Research in competitive dynamics and corporate strategy suggests that firms respond to shifts in the competitive landscape, yet we know little about how focal firms reconfigure their corporate scope when a rival is acquired by a third party. Drawing on the awareness–motivation–capability framework, we theorize that rival acquisitions constitute salient structural shocks that increase focal firms’ awareness of changes in competitive conditions, intensify their motivation to respond, and enhance their capability to implement scope-changing actions by shaping stakeholder expectations. We argue that focal firms may respond through scope expansion via acquisitions or scope contraction via divestitures, and we develop hypotheses about when each response is more likely. We predict that acquisition responses are stronger when the focal firm overperforms the acquired rivals, when stock-market reactions to rival acquisitions are favorable, and when the rivals’ acquirers are also competitors of the focal firm. Divestiture responses are stronger when the focal firm underperforms its rivals, when stock-market reactions are unfavorable, and when the rivals’ acquirers are not competitors. We find support for our predictions using data on public U.S. firms. The study links competitive response to corporate scope activities and offers guidance for executives navigating industry consolidation.

Korcan Kavuşan is Associate Professor of Strategy and Entrepreneurship at Rotterdam School of Management, Erasmus University. He earned his PhD from Tilburg University. His research focuses on how firms develop new technological and managerial capabilities through alliances and acquisitions, and how behavioral factors shape these interorganizational relationships. His work is published in the Academy of Management Journal, Academy of Management Annals, Strategic Management Journal, Research Policy, and Strategic Organization.