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Can first‐mover and early‐mover advantages be sustained in an industry with low barriers to entry/imitation?
Author(s) -
Makadok Richard
Publication year - 1998
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/(sici)1097-0266(199807)19:7<683::aid-smj965>3.0.co;2-t
Subject(s) - first mover advantage , imitation , industrial organization , counterintuitive , product (mathematics) , business , sustainability , economics , market share , marketing , microeconomics , psychology , social psychology , ecology , philosophy , geometry , mathematics , epistemology , biology
This study examines whether first‐mover and early‐mover advantages can be sustained in an industry where the barriers to entry are generally low and new product innovations can be easily imitated—namely, the money market mutual fund industry. Using a simultaneous‐equation supply‐and‐demand model of panel data from a variety of money market fund product categories, the study finds that first‐movers and early‐movers enjoy both a highly sustainable pricing advantage and a moderately sustainable market share advantage. These counterintuitive results are interpreted in terms of the structural characteristics of demand in the industry. Implications of these results for the ongoing debate between the ‘sustainability’ and ‘hypercompetition’ perspectives are discussed. © 1998 John Wiley & Sons, Ltd.