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Innovation timing advantages: From economic theory to strategic application
Abstract
First and second mover theory, as developed in industrial organization economics, maintains that firms can gain competitive advantage by using optimal timing in the introduction of innovations. Because the industry is the unit of analysis, the theory does not provide specific guidance for individual firms. We analyze the underlying sources of first and second mover timing advantages and clarify several issues regarding the basic theory. We then identify a variety of factors at the industry, firm and product/service levels and develop propositions showing their relations to individual firms in their efforts to benefit from timing advantages. We discuss the link which these indicator factors provide between economic theory and strategic timing choices. Finally, we suggest directions for research which would assist firms and their managers in selecting and pursuing innovation timing strategies.
... We submit that as a means of managing uncertainties, technological and market capabilities affect the timing of a firm's technology deployment, which we term "earliness of technology deployment" in this paper. We include the pace of frontier advancement as a contingency because firm capabilities are less likely to stay relevant when the pace of innovation accelerates (Gilbert and Birnbaum-More, 1996). We test our hypotheses using data from the thin film transistor-liquid crystal display (TFT-LCD) industry because 16 technology generations have been deployed since the industry's inception in 1990. ...
... In studying when to deploy technology, we adopt the first mover advantage perspective to explain the benefits and costs associated with the timing of action (Gilbert and Birnbaum-More, 1996;Zachary et al., 2014). Several studies have extended this stream of literature to explain the gain from innovation (Bakker et al., 2012;Eggers, 2014). ...
... The pressure of technology obsolescence drives firms to innovate because a short time frame between frontier advancements typically reduces the innovation value of existing technologies in the industry (Gilbert and Birnbaum-More, 1996). The ensuing ramp-up of innovation activities inevitably intensifies competition (Aghion et al., 2005), which forces firms to race one another to the latest technology (Barnett and Hansen, 1996). ...
It is widely accepted that the first firm to deploy the latest technology will enjoy monopoly profits. However, research shows that the first mover advantage is quickly eroded by late movers. Technology deployments by late movers remain largely under-explored. This study explores the impact of the technological and market capabilities of late movers on their deployment timing, and how this impact is moderated by the pace of frontier advancement. We find a positive association between a firm’s capabilities and the earliness of its deployment timing. A faster pace of frontier advancement exacerbates the impact of a firm’s capabilities on technology deployment timing. We draw empirical evidence from the thin film transistor-liquid crystal display (TFT-LCD) industry between 1995 and 2010. This paper contributes to the technology management literature by developing a deeper understanding of the trade-offs involved in the timing of technology deployments.
... The "first mover" in theory is the very first firm to bring an innovative product or service to market, but in practice it means one of the first to do. Therefore, Gilbert/Birnbaum-More (1996) recommend to use the term "early mover" since it might be a more accurate description of most situations, which are discussed as first mover. "Second mover" or "Late Movers" mean all firms entering the market after the first mover(s). ...
... e.g. Gilbert and Birnbaum-More, 1996;Lieberman/Montgomery, 1988). ...
... There are no costs for the followers, so that a cost leadership strategy is promising. Gilbert and Birnbaum-More (1996). ...
In environmental policy first mover advantages for environmental technologies are often taken for granted. It is a popular view to see the state as a political entrepreneur who introduces a certain environmental policy instrument, e.g. feedin tariffs for renewable energies, and thus becomes the world market leader or the lead market for the respective technology. Against this background, this paper wants to find out if the idea of first mover advantages can be justified by theories and empirical evidence from industrial organization and business management studies. After a review of theoretical and empirical papers we see that first mover advantages are not confirmed by empirical evidence. Thereby the successful innovator is not necessarily the first but very often one of the early movers within the competition of different innovation designs. We show that the success of a timing strategy depends on country-specific lead market potentials, on market and technology characteristics and on the regime of the country-specific regulation. On this basis we derive options for environmental innovation strategies for firms under different circumstances of markets, technologies and regulations. We will see different implications for practical innovation management and innovation policy.
... In industry, the timing of innovation is more or less abstract, as it is considered the advantages and disadvantages arising from pioneering or discipleship (Gilbert, 1996). In general, a company can choose from three options for the timing in relation to competitors: leader (pioneer), follower or imitator (Xu, 2013). ...
... In general, a company can choose from three options for the timing in relation to competitors: leader (pioneer), follower or imitator (Xu, 2013). The timing of innovation is less abstract in other disciplines, such as marketing and strategic management (Gilbert, 1996). ...
The global marketplace today is characterized by profound social, economic and technological changes and innovation facilitates the process of adaption to many of these changes. Innovation management is now considered as an integral part of the management of companies, which would like to be at the market for a long time. This paper focuses on an important characteristic which significantly affects the operation of the innovation process the role of time in seeking the optimum timing of innovation. The paper describes two main ways: continuity and discontinuity in innovation. In the next part the paper describes temporary parallel discontinuity and time gap discontinuity, which are two options of discontinuity in innovation. The last part focuses on the sustainable growth of innovation
... De fato, existem vantagens e desvantagens, decorrentes da escolha do momento de entrada em um mercado, que devem ser consideradas (GILBERT & BIRNBAUM-MORE 1996;MUELLER, 1997) para se ponderar a sustentabilidade das estratégias competitivas desenvolvidas pelas empresas agroindustriais nesse setor. ...
... Nesse contexto, é compreensível a predominância de estratégias seguidoras e o desenvolvimento de inovações incrementais nas empresas estudadas. Como enfatizaram GILBERT & BIRNBAUM-MORE (1996), essa posição é de menor risco pela possibilidade de se tomarem decisões em uma situação de menor incerteza tecnológica, mercadológica e regulatória, reduzindo os riscos de investir recursos em P&D e marketing em mercados que se revelam pouco promissores do que aqueles das empresas pioneiras. ...
This multi-case study searched to understand why and how food processing industries develop new products and market orientates to compete in the Brazilian functional dairy market. It also examines the regulatory framework role in this process. We use case studies as an approach to give evidence of the systemic relations and the existent trade-offs among factors related to innovation. We chose a research design with one unity of analysis (food processors that recently launched new products in the functional dairy market) and multiple case studies (three Brazilian dairies of the southern region). The results reveal that the enterprises adopt a second-mover strategy vis-a-vis the multinational competitors. Traditionally, this strategy is considered safer and requires lower R&D and marketing investments. However, it erodes branding and also limits financial returns from innovations. The second-mover behavior is consequence of poor market orientation and restricted cooperation with external partners. This "vicious circle" is also enhanced by barriers established by the regulatory framework.
... Here, a taxonomy of strategic emulation barriers supporting first-mover strategy is provided. Gilbert & Birnbaum-More (1996) elaborate on the notion of strategic application of timing strategies. This work yields a model to evaluate the advantages of being first or second to enter a new market. ...
... We are given a frame of reference and a terminology to describe the durability, but no real means of assessing it, and therefore no means of understanding why firms would or would not embark on a new business venture. This applies to both the conceptual work of Lieberman & Montgomery (1988) and the application oriented (decision support) work of Gilbert & Birnbaum-More (1996). To extract any real value from the concept of FMA, we need to develop a model to assess the durability of first-mover advantages. ...
Purpose: To incorporate the element of sustainability of advantages into the concept of First-Mover Advantage for analysis on grocery e-commerce. Grocery e-commerce is a relatively unexplored phenomenon in Denmark and I seek to explain this via the concept of FMA. In order to fully understand the complexity of the situation, sustainability of advantages needs to be incorporated into the concept. Design: Via a literature review on the subject of first-mover advantage, uncover the lack of sustainability of advantage. Hereafter construct a framework for analysis based on this literature review and coupled with previous empirical findings on grocery e-commerce. Findings: a) Providing insights into the concept of first-mover advantage, b) sustainability of advantages and c) providing a framework for analysis on advantages sought by acting entrepreneurial. Value: The applicability of the concept of first-mover advantage is very descriptive to date. With this paper and hopefully more to follow, I wish to transform the FMA concepts into a tool for analysis addressing the very crucial element that is not dealt with today – sustainability.
... De fato, existem vantagens e desvantagens, decorrentes da escolha do momento de entrada em um mercado, que devem ser consideradas (GILBERT & BIRNBAUM-MORE 1996;MUELLER, 1997) para se ponderar a sustentabilidade das estratégias competitivas desenvolvidas pelas empresas agroindustriais nesse setor. ...
... Nesse contexto, é compreensível a predominância de estratégias seguidoras e o desenvolvimento de inovações incrementais nas empresas estudadas. Como enfatizaram GILBERT & BIRNBAUM-MORE (1996), essa posição é de menor risco pela possibilidade de se tomarem decisões em uma situação de menor incerteza tecnológica, mercadológica e regulatória, reduzindo os riscos de investir recursos em P&D e marketing em mercados que se revelam pouco promissores do que aqueles das empresas pioneiras. ...
Esta pesquisa buscou compreender o motivo e o modo como as empresas agroindustriais brasileiras desenvolvem novos produtos e se orientam para o mercado no segmento de alimentos lácteos funcionais. Ela também examina o papel do sistema regulatório nesse processo. Foi utilizada a abordagem de estudos de caso para esclarecer as inter-relações sistêmicas e trade-offs entre os fatores relacionados à inovação. Foi escolhido um desenho de pesquisa com uma unidade de análise (empresas agroindustriais que, recentemente, lançaram novos produtos no mercado de lácteos funcionais) e estudos de caso múltiplos (três empresas agroindustriais da região Sul). Os resultados revelam que as empresas agroindustriais adotam estratégias seguidoras em relação às concorrentes multinacionais. Tradicionalmente, essa é uma estratégia considerada mais segura e exige menores investimentos em P&D e marketing. Contudo, ela corrói a imagem de marca e limita os retornos financeiros das inovações. O comportamento seguidor é resultado de um baixo grau de orientação para mercado e restrita cooperação com parceiros externos. Esse "ciclo vicioso" é reforçado pelas barreiras estabelecidas pelo sistema regulatório.
... Innovation diffusion theory shows that by introducing innovative practices at the right time, manufacturers can obtain a competitive advantage (Gilbert and Birnbaum-More, 1996). However, this theory does not explain the formation process of competitive advantages, so we propose to use resource advantage theory to compensate for this. ...
In recent years, suppliers’ sustainability has been the primary source of conflict in multinational supply chains. How suppliers from developing nations may accomplish sustainable development and competitive advantage goals has become a tough issue inside the multinational supply chain, particularly in the agri-food cold chain. Using an integrated theory-based perspective, this paper analyzes how sustainable logistics service providers’ supply chain cooperation (MSCC) might drive the sustainable transformation of suppliers in developing nations. Between 1 June 2020 and 15 January 2021, we gathered feedback from 215 Chinese vendors and analyzed and discussed possible models using structural equation modeling. This study demonstrates that the sustainable practices of logistics service providers are the foundation for influencing the collaboration of suppliers in developing nations with regard to sustainability. In addition, the five-stage transnational supply chain cooperation based on the theory of innovation diffusion is an efficient strategy for ensuring the sustainable development of suppliers in developing nations. This paper examines the theoretical framework at the forefront of multinational supply chain sustainability development. This presents the most recent experience and policy application for suppliers from emerging nations to acquire a competitive advantage.
... Tal conceituação, apesar de bastante abrange, difere-se da imitação, cuja essência é a difusão social, e da invenção, cujo foco é a propulsão social, ao posicionar-se de maneira clara como a dialética existente entre o processo de invenção e o processo de imitação. Este terceiro processo, o de inovação, caracteriza-se, portanto, como o mediador entre a oferta individual e a demanda social, especialmente pelo recurso à eficiência empresarial (Gilbert & Birnbaum-More, 1996). ...
Este estudo investiga, de forma crítica, a estrutura semântica do discurso de textos científicos que foram publicados em congressos e revista da área do Design da Informação. O procedimento envolveu a análise de 10 artigos em língua portuguesa, cujos temas são relacionados ao Design e cujas metodologias abordam procedimentos científicos não projetuais. O objetivo principal foi expor os pontos positivos e as fragilidades das relações entre o discurso dos objetivos planejados, das metodologias utilizadas e das conclusões extraídas pelos pesquisadores ao final de suas experiências. Para tal fim, foram utilizados dois instrumentos de análise distintos: A escala de diferencial semântico, desenvolvida em 1957, e o software de análise semântica Tropes versão 8.4 de 2013. O emprego dessas ferramentas mostrou que há fragilidade na transmissão de ideias e na coerência entre as estruturas da maioria do textos observados, apontado a necessidade de atenção na estipulação de objetivos claros e na escolha de metodologias ideais aos objetivos para, assim, promover conclusões coerentes.
... Tal conceituação, apesar de bastante abrange, difere-se da imitação, cuja essência é a difusão social, e da invenção, cujo foco é a propulsão social, ao posicionar-se de maneira clara como a dialética existente entre o processo de invenção e o processo de imitação. Este terceiro processo, o de inovação, caracteriza-se, portanto, como o mediador entre a oferta individual e a demanda social, especialmente pelo recurso à eficiência empresarial (Gilbert & Birnbaum-More, 1996). ...
Este artigo, com o objetivo de compreender as diferentes definições de inovação em design, mapeou todas as citações desse termo em um dos periódicos que melhor reflete o estado da arte das pesquisas desta área. O estudo exploratório, quantitativo e qualitativo foi realizado utilizando-se de uma variante das técnicas de análise de conteúdo e de análise de redes. Com base nos 13 artigos adequados encontrados, discerniu-se 163 categorias semânticas completamente conectadas em uma rede composta por oito clusters. De acordo com o quadro de referência compilado, a inovação em design aparentemente refere-se às alternativas empresariais socialmente aceitas para enfrentar os atuais problemas e os riscos futuros, especialmente através do desenvolvimento de novos produtos voltados para a satisfação das necessidades do mercado.
... Timing of innovation is crucial. Firms gain competitive advantage by using optimal timing in the introduction of innovation (Gilbert and Birnbaum-More, 1996) in green products. Besides that, regulations bound firms to adopt certain standard procedures. ...
The attention of corporate environmental management is shifting from clean technologies and pollution prevention to green product development (GPD). As a result, firms consider GPD critical for their increased productivity, cost reduction, better use of input resources, mitigation of waste disposal and become environmentally friendly. This study measures the effects of the best practices of environmental management – pollution prevention technologies, innovation and early timing – on GPD; and to analyze whether the moderating role of organizational capital strengthens/weakens that relationship. Data was collected systematically from companies involved in GPD in Thailand. Hierarchical regression techniques were used for data analysis. Findings revealed positive effects of innovation in pollution prevention technologies and early timing on GPD. And the interaction of organizational capital further strengthened the effects early timing had on GPD. Contrary to research hypothesis, pollution prevention technologies did not facilitate GPD. Data didn’t reveal the moderating effects of organizational capital on the relationship between pollution prevention technologies, innovation in pollution prevention technologies and GPD. Although, I did not hypothesis for the organizational capital, yet data revealed its direct impact on GPD. The findings also discuss the theoretical and managerial implications for modern managers.
... Indeed, there are often advantages to entering a market after the front-runner. These include being able to free-ride on the R&D of the front-runner, to act on more information about the relevant market, to act under more regulatory certainty, and having more flexible assets and structures that let a company respond more effectively to changes in the environment (Gilbert and Birnbaum-More, 1996). These can outweigh the advantages of being the first to enter that same market. ...
In this paper, we argue that competitive pressures could incentivize AI companies to underinvest in ensuring their systems are safe, secure, and have a positive social impact. Ensuring that AI systems are developed responsibly may therefore require preventing and solving collective action problems between companies. We note that there are several key factors that improve the prospects for cooperation in collective action problems. We use this to identify strategies to improve the prospects for industry cooperation on the responsible development of AI.
... While economic theory may strongly suggest that there is a first mover advantage in generic industries displaying characteristics of oligopoly, it may be prudent to briefly investigate the literature on how strategic positioning in the order of entry specifically affects high technology industries, where being the 'first mover' implies being the very first firm to bring an innovation to market (Glibert and Burnbaum-More, 1996). Most remain of the opinion that a firm who is first to market with an innovation will typically derive an advantage over rivals in a high technology industry, in much the same way as the leader is expected to hold a strategic advantage in the case of von Stackelberg equilibrium. ...
The market for video games machines in Japan has evolved in a series of distinct and progressive generations, each displaying the characteristics of a standards war. In such a contest, a small number of incompatible products with similar technical specifications battle to dominate the market. Economic theory would suggest that position in the order of entry has an important influence on market performance, and that the mantle of first mover carries with it a strategic advantage that can be exploited by firms. This paper empirically examines the effect that a firm's position in the order of entry into the market has upon its performance. Based on data supplied by a CESA survey on console ownership, an econometric model is constructed which tests the statistical significance of the relationship between the order of movement and market share. The results indicate that, in the market for Japanese video games systems, there are significant disadvantages associated with the first move and significant advantages associated with the second move.
... Early adopters may have both first mover advantages and disadvantages (Lieberman and Montgomery, 1988;Shilling, 2005). By introducing innovative practice at the right time, manufacturers can gain competitive advantages (Gilbert and Birnbaum-More, 1996). Dimensions that contribute to first mover advantages include technological leadership, preemption of scarce assets, and high switching costs by customers. ...
Drawing on diffusion of innovation and ecological modernization theories, we identify three types of industrial manufacturers, namely early adopters, followers, and laggards, based on the adoption of green supply chain management (GSCM) practices among Chinese manufacturers. Test results indicate that differences exist between the three types of GSCM adopters in terms of their environmental, operational, and economic performance. Understanding how Chinese manufacturers adopt GSCM practices and if this adoption affects their performance contributes theoretical advancement to the diffusion of innovation theory. Practically, the results provide managerial insights for manufacturers to benchmark for environmental management practices and performance improvement.
... Studies have shown that early adopters in technological and product innovations typically have better market and business performance because of the early adoption advantage (Decastro and Chrisman, 1995;Gilbert and Birnbaum-More, 1996;Song, Di Benedetto, and Zhao, 1999;Szymanski, Troy, and Bharadwaj, 1995). Nehrt (1996) conducted a study to investigate the investment timing and intensity conditions under which financial benefits may be enjoyed by a firm investing in pollution-minimizing manufacturing technologies that generate salable product while reducing pollution. ...
The Strategic Goals Program sponsored by the United States Environmental Protection Agency which focuses on the Metal Finishing
Industry is used to investigate some pertinent issues related to small manufacturing enterprises' environmental performance.
Results from the initial years of this program are used to evaluate a number of hypotheses related to the relationship between
environmental performance and adoption of environmental and risk management practices, especially among smaller organizations.
The methodology uses unique structuring of data to determine temporal environmental performance using data envelopment analysis.
Results show that early and increased investment in these practices and programs may not provide for better performance benefits.
The findings have implications for environmental managers in smaller organizations and policy makers overseeing these types
of organizations.
... The refractory producers have to rely on technological innovations to provide materials that are best suited for their applications, while keeping costs within an acceptable range. Additionally, the innovation timing needs to be well thought out to provide the industries with the expected result [5]. It is of great importance, therefore, to know what the most promising technical fields are, in which industries should invest and could lead them to a better position with less risk in the market. ...
Patents have shown to be useful tools to point out trends in tech-nological progress for a given field, as well as priorities and research relationships among organizations. The aim of this work is to analyze the technological advances in the refractory field based on the number of patents in some relevant areas. The results highlight some changes within this sector, the understanding of the present situation and identifying future trends. For this study, a search in the Derwent Innovation Index database (by Thomson ISI) was carried out and the retrieved data was dealt with and inserted into a local database to detect relationships among its fields. A sig-nificant decrease in the patent generation in the refractories area in the 90's was observed. The increase of steel production over the last decade and the worldwide expectation of the increase in pro-ductive capacity indicate that the phenomenon is related to tech-nological maturity in the sector. Nevertheless, reducing costs depends strongly upon continuous technological development, whereby innovation is a fundamental aspect regarding competitive advantage.
... Most of the so-called first-mover advantages (e.g., preemption of scarce assets, generation of buyer switching, pioneer's influence on the consumers' learning and preference formation processes) are transitory in that they dissipate with competitive entry (Brown and Lattin, 1994; Huff and Robinson, 1994). Moreover, these advantages are not attributable to just one firm (Gilbert and Birnbaum-More, 1996). Firms entering the market soon after the first mover still have an important opportunity to benefit from some of the advantages associated with early entry (Lieberman and Montgomery, 1988; Varadarajan et al., 2008). ...
The role of market orientation as an antecedent of new product performance has been extensively documented in the literature. What is less clear, however, is how firms should deploy their market orientation under different market conditions. This study addresses this question by investigating how market orientation is converted into superior new product performance for products that enter the market at different times. In particular, the study examines the moderating effect of market entry order on the mediated relationship between market orientation and new product performance via product quality and innovation speed. Data from a sample of 244 new product development projects show that market orientation can improve the performance of first-to-market products and late movers by facilitating the development of quality products, whereas it can improve the performance of early entrants by facilitating greater innovation speed.
... Cohen et al. (1996) and Armstrong and Levesque (2002) examine the tradeoff between entry timing and product quality. Gilbert and Birnbaum-More (1996), Kerin et al. (1992), and Lieberman and Montgomery (1988) survey theoretical and empirical work on first-mover advantage and discuss general mechanisms leading to such advantage (e.g., technological leadership, preemption of scarce resources, and switching costs). Our work contributes to this literature by studying sequential entry and product positioning in the presence of network effects, which leads to a different focus: network effects raise compatibility as a key issue and result in a different structure for both product design and pricing decisions. ...
We study how a commercial firm competes with a free open source product. The market consists of two customer segments with different preferences and is characterized by positive network effects. The commercial firm makes product and pricing decisions to maximize its profit. The open source developers make product decisions to maximize the weighted sum of the segments' consumer surplus, in addition to their intrinsic motivation. The more importance open source developers attach to consumer surplus, the more effort they put into developing software features. Even if consumers do not end up adopting the open source product, it can act as a credible threat to the commercial firm, forcing the firm to lower its prices. If the open source developers' intrinsic motivation is high enough, they will develop software regardless of eventual market dynamics. If the open source product is available first, all participants are better off when the commercial and open source products are compatible. However, if the commercial firm can enter the market first, it can increase its profits and gain market share by being incompatible with its open source competitor, even if customers can later switch at zero cost. This first-mover advantage does not arise because users are “locked in,” but because the commercial firm deploys a “divide and conquer” strategy to attract early adopters and exploit late adopters. To capitalize on its first-mover advantage, the commercial firm must increase its development investment to improve its product features.
... Studies have shown that early adopters in technological and product innovations typically enjoy better market and business performances because of the early adoption advantage (Gilbert and Birnbaum-More, 1996; Song et al., 1999). Hart and Ahuja (1996) demonstrate that the early moving firms may be opting for more advanced environmental strategies that build on low emissions, but which also involve other sources of sustainable competitive advantage (Ghemawat, 1986). ...
The examination of the possible direct link between environmental protection and firm performance in the literature has generally produced mixed results. The present paper contributes to the literature by using the resource-based view as a mediating process in this relationship. The study specifically tests whether or not the resource-based view of the firm mediates the positive relationships of proactive environmental management and improved environmental performance with competitive advantage, which also has consequences for financial performance. We also check the possible link between the adoption of a pioneering approach and good environmental management practices. Our findings support that early investment timing and intensity in environmental issues impact on the adoption of a proactive environmental management, which in turn helps to improve environmental performance. The findings also show that a firm's resources and competitive advantage act as mediator variables for a positive relationship between environmental protection and financial performance. This contribution is original because the present paper develops a comprehensive whole picture of this path process, which has previously only been partially discussed in the literature. In addition, this study clarifies a relevant point in the literature, namely that the effect of environmental protection on firm performance is not direct and can vary depending on the sector considered. Whereas competitive advantage in relation to costs influences financial performance in the IPPC law sector, the relevant influence in the hotel sector comes from competitive advantage through differentiation.
Does the speed of adopting environmental practices impact financial benefits? The strategy literature discusses the contingencies under which firms can gain an early‐mover advantage or a late‐mover advantage. This research examines the effect of adoption speed on two types of environmental practices: environmental innovation practices (EIP) and environmental management practices (EMP). The results show that early adoption of EIP increases competitive advantage when firms face intense competition. In comparison, we show that early adoption of EMP increases competitive advantage when firms face extremely low competition or have moderate to high levels of slack resources. The study contributes to the literature by revealing the nuances, contingencies, and boundary conditions of when it pays to be green. Prior research shows mixed results when studying firms' decisions to implement environmental practices, which implies that it may not pay to be green. This study shows that firms can get an early mover advantage from environmental practices, but it depends on the type of environmental practices, the firm's internal slack resources, and the firm's external competitive environment.
We study strategic investment in continuous time with positive externalities of changing magnitude. Our model particularly allows for two correlated risk factors. Constructing subgame-perfect equilibria with pure and mixed strategies, we observe the novel effect that it is important for the firms to anticipate preemption. In fact, the presence of a second risk factor implies also an additional strategic risk. We quantify the associated extra waiting cost and show that it is ex ante uncertain whether investment will happen when there is a first- or a second-mover advantage. Our formal arguments involve several methodological contributions. In addition, we provide detailed specifications of our basic model to address various applications.
Technological innovations have always shaped the development of media innovations. Emerging technologies enable the further development of media business models as they provide companies with potential competitive advantages. Hence, we anticipate that the adoption of emerging technologies in the media industry is both likely and implemented with foresight. This study examines the external strategic technology adoption behavior of media conglomerates by creating planning horizon profiles and technology investment profiles. Based on a detailed review of the literature on strategic planning, first, we discuss the situational factors that influence the planning horizon of media companies. Second, we evaluate in which emerging technologies and with which planning horizon media conglomerates strategically invest and third, we analyze the composition of the situational factors that characterize the specific technology investment profiles. By using the technology investment profiles, it is possible to take a closer look at the situational factors of investors and acquirers. Looking at all investment activities from 2000 to 2019, technology-related investment activities of the 100 largest media conglomerates are comparatively frequent. Media conglomerates have a high degree of technological diversity: The investments are diverse and relate to 36 out of 39 analyzed emerging technologies. As for the planning horizon, media conglomerates – both technology-driven media conglomerates and legacy media – invest particularly far into the future. Acquisitions are only made when success is in sight. The focus on mid- and long-term planning horizons and the proportion of acquisition and investment suggest that these are part of the diversification strategy of media conglomerates. Due to the composition of its profile, Biotechnology stands out in comparison to all other technologies: it can be assumed that these are new-generation media conglomerates investing in Biotechnology.
Zusammenfassung
Augmented und insbesondere Virtual Reality-Technologien und -Anwendungen existieren zwar bereits seit einigen Jahrzehnten, durchleben jedoch seit einigen Jahren (erneut) einen Aufschwung, getrieben durch technologische Entwicklungen. Aus diesen Entwicklungen ergeben sich in diversen Branchen, insbesondere aber in der Medienbranche, sowohl vielerlei Chancen als auch Herausforderungen. Vor diesem Hintergrund stellt sich die Frage, wie sich Unternehmen der Medienbranche auf diese neuen Technologien einstellen bzw. eingestellt haben – im Sinne einer strategischen Vorbereitung auf die Zukunft bzw. hinsichtlich ihrer Technologieadoptionsstrategien. In diesem Artikel wird untersucht, wie früh oder spät bzw. zu welchem Zeitpunkt AR- und VR-Investitionen stattfinden und welchen Planungshorizont (Dauer vom Zeitpunkt der Investition bis zum Erreichen des Produktionslevels) Medienunternehmen in ihren AR- und VR-Investitionen verfolgen. Die Ergebnisse zeigen, dass sich diejenigen Medienunternehmen, die in AR und VR investieren, in zwei große Gruppen aufteilen lassen: Wenn investiert wird, geschieht dies entweder relativ früh (nach 2 bis 4 Jahren) oder relativ spät (erst nach 12 bis 14 Jahren) nach Aufkommen der Technologie. Die beiden Gruppen können als Early Majority und Late Majority verstanden werden. Gemeinsam ist allen Medienkonzernen, dass ihre Investitionen einen mittelfristigen Planungshorizont von 5 bis 10 Jahren aufweisen, der bei AR sogar tendenziell länger ist als bei VR. Medienunternehmen sind sich dem langfristigen (Markt‑)Potenzial beider Technologien offenbar bewusst, investieren aber nur sehr zaghaft in diese.
Corporate environmental management attention is shifting from clean technologies and pollution prevention to green product development (GPD). As a result, firms consider GPD critical for their increased productivity, cost reduction, better use of input resources, mitigation of waste disposal and become environmentally friendly. This research measures the effects of the best practices of environmental management – pollution prevention technologies, innovation and early timing – on GPD; and to analyze whether the moderating role of organizational capital strengthens/weakens that relationship. Data was collected systematically from companies involved in GPD in Thailand. Hierarchical regression techniques were used for data analysis. Findings revealed the influence of innovation in pollution prevention technologies and early timing on GPD. Interaction of organizational capital further strengthened the effects early timing had on GPD. Contrary to research hypothesis, pollution prevention technologies did not facilitate GPD. Data didn't reveal the moderating effects of organizational capital on the relationship between pollution prevention technologies, innovation in pollution prevention technologies and GPD. Although, we did not hypothesize for the organizational capital, yet data revealed its direct impact on GPD. The findings also discuss the theoretical and managerial implications for modern managers.
Strategic product planning (SPP) for new product development (NPD) in the fuzzy
front end (FFE) requires high cognitive effort from managers and practitioners, since
the large number of Activities as well as the high level of interdependence Among
Them And Also the peculiarities of each project make the structuring Activities the
messy problem. In order to structure key Activities on SPP in the FFE, we propose
the cognitive model using the Strategic Options Development and Analysis (SODA)
method. The Proposed model was applied in two Brazilian industries from the food
sector. This study revealed that the activities in the FFE report to each other in a
hierarchical mannered, with a high level of complexity, and some Activities behave
the other options the strategies and the other goals. The activities found in the food
sector are similar to those found in the mobile sector, but have some differences due
to peculiarities of each sector. We recommend the cognitive model to assist
managers and practitioners structuring Activities on SPP.
The current far-reaching European legislative reform of the telecommunications sector has led to a lively debate in the media about (1) the balance between consumer protection on the one hand and entrepreneurial freedom of telecommunication companies (providers) on the other hand (e.g. the discussions about the maximal minimum duration of telecom subscriptions for consumers and the discussions about network neutrality) and (2) what the impact of the new legislation would be on the innovativeness of the industry, for example: will mandated access to next generation networks stimulate or hamper investment by providers? The first debate is mainly political and will not be discussed here. This chapter focuses on the latter, which is mainly the result of insufficient scientific insights into the relation between regulation and innovation. Regarding this ‘insufficient insight’, Irwin and Vergragt (1989) already stated more than 20 years ago:
Regulation has rarely been considered as a positive means of technical control e.g. through stimulating new forms of technological response rather than simply restricting the operation of the marketplace. The whole issue of regulation, therefore, has been conceptualized as a post-innovation check on undesired side-effects rather than as a tool for directing technology towards socially desirable ends.
Technologische Produkt- und Prozessinnovationen werden allgemein als ein entscheidender Schlüsselfaktor für den langfristigen Unternehmenserfolg angesehen. Durch die Verbesserung ihrer Produktions- und Fertigungstechnologien sowie durch die Entwicklung neuer Produkte und Märkte versuchen Unternehmen, ihre Wettbewerbsfähigkeit auch in Zukunft zu sichern. Neben der Tatsache, dass über das Hervorbringen von Innovationen aktiv das wettbewerbliche Umfeld beeinflusst werden kann, erzielt eine Innovation ihren positiven Erfolgsbeitrag nicht zuletzt aus dem Umstand, dass es eben nicht gerade jedem Unternehmen gelingt, eine Produkt- oder Prozessinnovation erfolgreich umzusetzen. So zeigt Buggie (1982), dass nur 30 von 600 Neuproduktideen zu erfolgreichen Produkteinführungen wurden. Lilien (1986) berichtet, dass 70 % der Aufwendungen für Neuproduktentwicklungen für gescheiterte Produkte anfallen. Cooper (1981) schließlich konnte im Rahmen einer großzahligen empirischen Untersuchung feststellen, dass lediglich 59,4 % der untersuchten Innovationsprojekte einen wirtschaftlichen Erfolg aufwiesen. 21,9 % der Projekte wurden bereits während der Entwicklungsphase abgebrochen und 18,7 % konnten sich nicht am Markt durchsetzen. Nichtsdestoweniger werden vermehrt intensive Anstrengungen unternommen, Produktinnovation erfolgreich am Markt zu platzieren. Zurückzuführen lässt sich dies nicht zuletzt auf den Anreiz, für einen begrenzten Zeitraum eine monopolartige Marktstellung inne zu haben.
This report reviews efforts under way in a number of OECD countries to advance innovation in energy technology, with a particular focus on hydrogen fuel cells. It compares energy innovation systems in Canada, France, Germany, Italy, Japan, Korea, Norway, the United Kingdom and United States to identify the roles of government, industry, universities and other public research organisations in the innovation process. It also examines the policies governments are implementing to finance needed research and development and to stimulate market demand for innovative energy technologies.
A partir de um estudo de caso na Vinícola Santa Augusta (VSA), este artigo buscou entender o processo de produção biodinâmica e sua contribuição para a sustentabilidade do empreendimento e do ambiente. A VSA desenvolveu ações sustentáveis em seu processo produtivo por meio do cultivo de uvas biodinâmicas, devido a uma necessidade estratégica de mercado, porém sem a intenção de desenvolver uma estratégia de gestão ambiental desse processo. O presente trabalho é uma pesquisa qualitativa, descritiva e exploratória, com sustentação teórica baseada nos conceitos da biodinâmica e suas contribuições para o meio ambiente, além do conceito de gestão ambiental sob a ótica de autores como Rohrich e Cunha (2004) e Maimon (1994). Este artigo tem o objetivo de propor a implantação de uma gestão ambiental por parte da empresa, a partir da adoção gradual de práticas sustentáveis e da manutenção do cultivo biodinâmico em seu processo produtivo. A pesquisa possibilitou concluir que a produção biodinâmica ainda é tímida no Brasil, principalmente na vitivinicultura, sendo a VSA pioneira no segmento. O estudo também permitiu entender a biodinâmica como uma alternativa de produção sustentável, com características de conservação dos recursos não renováveis e respeito aos limites da natureza, além de proporcionar a obtenção de produtos de qualidade, com alto valor agregado.
The associations of technology synergy, product characteristics, and new product performance are widely spread in the marketing and innovation management literatures. However, little research integrates these associations. This study adopts a meta-analytic approach to aggregate prior findings across studies published before 2010 to review the relationships between technology synergy, product characteristics, and new product performance. Structural equation analysis reveals that technology synergy has: (a) a positive medium effect on new product performance; (b) a positive and strong impact on product advantage, which then affects new product performance; and (c) an indirect effect on new product performance through product innovativeness and product advantage. These findings suggest that product innovation and advantage are important intermediaries between technology synergy and new product performance-as yet unrevealed in extant literature. Copyright (C) 2012 ASAC. Published by John Wiley & Sons, Ltd.
This study adopts a meta-analytic approach to review the effects of technology synergy, marketing synergy and environmental context on new product performance by aggregating the empirical evidence documented in studies published from 1979 to 2011. Based on this aggregation, the results from a structural equation analysis show that (a) increasing technology and marketing synergies improves new product performance and the performance effect of marketing synergy is stronger than that of technology synergy; (b) increasing technology synergy enhances product advantage, which increases new product performance, whereas increasing marketing synergy does not; (c) increasing technology and marketing synergies may hinder product innovativeness; and (d) improving product innovativeness increases new product performance through product advantage. These findings suggest that ignoring the intermediary roles of product advantage and innovativeness may lead to an incomplete understanding of the relationships among technology and marketing synergies, environmental context, and new product performance. The results also demonstrate that technological turbulence affects new product performance through product innovativeness and advantage; in contrast, market intensity has a direct effect on new product performance. Future studies can examine the relationships among synergy, product effectiveness, and new product performance by constructing a mediated moderation or moderated mediation framework based on the environmental context.
Purpose
In environmental policy first mover advantages for environmental technologies are often taken for granted. It is a popular view to see the state as a political entrepreneur who introduces a certain environmental policy instrument and thus becomes the world market leader or the lead market for the respective technology. Against this background, the purpose of this paper is to find out if the idea of first mover and lead market advantages can be justified by theories and empirical evidence.
Design/methodology/approach
A wide range of theoretical and empirical papers from the business management and industrial economics literature were reviewed to provide success factors for different timing‐to‐market and lead market strategies of environmental innovations.
Findings
A successful innovator is not necessarily the first but very often one of the early movers within the competition of different innovation designs. The paper shows that the success of a timing strategy depends on country‐specific lead market potentials, on market and technology characteristics and on the regime of the country‐specific regulation. On this basis the paper derives options for environmental innovation strategies for firms under different circumstances of markets, technologies and regulations.
Research limitations/implications
Patent applications, R&D expenditure, etc. are not unimportant input factors for the innovation, but all these supply‐side factors are beyond the focus of this article.
Practical implications
Research on the lead market and the timing to market takes centre stage when product innovations are in the development phase. Companies in countries that do not have sufficient above‐average lead market attributes must target product innovations to fit the preferences of users in the lead market.
Originality/value
This paper is the first to analyse if different timing to market advantages and lead market advantages for environmental innovation can be justified by theories and by empirical evidence.
Acknowledging the currently limited scientific insights in the relation between regulation and innovation, this paper aims to shed a new light on the (im)possibilities to pace innovation by means of regulation. More concrete, it will focus on the meso level (industry) discussions about stimulating the deployment of so-called ¿Next Generation Networks¿ (NGNs) for telecommunication. From structured application of innovation timing theory combined with the concept of network effects in telecommunications industry and confronting these with new entrance strategies, a better understanding of the variegated influence of several regulatory measures results; because of network effects enhancing some first-mover advantages, a first mover is likely to become a provider with sustainable market power in an emerging telecommunication market. If a leapfrog-enabling technology gateway is available, investing in a NGN appears to be a more attractive strategy for the new entrant in an unregulated telecommunications market than investing in a ¿Same Generation Network¿ or setting-up Service Based Competition. Cost-based mandated access leads to declining attractiveness of investing in NGNs. Relaxing mandated access obligations appears to influence the development of NGNs positively. Furthermore we state that interconnectivity and portability obligations as well as guaranteeing more regulatory certainty have positive effects on all new entrance strategies.
This empirical study examines the effectiveness of innovation protection mechanisms (IPMs) in capturing returns from innovation in service firms. To identify their effects, we set five types of IPMs (patents, other intellectual property rights, speed to market, secrecy, and complementary resources) as a moderator of the relationships between the innovation and firm competitiveness. Through a sample of service firms from the Korean Innovation Survey, the results of this study indicated that firm competitiveness cannot be influenced by service innovation alone but rather it is influenced by service innovation used in conjunction with IPMs other than patents. The results contribute to understanding innovation protection strategies for better competitiveness of service firms.
Building from the resource-based view of the firm and the first-mover advantage literature, this paper asserts that the entry order in a new product-market affects how the firm's resources and capabilities influence the product's performance. This proposition is tested on a sample of 136 product launches by Spanish manufacturing firms. The empirical analysis reveals that firms with superior managerial and R&D resources achieve superior new product performance when an early-entry strategy is adopted. Manufacturing resources also contribute positively to the success of new products, but this effect is weakened by the difficulties and inconveniences that firms with advantages in operations face when they attempt to pioneer a new market. The results regarding the influence of marketing resources on new product performance are not conclusive.
Organizational adaptation to competition often means inventing or adopting a process innovation and the daunting challenge of implementing it. Increasingly, process innovations rely on the capabilities embedded in an organization's IT infrastructure. Successfully implementing an IT-enabled process innovation depends largely on how a project's IT and work process designs fit and evolve with this IT infrastructure. However, little empirical research guides the formulation of IT and work process strategies. This study addresses the question: How does the degree of coupling between a redesign project's IT strategy and work process strategy affect project performance? Data collection utilized a multistage research design employing comprehensive phone interviews and matched surveys among three sets of respondents (project managers, IT managers, and process users) across 43 process redesign projects in the health care industry. Our findings indicate project performance improves with tightly coupled IT and work process strategies when implementing process inventions, and with loosely coupled strategies when implementing imitations.
Purpose
The purpose of this paper is to discuss the concept of demand side economies of scope in relation to multiplay services. The basic question raised in the paper is the extent to which demand side economies of scope in the area of multiplay is based on an externality founded in a positive feedback mechanism as in the case of demand side economies of scale in interactive communication networks.
Design/methodology/approach
In order to elucidate this, the paper first presents and explores the concept of economies of scope, and more specifically demand side economies of scope. Second, an analysis of the bundling strategies of operators in the field is presented, including an examination of the forms of bundling with respect to how open or close the business models implemented are. After this analysis, the paper concludes with a discussion of the demand side economies of scope concept aiming to contribute to a qualification of the concept and its applicability.
Findings
The paper concludes that the value proposition of multiplay services is more related to the intrinsic value of the service than its extrinsic value. This constitutes a major difference between demand side economies of scale and demand side economies of scope.
Practical implications
The findings of the paper have practical implications for operators offering multiplay services with respect to the drivers of this market.
Originality/value
The value of the paper lies in its discussion of the concept of demand side economies of scope.
In a recent political discussion about the optimal division of power and competence between national and European regulatory bodies for telecommunication markets, the European Commission, the Parliament and the Council fundamentally disagreed about the necessity and most suitable arrangement (if any) for a newly established regulatory body. In the end, a Body of European Regulators for Electronic Communications (BEREC) resulted as a compromise. This paper initially describes the decision making process from which BEREC resulted and subsequently critically assesses the expected contribution of BEREC to the innovativeness of the internal telecommunication markets by confronting BEREC with innovation theory and general principles for effective market authority. One result of this analysis is that a more centralized model of market authority (as initially considered by the Commission) might contribute more to the innovative potential of the internal telecommunication markets than BEREC is expected to.
Technologische Produkt- und Prozessinnovationen werden allgemein als ein entscheidender Schlüsselfaktor für den langfristigen
Unternehmenserfolg angesehen. Durch die Verbesserung ihrer Produktions- und Fertigungstechnologien sowie durch die Entwicklung
neuer Produkte und Märkte versuchen Unternehmen, ihre Wettbewerbsfähigkeit auch in Zukunft zu sichern. Neben der Tatsache,
daß über die Hervorbringung von Innovationen aktiv das wettbewerbliche Umfeld beeinflußt werden kann, erzielt eine Innovation
ihren positiven Erfolgsbeitrag nicht zuletzt aus dem Umstand, daß es eben nicht gerade jedem Unternehmen gelingt, eine Produkt-
oder Prozeßinnovation erfolgreich umzusetzen. So zeigt Buggie, daß nur 30 von 600 Neuproduktideen zu erfolgreichen Produkteinführungen
wurden (Buggie, 1982, S. 22). Lilien berichtet, daß 70 % der Aufwendungen für Neuproduktentwicklungen für gescheiterte Produkte
anfallen (Lilien, 1986, S. 339). Cooper schließlich konnte im Rahmen einer großzahligen empirischen Untersuchung feststellen,
daß lediglich 59,4 % der untersuchten Innovationsprojekte einen wirtschaftlichen Erfolg aufwiesen. 21,9 % der Projekte wurden
bereits während der Entwicklungsphase abgebrochen und 18,7 % konnten sich nicht am Markt durchsetzen (Cooper, 1981, S. 47).
Daß nichtsdestoweniger vermehrt intensive Anstrengungen unternommen werden, Produktinnovation erfolgreich am Markt zu plazieren,
läßt sich nicht zuletzt auf die für einen begrenzten Zeitraum existente Monopolsituation und die Nutzung von Erfahrungskurvenvorteilen
aufgrund des frühzeitigen Markteintritts zurückführen.
This paper aims to capture a panoramic picture of innovation in organizations. To achieve this, innovation is viewed from perspectives representing different fields of knowledge, particularly those on creativity, the dynamics and the organization of innovation. At the center of the model is the project raising and doing process. This core process is enabled by people's knowledge and skills, their motivated behavior and integration with the rest of the organization. The results of this process are new products, processes or service. The source of innovation is information; however, it is only useful if it is communicated to the motivated who also have the necessary knowledge and skills. An organization's guiding principles and resources provide the direction and support for innovation. The paper also examines the factors originating from the external environment which impact the organization's choice of mission, strategy and tasks.
Performance is the lifeblood of a firm’s management. Performance itself depends on the adaptation of strategy based on learning and the environment. An important way that firms adapt their strategy is through imitation or mimetic isomorphism. Imitation implies a referent for such adaptations. This article seeks to determine who or what should serve as that referent. Accordingly, this research (1) develops a broad and rich model of industry dynamics, bringing together literature from industrial economics, strategic groups, learning, and resource-based theories; (2) examines the robustness of imitations strategies; and (3) develops a framework of the managerial implications of imitative behavior in varying industry conditions.
We used the techniques of event-history analysis to examine the speed with which newly founded organizations ship their first products for revenues, an important entrepreneurial event. In a longitudinal study of new ventures in the U.S. semiconductor industry, we found that substantial technological innovation lengthens development times and reduces the speed with which first products reach the marketplace. Organizations that undertook lower levels of technological innovation, had relatively lower monthly expenditures, whose founding organization structures included both a manufacturing and a marketing position, that had more competitors in the marketplace, and were founded in the Silicon Valley region of the U.S. shipped their first product for revenues significantly faster than other new ventures. Since several theoretical perspectives were utilized, results indicate that it is worthwhile to synthesize from several perspectives in order to understand the timing of entrepreneurial events. Implications for theory and future research on new organizations are discussed.
Building on previous contingency frameworks, we developed an encompassing contingency model that might explain the inconsistent planning-performance findings reported in previous research. The model was empirically tested using meta-analytic data drawn from 26 previously published studies. Results suggest that strategic planning positively influences firm performance and that methods factors are primarily responsible for the inconsistencies reported in the literature. The substantive contingency factors that we examined, some of which have been frequently cited as important by previous researchers, did not have a large impact.
A critical factor in industrial competitiveness is the ability of firms to exploit new technological developments. We term this ability a firm's absorptive capacity and argue that such a capability not only enables a firm to exploit new extramural knowledge, but to predict more accurately the nature of future technological advances. We develop a stylized model in which we focus exclusively on firms' decisions to invest in their absorptive capacities. We first examine a monopolist's investment decision, analyzing the path dependence of its investment and the effect of uncertainty. We then consider the effect of competition by modeling the impact of entry on an incumbent's investment behavior. Implications for management and public policy are then discussed.
An evolutionary model of technological change is proposed in which a technological breakthrough, or discontinuity, initiates an era of intense technical variation and selection, culminating in a single dominant design. This era of ferment is followed by a period of incremental technical progress, which may be broken by a subsequent technological discontinuity. A longitudinal study of the cement (1888-1980), glass (1893-1980), and minicomputer (1958-1982) industries indicates that when patents are not a significant factor, a technological discontinuity is generally followed by a single standard. Across these diverse product classes, sales always peak after a dominant design emerges. Discontinuities never become dominant designs, and dominant designs lag behind the industry's technical frontier. Both the length of the era of ferment and the type of firm inaugurating a standard are contingent on how the discontinuity affects existing competences. Eras of ferment account for the majority of observed technical progress across these three industries.
Several studies have shown that pioneers have long-lived market share advantages and are likely to be market leaders in their product categories. However, that research has potential limitations: the reliance on a few established databases, the exclusion of nonsurvivors, and the use of single-informant self-reports for data collection. The authors of this study use an alternate method, historical analysis, to avoid these limitations. Approximately 500 brands in 50 product categories are analyzed. The results show that almost half of market pioneers fail and their mean market share is much lower than that found in other studies. Also, early market leaders have much greater long-term success and enter an average of 13 years after pioneers.
In a broad cross section of consumer goods businesses, market pioneers generally have substantially higher market shares than late entrants. In fact, the empirical association between order of entry and market share is almost as strong as the association between market share and return on investment. The authors examine theoretical sources behind this relationship. The empirical results suggest that the higher pioneer shares are derived from firm-based superiority as well as from consumer information advantages. Nine hypotheses are developed and tested empirically. The results also indicate that order of market entry is a major determinant of market share.
Market pioneers outsell later entrants in both consumer and industrial markets. Entry barriers arising from preemptive positioning and switching costs have been advanced to explain this market share difference, termed “pioneering advantage.” However, empirical studies show that pioneering advantages are present even in mature markets in which brands reposition and switching costs are minimal. In these cases, the authors argue that pioneering advantage can arise from the process by which consumers learn about brands and form their preferences. This process can produce a preference structure that favors the pioneer, making it difficult for later entrants to “compete away” the pioneer's large market share, even if brands can reposition and switching costs are minimal.
Competitive strategy under uncertainty involves a trade-off between acting early and acting later after the uncertainty is resolved, and another trade-off between focusing resources on one scenario and spreading resources on several scenarios thus maintaining flexibility. This paper analyzes both these trade-offs taking into consideration the nature of uncertainty, industry economics, intensity of competition, and the position of a firm relative to its competitors.
Provides a systematic presentation of the economic field of industrial organization, which is concerned with how productive activities are brought into harmony with the demand for goods and services through an organizing mechanism, such as a free market, and how variations and imperfections in the organizing mechanism affect the successful satisfying of an economy's wants. Of the three market mechanisms (tradition, central planning, and free markets), the field of industrial organization deals primarily with the market system approach. This book primarily emphasizes the manufacturing and mineral extraction sectors of industrialized economies, with less discussion of wholesale and retail distribution, services, transportation, and public utilities. Beginning with a discussion of the welfare economics of competition and monopoly, the structure of industries in the U.S. and abroad and their determinants are described, including motives for mergers and their effects. Extended analysis of pricing, product policy, and technological innovation then follows. Antitrust, price fixing, related restraints, structural monopolies, regulation, and price discrimination are examined, as are the complex policies governing pricing relationships between vertically linked firms. The role of advertising in product differentiation and the roles of market structure and product variety are identified. Innovation, patents, and their relation to market structure are explored. Overall, this analysis seeks to identify attributes or variables that influence economic performance and to build theories about the links between these attributes and end performance. (TNM)
This paper attempts to explain why innovating firms often fail to obtain significant economic returns from an innovation, while customers, imitators and other industry participants benefit. Business strategy - particularly as it relates to the firm's decision to integrate and co1laborate - is shown to be an important (actor. The paper demonstrates that when imitation is easy. markets don't work wen, and the profits (rom innovation may accrue to the owners of certain complementary assets. rather than to the developers of the intellectual property. This speaks to the need, in certain cases, for the innovating firm to establish a prior position in these complementary assets_ The paper also indicates that innovators with new products and processes which provide value to consumers may sometimes be so iJt positioned in the market that they necessarily win fai1. The analysis provides a theoretical foundation (or the proposi. tion that manufacturing often matters. particularly to innovating nations_ Innovating finns without the requisite manufacturing and related capacities may die. even though they are the best at innovation_ Implications for trade policy and domestic economic policy are examined.
Understanding sources of sustained competitive advantage has become a major area of research in strategic management. Building on the assumptions that strategic resources are heterogeneously distributed across firms and that these differences are stable over time, this article examines the link between firm resources and sustained competitive advantage. Four empirical indicators of the potential of firm resources to generate sustained competitive advantage-value, rareness, imitability, and substitutability are discussed. The model is applied by analyzing the potential of several firm resources for generating sustained competitive advantages. The article concludes by examining implications of this firm resource model of sustained competitive advantage for other business disciplines.
This essay presents an overview of selected aspects of prevailing theoretical understanding of innovation, and attempts to sketch some directions that would seem fruitful to follow if we are to achieve a theoretical structure that can be helpful in guiding thinking about policy. We are using the term innovation as a portmanteau to cover the wide range of variegated processes by which man’s technologies evolve over time. By a theory we mean a reasonable coherent intellectual framework which integrates existing knowledge, and enables predictions to go beyond the particulars of what actually has been observed. It seems apparent that if scholarly knowledge is to be helpful to deliberation about policy directions, theory must be wide enough to encompass and link the relevant variables and their effects, and strong enough to give guidance as to what would happen if some of these variables changed.
This study examines relationships among strategy, distinctive competence, and organizational performance. The analysis focuses on the perceptions of top managers in four industries (plastics, semiconductors, automotives, and air transportation). Findings indicate that these managers perceive four strategy types, Defender, Prospector, Analyzer, and Reactor, to be present within their industry. Defenders, Prospectors, and Analyzers all show competence in general and financial management. Beyond these two functions, Defenders and Prospectors have identifiable but different configurations of distinctive competence, while Analyzers' special capabilities are considerably less apparent. Reactors, as expected, have no consistent pattern of distinctive competence. Finally, although the data are only suggestive, Defenders, Prospectors, and Analyzers consistently outperform Reactors in competitive industries, but not in an industry that is highly regulated.
This paper examines the probability and timing of entry by industry incumbents into emerging technical subfields. When a new technical subfield of an industry emerges, an industry incumbent faces opposing entry incentives, either to wait until technical and market uncertainties subside or to stake out a strong position early. This paper argues that an incumbent is likely to enter a new subfield if the firm's core products are threatened or if it possesses industry-specialized supporting assets. The greater the competitive threat, the less likely an incumbent is to enter but the earlier it will do so. The predictions are supported with analysis of 30 years of entry data from five subfields of the American medical diagnostic imaging industry.
This study explores organizational growth in technology-based ventures. We relate characteristics of the founding top-management team, strategy, and environment to the sales growth of newly founded U.S. semiconductor firms. The results indicate significant main and interaction effects for the founding top-management team and market stage on firm growth. In contrast, the technical innovation of firm strategy and marketplace competition were not significant. Finally, the founding top-management team and market-stage effects were increasingly large over time. Overall, these results indicate that both environmental determinism and strategic choice operate on young firms. These findings also suggest chaos-theory linkages to positive-feedback models and sensitive dependence of organizational growth on founding conditions.
In a broad cross section of consumer goods businesses, market pioneers generally have substantially higher market shares than late entrants. In fact, the empirical association between order of entry and market share is almost as strong as the association between market share and return on investment. The authors examine theoretical sources behind this relationship. The empirical results suggest that the higher pioneer shares are derived from firm-based superiority as well as from consumer information advantages. Nine hypotheses are developed and tested empirically. The results also indicate that order of market entry is a major determinant of market share.
Innovation, technology advances, and competitive advantage are connected by complex and multidimensional relationships. This article begins by examining four factors that shape the relationship between innovation and competitive advantage. Routes to corporate entrepreneurship (research and development units, intrapreneurshiplinternal ventures, external joint ventures and acquisition) are compared in terms of these criteria. The debates and questions that set the stage for further research in this area conclude the article.
A resource-based approach to strategic management focuses on costly-to-copy attributes of the firm as sources of economic rents and, therefore, as the fundamental drivers of performance and competitive advantage. Interest presently exists in whether explicit acknowledgement of the resource-based view may form the kernel of a unifying paradigm for strategy research. This article addresses the degree to which a resource-based view represents a fundamentally different approach from theories used in industrial organization (10) economics. The central thesis is that, put informal terms, the resource-based approach is reaching for a theory of the firm. To determine its distinctiveness in comparison to IO, therefore, an appropriate comparison is with other theories of the firm developed within that tradition. Section I summarizes and analyzes five theories that have been significant in the historical evolution of IO. These are neoclassical theory's perfect competition model, Bain-type IO, the Schumpeterian and Chicago responses, and transaction cost theory. The first part of Section II analyzes the resource-based approach in terms of similarities to and differencesfrom these IO-related theories. The conclusion is that resource-based theory both incorporates and rejects at least one major element from each of them; thus resource-based theory reflects a strong IO heritage, but at the same time incorporates fundamental differences from any one of these theories. The second part of Section II analyzes resource-based theory as a new theory of the firm.
How do executive teams make rapid decisions in the high-velocity mi- crocomputer industry? This inductive study of eight microcomputer firms led lo propositions exploring that question. Fast decision makers use more, not less, information than do slow decision makers. The former also develop more, not fewer, alternatives, and use a two-tiered advice process. Conflict resolution and integration among strategic de- cisions and tactical plans are also critical to the pace of decision mak- ing. Finally, fast decisions hased on this pattem of hehaviors lead to superior performance.
Numerous conceptual and empirical studies advance the notion that first movers achieve long-term competitive advantages. These studies purport to demonstrate the presence of a systematic direct relationship between order of entry for products, brands, or businesses and market share. However, an objective assessment of the literature suggests that this view must be qualified. A broadened perspective is presented that highlights the complexity of this phenomenon and suggests that first-mover status may or may not produce sustainable advantages because of a multiplicity of controllable and uncontrollable forces. A conceptual framework identifying factors that underlie first-mover advantage and product-market contingencies that moderate the order of entry-competitive advantage relationship is proffered. Several research propositions relevant for marketing theory and practice are presented.
We focus on the question of whether it is the management of firm-related variables that is responsible for the success of a product innovation, or the management of project-related variables. An empirical analysis of 88 innovation projects has been made. Four factors were discovered to significantly influence innovation success. We find that an innovation's success is, above all, determined by capabilities of the innovative firm. In view of these findings, we think that it is reasonable to steer away from analyses of key factors related mainly to the individual innovation project. It is necessary to come to an integrative perspective, because it is only in this way that effects of strategic decisions made by the innovation management on the operative-tactical project management become clearly visible.
This paper explores the implications of the learning curve for competitive strategy under a range of assumptions regarding competition and the nature of the learning process. A game-theoretic model is used to examine how the learning rate and information diffusion affect entry barriers, profits, and price dynamics.
The analysis of the timing of innovation posits a particular innovation and examines the way the expected benefits, the cost of research and development, and interactions among competing firms combine to determine the pattern of expenditure across firms and over time, the date of introduction, and the identity of the innovating firm. In the case of a sequence of innovations, the expected lifetime of a given innovation and the pattern of technological leadership are also determined endogenously. Given that an innovation has been perfected, the extent and timing of its dissemination into use may be examined. This may depend upon a number of factors, including the existence of rival firms and institutions, which may facilitate or retard the dissemination of innovations. The chapter discusses the issues of innovation production in the context of symmetric noncooperative models. The chapter investigates the extent of dissemination of the innovation, where this dissemination is achieved through licensing.
Compares and analyzes the strategies for success for two categories of mature industrial-product environments. The two categories considered are the disciplined capital goods makers and the aggressive makers of complex goods. Data used in the analysis were drawn from the PIMS database. Six position attributes were identified for examination, including market share and capital intensity, while eleven choice attributes were used including value added and current assets. The results are presented in terms of clusters of high profit firms and low profit firms. These results support the proposition that the primary strategies pursued by the high performers in the two groups considered closely resemble Porter's three strategic types – cost leadership, differentiation, and focus. Interestingly, not all three of these strategic types were found in each setting. In fact, none of the high profit aggressive makers demonstrated the cost leadership strategy. In this attempt to contribute to the medium-grain contingency view of strategy, this analysis demonstrates that there are various strategies that lead to high profitability within an industry, but the effective strategies used differ by industry. (SRD)