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A question of strategy: To be a pioneer or a follower?



One of the most important questions faced by business leaders in the strategic management process is a choice of timing to launch new product/technologies and enter new markets. There are two options: to be a pioneer or to be a follower. Both have advantages and risks. Pioneers often have higher profitability, greater market share, and a longer business life, but the relative success of each strategy depends on several factors, both internal and external (pace of evolution of technology and markets).
* Faculty of Economics, University of Belgrade
ABSTRACT: One of the most important
questions faced by business leaders in the
strategic management process is a choice of
timing to launch new product/technologies
and enter new markets. ere are two
options: to be a pioneer or to be a follower.
Both have advantages and risks. Pioneers
oen have higher protability, greater
market share, and a longer business life, but
the relative success of each strategy depends
on several factors, both internal and
external (pace of evolution of technology
and markets).
KEY WORDS: pioneer, follower, rst-
mover advantage
Đorđe Kaličanin* DOI:10.2298/EKA08177089K
Đorđe Kaličanin
1. Introduction
e question of rst-mover advantage has long been a subject for intense
discussion by economists and business people. It is recognized that rst market
entry rewards pioneers, the main initial reward being the biggest market share
(Urban et al, 1986). is reward decreases over time as new rms enter, forcing
pioneers to take actions to increase and/or defend market share. However, market
share is oen not highly correlated with other important performance measures
(protability, survival, or sales growth) in new industries, and this has led to
changes in business strategy (VanderWerf, Mahon, 1997).
Historically the advantages of being a pioneer have been promoted to a much
greater extent than the risks (Lieberman, Montgomery, 1998). e actual outcome
depends on the initial resources of the pioneer, as well as on the resources
and capabilities subsequently developed in response to those of the followers.
Environmental change certainly provides opportunities to rst-movers, but
rms must initially possess the organizational skills and resources to capitalize
on such opportunities (Kerin et al, 1992). Additionally, the question of whether
to be a pioneer or a follower is of increasing importance in the modern Age of
Speed of entry into any market is always of great competitive importance. Perhaps
an enterprise intends to develop a new product or a novel technology to generate
new products, creating a new industrial sector, or even a whole new industry.
Alternatively a company wants to be rst to invade a hitherto unexploited national
or regional market. In all cases, companies are trying to beat the competition.
is is supercially similar to an athletic contest, in which every runner tries to
nish rst, but in business, the race never ends. Competitive advantage has to
be continuously maintained. A temporary innovation-based monopoly has to be
transformed into a sustainable long-term process or product. However, there are
companies that consciously choose to follow, rather than innovate, believing this
to be a more advantageous strategy.
Pioneering and rst-move advantage can be achieved in several ways: 1) by
making new products, 2) by using a new process, or 3) by entering a new market
(Heiens et al, 2003). In all cases, pioneers create new market demand for their
products/services and continue to satisfy that demand before other enterprises
enter the same market. It has also been claimed that rst-move advantage can
be established by new advertising campaigns, initiating price changes, and the
adoption of new distribution techniques.
e rst two cases (new product or new process) fall into the category of
technological pioneering. Technological pioneering refers to the development and
commercialization of an emerging technology in pursuit of prots and growth
(Zahra et al, 1995: 144). e third case is described as market pioneering, when
an enterprise with established products and technology is the rst to enter a new
market. Both technological pioneers and market pioneers, through their timing
and actions, are rst-movers. Other companies are followers. e latter can be
divided into early or late followers (or entrants). Early followers enter the market
soon aer the pioneer; late followers enter aer more time has elapsed.
In any company, the choice of whether to be a pioneer or a follower must be
incorporated in the strategic planning process. A pioneer strategy is compatible
with the choice of a broad or a focused dierentiation strategy. A follower strategy
is compatible with the choice of a broad or a focused low-cost strategy (analogous
to Kaplan, Norton, 2004).
2. Advantages and Risks of Pioneer and Follower Strategies
Pioneers gain advantage by making rst moves in technology, product or
marketing innovation. ese advantages are called rst-mover advantages. Other
enterprises are followers, they aim to maximize the late-mover advantages and to
minimize late-mover disadvantages.
First-mover advantages are: 1) owning the positive image and reputation of being
a pioneer, 2) reduction of total costs through control of new technology, and
supply and distribution channels, 3) the creation of a base of loyal customers,
4) having the ability to make imitation by competitors as dicult as possible
(ompson, Strickland, 2003: 193).
Pioneers try to make a competitive advantage through being rst in a new eld.
Building a competitive advantage is a time consuming process (time is the
horizontal axis on gure 1) and is called the build-up period. is period can
be minimized if an enterprise already has the necessary resources in place and
the customer response is positive and rapid. Build-up periods can be longer if
demand growth is weak, or the technology takes several years to perfect, or if it
takes time to establish manufacturing capacity..
e size of advantage is shown on the vertical axis. It can be large (as in
pharmaceuticals, where patents result in a substantial advantage), or small (as
Đorđe Kaličanin
in the fashion industry, where popular designs can be imitated quickly). Aer
the build-up period comes the benet period during which a company enjoys
the benets of competitive advantage. e length of this period depends on both
the responses of the followers and the success of pioneers in enhancing and
strengthening their position in the market. e overall magnitude of pioneer
competitive advantage depends on the extent to which followers: 1) benet from
the dierence between innovation costs and imitation costs, 2) exploit saving
innovation costs, 3) capitalize on the pioneer’s mistakes, 4) benet from economies
of scope, and 5) inuence/change consumer preferences (Kerin et al, 1992: 47). If
followers are successful, the period of competitive advantage erosion begins.
Figure 1. Building and Eroding of Competitive Advantage
(Source: ompson, Strickland, 2003: 186.)
Generally, the greatest rst-mover advantage is in being the market leader and
in maximizing early revenues from the products/services. anks to the initial
temporary monopoly from innovation, pioneers are in a position to charge
higher prices for their products, and thus maximise prots. is strategy is
popularly called “skimming the cream. Pioneers can also create new sources
of revenue through licensing, but this generally produces the lowest rewards for
In most cases, pioneers continue to hold the biggest market share even aer the
entry of followers into the same market. High protability can be maintained
through high entry barriers in the form of resource control (control of technology,
locations, managers and key employees).Also, the inevitable learning curve can
positively inuence the pioneer’s market share. ese advantages are summarized
in the teachings of one of the greatest military theorists ever, Chinese general
Sun Tzu. Sun Tzu wrote: “Generally, whoever comes rst to the battleeld, and
awaits the enemy, will be rested; but, whoever comes last and has to gostraight
into battle, will be tired. So, one who is skilled in war constrains the others but is
not constrained by the others” (Cu Sun, 2005: 81).
High switching costs also benet the pioneer. ere is inevitably a cost to the
customer to switch to a follower’s product. Naturally, a pioneer has to continuously
improve his own product, in case followers oer an alternative whose enhanced
performance outweighs switching costs.
e main rst-mover disadvantages (Lieberman, Montgomery, 1988) are: 1)
freerider benets to followers, 2) market and technological uncertainties, 3)
unforeseen changes in technology or customer needs, and 4) incumbent inertia,
which results in the gradual updating of existing technology, rather than the
adoption of new and improved technologies. Several factors inuence the size of
the risk in being a pioneer. For instance, R&D (research and development) costs
involved in innovation can be so high that they may not be recovered in revenues.
It is logical that the risks associated in a completely new product are greater than
those associated with incremental product changes (Min et al, 2006).
Another dicult task faced by pioneers is in creating primary demand for a
completely new - and non-branded - product. Educating customers about a novel
product can be very expensive. Nevertheless, pioneers usually have longer market
lives than their followers. In contrast, followers try to create selective demand, for
a specic brand. In their case, technological standard has been established by the
pioneer, hence they avoid these costs.
Bandwagon eects can increase the risk to followers. Bandwagons appear
when companies make strategic decisions - such as new-product development,
technological innovation, or even an acquisition - in response to the actions of
other companies (McNamara et al, 2008). Institutional bandwagon pressures
appear when non-adopters are pressured to mimic the actions of early adopters
to avoid appearing dierent. Competitive bandwagon pressures appear when
non-adopters fear they may be disadvantaged. Bandwagon companies oen base
decisions on informal information, ignoring criteria used in rational decision
making processes. Very oen heuristics are used, thus company XYZ has an
excellent track record, so, if we follow them, we will not make a mistake”.
Đorđe Kaličanin
Networks are currently envisaged as company environments in which value for
customers is created. Consequently, when discussing new management challenges,
we compare how networks compete against networks, rather than companies
competing against companies (Cares, 2006: 40-41). is has implications with
respect to choice of pioneer or follower strategies. New products created through
eective cooperation of networked members are more likely to dominate new
markets. ere are also associated risks.
In the context of networking achieving pioneering advantages, consider
innovation ecosystems. Innovation ecosystems are forms of strategic alliances
focused on new technology and new product development. rough them, rms
combine their individual oerings (in the form of parts) into a coherent, customer-
facing solution (in the form of a nal product). e total risk in these innovation
ecosystems consists of initiative risk, interdependence risk, and integration risk
(Adner, 2006).
Initiative risk is a type of risk inherent in every new venture. ere are a lot of
unknowns with the launch of any new product or service, both technical (does
it do what it’s supposed to) and with respect to marketing (is it acceptable to the
Interdependence risk is associated with the uncertainties of coordinating the
relevant contributors. We can estimate the joint probability that dierent partners
will be able to satisfy their commitments within a specic time frame. For
instance, suppose that each of three suppliers has a 0.9 probability of success in
developing a part of the whole product. In that case, the probability of launching
the new product on time is 0.66, or 66%. is probability is the product of the
probabilities for successful completion of every partner, i.e. 0.9 x 0.9 x 0.9.
e nal type is integration risk. It is concerned with the uncertainties in the
adoption process across the value chain. Time is required for all intermediaries
in value chains to become aware of the product, sample it, and make orders.
Logically, the more intermediaries, the bigger the integration risk for customer
acceptance and loyalty. For instance, a at-screen TV manufacturer needs eight
months to bring a new screen to production. End consumers need four months
to become aware of a new product before they start to buy it in signicant
numbers. Realistically, suppliers need six months to develop inputs for at-screen
manufacturers. If we add two months for the distributors to stock the product
and train the sales force, the integration period will be 20 months (8+4+6+2).
If a at-screen manufacturer is able to allocate additional resources and reduce
development time by 50%, a saving of four months will be made. Now, the total
integration period will be 16 months (4+4+6+2), and there is a greater chance of
achieving the product-launch target.
3. Conditions for Implementing Pioneer and Follower Strategies
e resource-based view of companies is a concept oen explored in the search
for competitive advantage. is holds that competitive advantage is a positive
consequence of the exploitation of resources that are valuable, rare and dicult
to imitate. How long it lasts, is not simply a question of time ow, nor is it strongly
connected with the patent period. e time competitive advantage lasts is a
function of the time spent creating a pool of superior resources. e resources
needed for a pioneer to succeed are dierent from those required by a follower.
In the case of technology, success oen depends on radical changes, which
are frequently the consequences of scientic discoveries. Accordingly large,
nancially-strong companies with well developed and funded (R&D) programmes
are best positioned to be technological pioneers.
However, great technological pioneering will only gain market leadership if it is
followed by successful commercialization. Innovative technological pioneering
and market leadership do not always go hand-in-hand. Examples of success include
Gillette in safety razors and Sony in personal stereos. But other companies failed
in the commercialization of technological innovation, e.g. Xerox in fax machines,
eToys in Internet retailing (Suarez, Lanzolla, 2005), Bowmar in calculators, and
EMI in scanners (Mittal, Swami, 2004). Examples of followers gaining greater
market share than pioneers include Seiko in quartz watches, and Matsushita in
VHS VCR (Mittal, Swami, 2004).
Market leadership for pioneers is a consequence of temporary monopoly based
on innovation. is needs to be defended and improved by carefully formulated
and implemented strategies for innovation, distribution, pricing and promotion.
Increasing investment in advertising and price cutting are the most frequently
used ways of retaining market share (Urban et al, 1986). If a technological
pioneer lacks marketing competencies, early followers will soon erode the initial
In contrast, the critical success factors for followers are strong competencies in
production and marketing. Followers can gain advantages in cases when they
Đorđe Kaličanin
possess valuable assets, when learning curve eects are not crucial for prot,
when customers have lower switching costs, and when the market is growing
slowly. Clear positioning and strong promotion are essential for the market
success of followers.
Some followers invest signicant amounts of money in R&D, but, unlike pioneers,
investment is narrowly focused into areas giving the best returns. Michael Dell
has said that Dells R&D strategy is shareholder focused. R&D projects result in
product characteristics valued by customers who are prepared to pay for them.
ose companies who invest in things that are technically interesting, but not
valued by customers, are “over-inventing” (Stewart, O’Brien, 2005).
e choice whether to be a pioneer or a follower is strategic decision. e correct
approach is to start by accurately establishing the current and future internal
capabilities of the company. e choice depends on the likely length of rst-
mover advantage. is period is determined not only by the internal resources
of the company but also by industry dynamics (Suarez, Lanzolla, 2005) or
environmental dynamics (Suarez, Lanzolla, 2007). Industry (environmental)
dynamics are created by the interaction of two important factors: the pace of
technological evolution and the pace of market evolution. Both factors are
external and beyond the control of any single company.
e pace of technological evolution refers to the number of performance
enhancements with time. Some technologies, such as computer processors,
evolve in series of incremental improvements. Other technologies, such as digital
photography evolved in sudden, disruptive bursts, with little or no connection
with earlier technology (digital photography actually started to displace lm).
Regarding the pace of technological evolution, the faster or more disruptive it is,
the more dicult it is for any enterprise to control.
e pace of market evolution refers to market penetration - the number of
customers who bought the product in a specic time period. e market for
automobiles and xed telephones evolved more slowly than the market for VCRs
and cellular telephones. Fixed telephones took more than 50 years to reach 70% of
households. Cellular telephones achieved the same level in less than two decades
(Suarez, Lanzolla, 2005: 123). Regarding the pace of market evolution, the greater
the dierence between old and new product, the greater the uncertainty about
the pace of market growth and the number of market segments.
e combined eects of market and technological change determine a company’s
chances of achieving a rst-mover advantage (see the gure 2).
Figure 2. e Combined Eects of Market and Technological Change
(Source: Suarez, Lanzolla, 2005: 124)
ere are four possible combinations. “Calm Waters” represents the situation
where both technology and market grow slowly. e gradual evolution of both
factors allows pioneers to create long-lasting dominant positions. e slow pace of
technology evolution makes it dicult for followers to dierentiate their products.
e slow pace of market evolution helps pioneers to create, defend and develop
new market segments. Scotch tape is an original product of the very innovative
company 3M, which has maintained rst-mover advantage. For this combination,
resources are of less importance for defending competitive advantage. One of
the more relevant is brand, others may be physical assets, location and nancial
When “the market leads, and technology follows” describes situations where the
technology evolves gradually but the market grows quickly. It is very likely that
rst-mover advantage will be short-lived (as in the case of Howe sewing machine,
aer Singer entered the market). First-mover advantage can be through superior
Đorđe Kaličanin
design, marketing, branding and capacity production (using all these strategies,
Sony maintained a long lasting advantage with the Walkman, the rst personal
When “technology leads and the market follows” is the situation where the
market evolves gradually but the technology evolves rapidly. Success in these
circumstances requires signicant R&D eort backed by strong nances. is
is exemplied by digital cameras. Sony launched the rst digital camera, the
Mavica, but sales remained stagnant for a decade. Aer many performance
upgrades, sales nally started to increase. roughout this period Sony kept a
leadership position in the USA market.
“Rough waters” describes situations where both the technology and the market
evolve rapidly. Sustaining rst-mover advantage is very dicult as it requires
superior resources in R&D, production, marketing and distribution. In this
situation pioneers become vulnerable very soon. A good example is the case of
Netscape, the rst Internet browser created in 1994. Today, Microso Explorer
is dominant. However, Netscape created wealth for its shareholders, since AOL
paid around $10 billion to the owners. On the other hand, Intel is an example of
a company that has strongly defended its leadership position, through signicant
and focused investment into resources, as well as acquisitions.
From the above, we can conclude that, in some situations, the creation of rst-
mover advantage can be time-consuming, expensive and ultimately unsustainable.
In such situations, it is wiser to be a follower.
e success of market pioneer strategy, in the sense of rapid penetration of a
new market before competitors, depends on identication of challenges and
risks specic to the targeted market. is includes analyzing company resources,
predicting market growth, and forecasting future relationships with competitors.
e emphasis today is on emerging markets, those markets inside states that have
accepted the economic model of developed countries in the past few decades.
China, India and Brazil are the largest, but similar characteristics are found in
the Southeastern European countries, including the Republic of Serbia.
Emerging markets are characterized by uncertainty. Pioneers have to minimize
those uncertainties and prots are oen less than in other markets. Followers
usually enter when market conditions stabilize, the infrastructure is in place and
customers educated. One way to minimize the risk is to enter through a joint
venture with a local partner. Such partners can possess important resources, such
as knowledge of local markets and distribution channels (Cui, Lui, 2005).
Successful penetration of emerging markets oen depends on the image of the
country of origin of the pioneer. Customers are usually prepared to pay a premium
for products which come from developed countries with high reputations,
especially the USA, Japan or Germany (Gao, Knight, 2007). is preference is
most marked for products associated with a specic country, e.g. Swiss watches
or Scotch whiskey. Country images are not the creation of individual companies,
but rely on the concerted eorts of national government agencies and individuals
over a long period.
4. Conclusion
e process of strategic business planning consists of making a series of choices:
generic strategy, method of growth, diversication strategy, product-market
segment selection etcOne of the most important is the choice of timing or
market entry - when to develop and commercialize new products and technologies
and when to enter new markets. ere are two options: to be a pioneer or to be
a follower. Followers also have to decide whether to be early or late entrants. All
options have advantages and risks. Research suggests followers may fare slightly
better than pioneers but, logically, the outcome should depend on the specic
characteristics of each new market (Lieberman, Montgomery, 1998:1122).
e magnitude and durability of pioneer competitive advantage drives rst-
mover strategy. In most cases, pioneers enjoy benets in the form of a greater
market share; but market share is only one performance measure. Planners must
also consider other, possibly more relevant, factors such as protability, or sales
growth. Concentrating on shareholder focus and value-based measurements will
increase the chance of making the correct strategic choice.
Most current strategic management approaches emphasize the importance of
possessing strong internal resources and competencies for implementation. e
resource-base determines choice of strategy. A pioneer strategy implies greater
R&D and nancial resources. A follower strategy implies strength in marketing
and production. is is of great importance when allocating limited resources.
Understanding internal resources and competencies is the rst pillar or strategic
Đorđe Kaličanin
e duration of the rst-mover advantage period depends on both internal and
external factors. e latter are beyond the control of any single enterprise. An
understanding of external constraints on entry order and lead times is the second
pillar of strategic analysis. Two external factors are especially important: the
pace of technological change and the pace of market evolution. Rapid changes
in both generally reduce the period of rst-mover advantage. In the current
Internet era, both technological and market evolution happen almost in real
time. Internet-based technologies promote the emergence of new businesses and
the transformation of old. is constant creation of market entry opportunities
presents new challenges for strategic management in the 21
century, and potential
areas for future research.
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... Although the pioneer role is generally considered the better strategic option in innovation studies (Lieberman and Montgomery, 1988), it has some drawbacks. Regarding the benefits, the literature has shown that early technology adopters stand to gain substantial rewards, such as a positive image and reputation as a technological pioneer, the retention of current consumers and ability to attract new ones, and the development of superior innovations that competitors cannot easily replicate (Alpert et al., 2001;Covin et al., 2000;Dorde, 2008;Lee et al., 2010 Parry andBass, 1989). Regarding the drawbacks, the most important ones are related to free-rider benefits that followers gain, market and technological uncertainties, unforeseen changes in technology or customer needs, and incumbent inertia, which requires a gradual updating of existing technology rather than the adoption of new and improved technologies (Lieberman and Montgomery, 1988). ...
... In summary, the choice between these two strategic options is largely connected to the cost of innovation and the cost of imitation. The choice is also determined by the cost of brand switching if the follower's technology outperforms the pioneer's technology (Dorde, 2008;Lieberman and Montgomery, 1988). According to Pantano (2016), being an innovation pioneer in retailing often means being the first to provide a new experience. ...
... Retailers oriented primarily toward process innovation that frame technological advances as a resource are frequently first movers. By introducing technologies that modify the way retail processes are conducted and retail experiences are provided, initiators achieve, or at least strive for, first-mover advantages (Alpert et al., 2001;Covin et al., 2000;Dorde, 2008;Lee et al., 2010;Parry and Bass, 1989). Initiators are generally willing to invest in technologies that are new to the market and to the business. ...
Luxury organizations have traditionally resisted technology, as they perceived it to be antithetical to the values of luxury. Recently, however, competitive and market pressures, compounded by the global pandemic, have prompted luxury organizations to utilize significant technological innovations to enhance their customer experience, mostly on an ad hoc basis. Across four case studies in the luxury fashion retail sector, we conduct 12 interviews with managers. This paper advances a framework that encourages luxury organizations to consider technological innovation in retailing from a strategic point of view. Such a view involves contemplating questions regarding what technology type to adopt (radical vs. incremental) and when the best timing is to adopt the technology (pioneering vs. following technological leaps). The framework identifies four retailer roles that emerge from the innovation process: facilitator, enabler, explorer, and initiator. Each role comprises a different set of risks, resource implications, and expected returns.
... The pioneering/following strategy reflects the higher or lower level of leadership/followership in the market (Parra-Requena et al., 2012). On the one hand, past researches outlined how the first market entry might reward pioneers (Alpert et al., 2001;Carsonet al., 2007;Covinet al., 1998;Kaličanin, 2008;Jakopin & Klein, 2012), whereas, on the other hand, different studies identified the higher risks encountered by pioneers and the subsequent threat to be the first to fail (Minet al., 2006;Muelleret al., 2012;Robinson & Min, 2002). ...
... Advantages for pioneers can be listed as follows: (i) acquiring a positive image and reputation of being an innovator and a leader in the industry, (ii) reducing management costs due to the support of new technologies, (iii) maintaining and acquiring loyal consumers, (iv) making imitation strategies as difficult as possible for their competitors, (v) reaching a unique and differentiated positioning, and (vi) acquiring and accumulating competitive advantages connected to experience and network externalities, which tend to support each other and to strengthen over time (Kaličanin, 2008;Pantano, 2014;Spence, 1981). ...
... In contrast, the main disadvantages are: (i) market and technological uncertainty, (ii) unpredictable changes in technology and in consumers' needs (especially after the introduction of the innovation), (iii) free-rider benefits to followers, (iv) incumbent inertia, which implies the difficulty of pioneers in changing their business practices in accordance with the market changes, and results in the gradual improvement of existing technology rather than the introduction of a totally new technology, and (v) difficulties in creating a new demand for a totally new product or brand (Kaličanin, 2008;Finney et al.,1988;Min et al., 2006). ...
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Although innovating in the physical stores has become a challenge for retailers, previous studies provided insights based primarily on consumers’ and employees’ acceptance of technology, with limited attention towards specific practices for successful adopting innovations. Starting from a qualitative analysis of pioneering strategies adopted by a sample of 50 retailers in the Dutch market, this research is devoted to a broad investigation of the innovation management strategies with emphasis on the choice to be the first to innovate. Our findings provide a correlation between the pioneer practices and the sales outcomes, by describing the more favourable conditions for adopting this strategy in terms of time, place and innovation characteristics (i.e., typology). These results would support retailers in the choice of innovating and managing the innovation process.
... Also, some studies use concepts such as "pioneer", "first entrant" or "first mover" (Song et al., 2013) and it is (Lieberman & Montgomery, 1998) who wondered if the "first mover" is defined based on its entry into the market, supported by (Carpenter & Nakamoto 1989) that defines pioneer as that company that introduces a product before others, (Golder & Tellis, 1993) provides another definition: "the first company to sell in a new product category". The greatest advantage that a pioneer can get is to become the market leader, achieving higher initial income and being the first to put the product on the market, it will become a unique company, monopolizing the business temporarily (Kaličanin, 2008). Financially, it creates sources of income through patents, copyrights, and use of licenses; commercially, they develop image and market positions by being the first to place the product, achieving customer loyalty through the creation of a database of loyal (Thompson & Strickland 2003). ...
... Also, some studies use concepts such as "pioneer", "first entrant" or "first mover" (Song et al., 2013) and it is (Lieberman & Montgomery, 1998) who wondered if the "first mover" is defined based on its entry into the market, supported by (Carpenter & Nakamoto 1989) that defines pioneer as that company that introduces a product before others, (Golder & Tellis, 1993) provides another definition: "the first company to sell in a new product category". The greatest advantage that a pioneer can get is to become the market leader, achieving higher initial income and being the first to put the product on the market, it will become a unique company, monopolizing the business temporarily (Kaličanin, 2008). Financially, it creates sources of income through patents, copyrights, and use of licenses; commercially, they develop image and market positions by being the first to place the product, achieving customer loyalty through the creation of a database of loyal (Thompson & Strickland 2003). ...
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The present investigation analyzes how the dynamism of the environment affect the relationship be-tween the capacity of adaptation and the pioneering behavior in the companies of the tourism sector in Peru. The empirical study was carried out in 238 tourist companies located in the cities of Lima, Arequipa and Cuzco considered as a cultural heritage of Perú. Regarding to the results achieved in the study, the proposed model allows detecting a direct, significant effect between the ability to adapt and pioneering behavior, whose relationship is accentuated through market dynamism and technological dynamism, and is weakened by competitive intensity. This work contributes to the ex-isting theory and demonstrates through practical application the linkage of the dimensions of the dy-namism of the environment as drivers of adaptive capacity in companies in the cultural tourism sec-tor that are necessary to obtain advantages for a behavior Pioneer in an existing competitive market.
... Therefore, it is pertinent for an entrepreneur to identify the different stages of its business in the industry, hence take decision on the strategy that will propel the venture to the next stage in the life cycle. Industry life cycle is the natural stages that an entrepreneurial venture goes through during the course of its lifecycle in the marketplace (Kaličanin, 2008). It traces the evolution of a given industry based on the business features commonly displayed in each stage. ...
... The answers related to the principal business or market entry strategy (pioneer or follower) were quite different. Usually, pioneers benefit from various advantages related to being the first in the market, such as greater market share and/or sales growth (Kalicanin, 2008). However, these advantages are associated with risks; for instance, the new product may not work, or it may not be well received by the market. ...
Recent developments in the global economy indicate that new product development (NPD) activities are not limited to any single country; rather, they have spread across nations and cultures. This study aims to increase the understanding of NPD through an intercultural analysis by comparing innovation processes in Germany and China. Our study relates NPD and Hofstede's cultural dimensions by identifying culture-based patterns of similarities and differences between German and Chinese practices related to strategic, organisational, and operational factors. The research subjects are five international companies with research and development sites of the same business section in Germany and China. The findings reveal both culturedependent and culture-independent factors. Most of the strategic and organisational factors in the two countries are relatively similar because of sitespanning corporate cultures, but there are differences between the countries with regard to idea generation and management.
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Radical changes of business environment have been caused by growing globalization at the beginning of the 21st century. Consequently, a strong network of trade and investment relationships between national economies has been established. Although it entails many risks, global business environment opens up great opportunities, as well. In order to seize these opportunities, many companies from emerging markets internationalize their business operations, and thus challenge once untouchable leaders from developed countries. Traditional theories on multinational companies cannot fully explain their motives for going abroad. Recently, the automotive industry has become a new field where the late followers from emerging markets try to challenge the leaders. This paper includes the following three case studies: Hyundai - Kia, Geely - Volvo, and Tata Motors - Jaguar Land Rover. These case studies show that although the late followers in the automotive industry use different internationalization strategies, they all perceive internationalization as a means of obtaining the lacking competencies and building up a positive reputation.
Purpose – The innovation success requires a deep understanding of risks and benefits of the process, as well as of the best moment for innovating. The purpose of this paper is to explore the current retailers’ choice of innovating in terms of being the first innovator imitating competitors’ innovations, by declining the benefits and risks associated with the both strategies. Design/methodology/approach – Building on qualitative data from retail industry, with emphasis on fashion (including clothes, jewelry, and accessories), the investigation provides an empirical contribution to the emerging area on innovation management in retailing through its in-depth investigation of the strategies of eight case retailers who introduced technological innovations in the last three years, and by mapping the patterns between strategy and outcomes. Findings – The analysis revealed how pioneers and followers acted their strategies for achieving benefits and reducing the encountered risks. In particular, findings identify to what extend pioneers act according the technology push and followers according to the demand pull. Originality/value – The research starts from the definition of the time choice of innovating, and the subsequent choice of being the first innovation adopter or the imitator. The insights support scholarly exploration of innovation management by offering a new marketing management perspective, and providing practitioners with a better understanding on the time choice for innovating in retailing and also in broader empirical settings.
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Acquisitions often occur in waves within industries. We extend the theoretical understanding of such waves by drawing upon research on early mover advantage and bandwagon effects to develop arguments regarding the likely performance potential of participating at different points in an acquisition wave. In line with our theoretical model, we find acquisition performance is higher for early movers but lower for acquirers that participate at the height of the acquisition wave. Although we find this general performance trend, our findings suggest both industry and acquirer characteristics influence the degree to which firms seize early mover advantages or fall prey to bandwagon pressures.
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Does the first entrant in a new market have a difficult time surviving or do first-mover advantages provide protection from outright failure? This empirical study of 264 new industrial product-markets yields insights into this controversial research topic. The key data analysis insights arise through a comparison of survival risks in markets that were started with a really new product and in those that were started with an incremental innovation. When a pioneer starts a new market with a really new product, it can be a major challenge just to survive. In contrast, in markets started by an incremental innovation, market pioneer survival risks are much lower. Notably, early followers have the same survival risk across both types of markets. Overall, these results indicate that in markets started by a really new product, the first to market is often the first to fail. In contrast, in markets started by an incremental innovation, it appears that first-mover advantages protect the pioneer from outright failure.
Along-standing hypothesis is that firms that enter a market early ("first movers") tend to have higher performance than their followers ("first-mover advantage"). Recently, researchers have begun to argue that the statistical tests that support this relationship are limited in their applicability. That is, it is suggested that because of the methods used, these tests show the relationship only for certain subsets of firms, markets, and types of performance. We performed a meta-analysis to determine whether the findings are in fact sensitive to the methods used. We discovered that tests using market share as their performance measure were sharply and significantly more likely to find a first-mover advantage than tests using other measures (such as profitability or survival). Also significantly more likely to find an advantage were tests that sample from individually selected industries and those that include no measures of the entrants' competitive strength. Conversely, we found little evidence that "survivor bias" (the exclusion of nonsurviving entrants from the sample) affects a test's findings. The data further suggest that tests that use none of the questioned research practices will find a first-mover advantage no more often than can be accounted for by random statistical error alone.
We advance first mover advantage (FMA) theory by examining how the pace of market evolution and technology evolution potentially enables or disables FMA. Integrating several streams of literature, we elaborate on the interplay among these two environmental (macro) conditions and the "isolating mechanisms" that underpin FMA. We model these dynamics to help researchers negotiate the current debate, arising from conflicting empirical evidence, on the conditions necessary for FMA to exist.
Executive Overview Technological pioneering, the creation and successful commercialization of technology, is among a company's most potentially viable strategies. However, it cannot succeed without skilled management that (re)defines the company's strategic goals and competencies. Without managerial resourcefulness, pioneering becomes tantamount to unplanned adventure into unforgiving markets. Technological pioneering that is carefully planned and strongly supported by an appropriate structure and an effective marketing plan can propel a company into a position of market leadership.
This article reflects upon and updates our prize-winning paper, ‘First-mover advantages,’ which was published in SMJ 10 years ago. We discuss the evolution of the literature over the past decade and suggest opportunities for continuing research. In particular, we see benefits from linking empirical findings on first-mover advantages with the complementary stream of research on the resource-based view of the firm. © 1998 John Wiley & Sons, Ltd.
Drawing on the resource-based view, this study examines the contingency effects of industry- and firm-level variables on the first-mover advantages and effective follower strategies in an emerging-market context. Using hierarchical regressions, the authors analyze a large data set of foreign investors in China. Contingency models that include the interactions of entry order with the moderating variables have better fit of the data than the main-effect models. Industry growth and competition, firm size, entry mode, resource commitment, and marketing intensity have significant moderating effects on first-mover advantages. After the authors correct for multicollinearity bias using ridge regression, it seems that pioneers still enjoy a small advantage in market share but not in profitability, indicating a trade-off between the two. Furthermore, followers may augment performance by increasing resource commitment and marketing intensity. These findings have significant implications for entry-order strategies and for improving foreign direct investment performance in foreign markets; they also suggest meaningful directions for further research.
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.