Imitate Others? Not If We Have the Chance: Competitive Differentiation in Medical Malpractice Insurers' Pricing Decisions Under Uncertainty

18 Pages Posted: 11 Jul 2014  

Vinit Desai

University of California, Berkeley - Haas School of Business

Date Written: July 2014

Abstract

Several perspectives assert that organizations facing uncertainty tend to imitate other organizations' actions. While one might therefore expect to see great homogeneity across fields characterized by uncertainty, it is surprising that this homogeneity has not been observed more frequently in practice. Research investigating this puzzle has typically focused on the role played by organizational characteristics or the information organizations possess about their environments. Instead, this study turns attention to the information others possess about the organization. To that end, I disaggregate organizational uncertainty into the uncertainty facing decision makers and the uncertainty faced by others about what those decision makers might ultimately do, providing a more fine grained analysis of uncertainty and its impact on competitive action than typically offered in this literature. I suggest that uncertainty in competitors' evaluations of the organization provides an opportunity for the organization to differentiate itself rather than imitate others. I also suggest that this effect is stronger than the effects of the uncertainty facing the decision makers themselves. Related hypotheses are tested on a panel of medical malpractice insurance providers. The study's perspective generates unique predictions regarding imitation and differentiation in this industry and across other contexts featuring both uncertainty and competition.

Suggested Citation

Desai, Vinit, Imitate Others? Not If We Have the Chance: Competitive Differentiation in Medical Malpractice Insurers' Pricing Decisions Under Uncertainty (July 2014). British Journal of Management, Vol. 25, Issue 3, pp. 589-606, 2014. Available at SSRN: https://ssrn.com/abstract=2464786 or http://dx.doi.org/10.1111/1467-8551.12039

Vinit Desai (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

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