Rivals are lulled into retaliatory inaction through vague or distant timelines in company press releases, particularly if repeated frequently, finds new study by researchers in UK and US.
Corporate press releases are full of linguistic devices aiming to boost the announcement’s impact: “improved”, “innovative” and “award-winning” are a few of the terms used to lure consumers to a product, firm or brand.
A new study by academics in the UK and US, forthcoming in the Academy of Management Journal, looks at a different sort of terminology used by companies – timelines – in examining how companies seek to deter rapid retaliation by top competitors.
The conclusion, based on 2,130 press releases over more than a decade from 28 US-based duopoly firms in 14 industries: vague or unclear and distal timelines of an action, particularly if repeated frequently in a press release, tends to lull rivals into inaction. In other words, phrases like “in coming years” or “end of the decade” are more likely to create complacency in competitors than will terms like “immediately” or “in the next quarter” – especially if serially recited in a lengthy press release, because “‘wordiness’ reflects another form of vague framing.”
Other qualitative time cues identified in the study include “at this moment”, “right after”, “number of quarters”, “few months”, “next season”, “this season” and “in the coming years”.
“The study sheds important light on how the ‘temporal framing’ of announcements influences the competitive response of top rivals, and the strategy pursued by companies seeking to deter such a response,” says co-author Sucheta Nadkarni, Sinyi Professor at University of Cambridge Judge Business School. “Previous research has looked at language used by companies, but our focus on timelines provides a new lens to examine these competitive dynamics.
“There is also a clear ‘dark side’ identified in the study: companies using vagueness and distance to deter retaliatory responses also risk weakening the impact of their message to customers and other key stakeholders as to the announcement’s importance, so there’s a real balancing act required,” says Professor Nadkarni.
The study focused on duopoly industries in which two firms held most of the market share over the period 1999 to 2011. The 14 industries included metal ore, publishing, mining machinery, durable goods and household appliances. The researchers examined 2,130 press releases through a dictionary of dates (“2005”, for example), time frames (“five years”, “two months”) and descriptive terms (“quickly”, “long term” or “in the coming days”), along with more than 10,000 news or other articles detailing the likelihood and speed of rivals’ responses.
After constructing a model, the study found that a one-unit increase in a press release’s temporal vagueness decreased the risk of a rival’s response by 12 per cent, while a one-unit increase in the temporal distance of an action deceased the rival’s risk of response by 27 per cent. A one-unit increase in temporal vagueness, with frequency of such vagueness in the press release, was associated with a 52 per cent decrease in the rival’s risk of response.
Conversely, “we found that focal firms’ clear (low vagueness) and proximal presentation of action timelines attracted speedy retaliation from rivals.”
The study – entitled “Only timeline will tell: temporal framing of competitive announcements and rivals’ responses” – is co-authored by Professor Sucheta Nadkarni of Cambridge Judge Business School, Lingling Pan of Eli Broad College of Business at Michigan State University, and Tianxu Chen of the School of Business Administration at Portland State University.