Sustainable Pioneering Advantage? Profit Implications of Market Entry Order

William Boulding () and Markus Christen ()
Additional contact information
William Boulding: Fuqua School of Business, Duke University, Durham, NC 27708
Markus Christen: INSEAD, Boulevard de Constance, 77300 Fontainebleau, France

Marketing Science, 2003, vol. 22, issue 3, 371-392

Abstract: There is strong theoretical and empirical evidence supporting the idea that “first-to-market” leads to an enduring market share advantage. In sharp contrast to these findings, we find that at the business unit level being first-to-market leads, on average, to a long-term. This result holds for a sample of consumer goods as well as a sample of industrial goods and leads to questions about the validity of first mover advantage, in and of itself, as a strategy to achieve superior performance. We replicate the typical demand-side pioneering advantage but find an even, which is the source of the pioneering profit disadvantage. In an extended analysis, we show that first-to-market leads to an, which, depending on the sample or profit measure, lasts for about 12 to 14 years before turning into a disadvantage. Moreover, we show that pioneers differentially benefit from a lack of consumer learning, a strong market position and patent protection. These three moderating factors together can actually help pioneers achieve a sustainable profit advantage over later entrants. Finally, we find strong support for the theoretical argument that the entry order decision should be treated as endogenous in empirical estimation.

Keywords: Pioneering Advantage; Firm Performance; New Product Marketing; IV-Estimation (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (39)

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http://dx.doi.org/10.1287/mksc.22.3.371.17736 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:22:y:2003:i:3:p:371-392

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