Past research indicates that new IPOs in an industry affect the performance of incumbent firms. However, this general characterization of competitive effects overlooks inter-firm heterogeneity of resources within an industry. This paper follows the dyadic approach to competitor analysis and uses the aspect of vertical integration to differentiate between competitors with an industry. We argue that the competitive effects of IPOs on incumbents would differ as a function of incumbents’ degree of vertical integration, degree of involvement in the focal business segment, and the level of unused slack available.