sensemaking efforts on their firms’likelihood of responding to rival activists’ claims.This framework marks an important step in thetheoretical evolution of the competitive dynamicsdomain, which has progressed from explainingrivalry in product and factor markets betweensimilar actors to explaining rivalry in socio-cognitive markets between dissimilar actors. Ourintention is to spark further examination of thisphenomenon and to encourage competitive dy-namics scholars to think more broadly and dif-ferently about rivalry, expanding the domain’stheoretical and empirical horizons.

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TheodoreL.Waldron (theodore.waldron@ttu.edu) is anassociateprofessor of sustainablestrategy and entrepreneurship in the Jerry S. Rawls College of Business at Texas TechUniversity. He received his Ph.D. from the University of Georgia. His research examinesintersections among competitive dynamics, social movements, and entrepreneurship.

Chad Navis (chadn@clemson.edu) is the Arthur M. Spiro Professor of EntrepreneurialLeadership in the College of Business at Clemson University. He received his Ph.D. fromEmoryUniversity.His researchexaminessociocognitivedynamicsof entrepreneurship innew and evolving market categories.

Olivia Aronson (oaronson@richmond.edu) is an assistant professor in the Robins Schoolof Business at the University of Richmond. She received her Ph.D. from Texas TechUniversity. Her research focuses on entrepreneurship, social issues, and competitivedynamics.

Jeffrey G. York (jeffrey.york@colorado.edu) is an associate professor of strategy andResearch Director for Entrepreneurship at the Leeds School of Business, University ofColorado Boulder. He received his Ph.D. from the University of Virginia. His researchexamineshow,why, andwhenentrepreneurship can reduce environmental degradation.

Desiree F. Pacheco (pacheco@pdx.edu) is an associate professor of management and theCameron Professor of Strategy, Sustainability, and Entrepreneurship at Portland StateUniversity. She received her Ph.D. from theUniversity of Colorado. Her research interestsinclude sustainable business, institutional change, new industry development andevolution, and competitive dynamics.

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