Academic journal article Academy of Strategic Management Journal

Is There a Real Pioneers Advantage? Lessons Learned after Almost Thirty Years of Research

Academic journal article Academy of Strategic Management Journal

Is There a Real Pioneers Advantage? Lessons Learned after Almost Thirty Years of Research

Article excerpt

INTRODUCTION

Previous research has shown that early entry of companies into new markets promotes competitive advantages or influences benefits exceeding the cost of the capital required when compared to competitors who have entered later (Lieberman and Montgomery, 1988). This concept has been called: pioneer's advantage (Robinson and Fornell, 1985), first-mover advantage (Lieberman and Montgomery, 1988) and order of market entry effect (Lambkin, 1988).

The theoretical foundation for this idea comes from the economics of industrial organization, specifically the concept of entry barriers (Porter, 1980), where one of the forces of the Competition Model refers to the threat of new entrants. The likelihood of a firm entering an industry is a combination of two factors: barriers to entry and the retaliation expected from industry participants.

Since the seminal studies on the subject were undertaken, advantages associated with economies of scale or learning curves for the pioneers in the market have been found (Glazer, 1985). For Robinson and Fornell (1985) and Robinson (1988), there are pioneers who have maintained successful market leadership for decades, like Campbell, Coca-Cola, Dupont, and Kleenex. However, they also identify pioneers who have not had the success expected, such as Advent (large-screen TVs), Royal Crown Cola (caffeine-free-low-calorie cola) and Osborne (laptops).

Although extensive empirical evidence in favor of the advantages of pioneer strategy in consumer and industrial markets has developed in growth sectors such as maturity (Robinson and Fornell, 1985; Urban et al. 1986; Lambkin, 1988; Parry and Bass, 1990), supported by the development of consumer preferences for the pioneers (Carpenter and Nakamoto, 1989; Kardes and Gurumurthy, 1992; Kardes et al. 1993), we found studies where the results show combined effects for and against pioneering market entry (Robinson et al. 1992, Christensen and Bower, 1996; Bohlmann et al., 2002). Research also discovered instances where the results for early market entrants have not been successful (Golder and Tellis, 1993).

The strategy of entering the market first has advantages for companies in terms of patent development, higher product quality, and broader product lines. In addition they enjoy cost savings in the supply chain and consumer preference in markets with imperfect information about the product (Robinson and Fornell, 1985).

However, it can be risky and high costly to be a pioneer. The costs of product development and marketing are often too high to make the consumer interested in the product and decide to buy. The risk of failure is high because the demand potential is not known with certainty (Urban et al. 1986).

In this context, with advantages and disadvantages for first movers in a new market, the initial aim of our study is to do a literature review of almost 30 years of research in this field of knowledge, starting in 1985. We will subsequently present the methodology used, then the main theories and discuss the empirical evidence we found. We will present some considerations about the characteristics of the sample, the definition and evaluation-measured results, then present our proposed integrative model for the development of sustainable competitive advantage for pioneering companies in order of market entry, and finally we offer conclusions and lines of future research.

METHODOLOGY

The methodology targets a descriptive exploratory analysis, with which we can evaluate the current status of the issue in question. The data collection consisted of researching the most relevant research on this topic as well as consulting the databases Business Source Premier and Host EPSCO ABI Inform. From these databases were collected articles related to the topic of the first mover advantage, (using the following concepts as key words: "pioneer advantage", "first mover" and "order of entry") spanning a period of twenty seven years from 1985 to 2012 inclusive. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.