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Competitor See, Competitor Do: Incumbent Entry in New Market Niches

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  • Marion Debruyne

    (Goizueta Business School, Emory University, 1300 Clifton Road, Atlanta, Georgia 30322)

  • David J. Reibstein

    (Wharton School, University of Pennsylvania, 700 Jon M. Huntsman Hall, 3730 Walnut Street, Philadelphia, Pennsylvania 19104)

Abstract

The ability to keep up with changing technology is critical for a company's long-term survival. However, companies have to balance the risk of rushing into new areas and potentially cannibalizing their existing business against the risk of missing the emerging market. This paper investigates when incumbents enter into new market niches created by technological innovation. We argue that market conditions and company-specific characteristics do not suffice to explain incumbents' entry timing, but that entry is a contagious process. Our results demonstrate that incumbents are more likely to respond to innovations in their industry when their counterparts do so. In particular, we show that incumbents are affected by the entry of firms that are similar in size and resources. When a highly similar company enters the new market, it raises the probability that the company enters itself beyond levels based solely on the attractiveness of the market.

Suggested Citation

  • Marion Debruyne & David J. Reibstein, 2005. "Competitor See, Competitor Do: Incumbent Entry in New Market Niches," Marketing Science, INFORMS, vol. 24(1), pages 55-66, December.
    • Handle: RePEc:inm:ormksc:v:24:y:2005:i:1:p:55-66
    DOI: 10.1287/mksc.1040.0064
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    7. Catherine Tucker & Juanjuan Zhang, 2008. "Decomposing the Congestion Effect and the Cross-Platform Effect in Two-Sided Networks: A Field Experiment," Working Papers 08-12, NET Institute, revised Oct 2008.
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    10. Gijsenberg, Maarten J. & Nijs, Vincent R., 2019. "Advertising spending patterns and competitor impact," International Journal of Research in Marketing, Elsevier, vol. 36(2), pages 232-250.
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    15. Kelchtermans, Stijn & Neicu, Daniel & Teirlinck, Peter, 2020. "The role of peer effects in firms’ usage of R&D tax exemptions," Journal of Business Research, Elsevier, vol. 108(C), pages 74-91.
    16. Hann Earl Kim & Johannes M. Pennings, 2009. "Innovation and Strategic Renewal in Mature Markets: A Study of the Tennis Racket Industry," Organization Science, INFORMS, vol. 20(2), pages 368-383, April.
    17. Ian Sinapuelas & William Robinson, 2009. "Entry for supermarket feature me-too brands: An empirical explanation of incidence and timing," Marketing Letters, Springer, vol. 20(2), pages 183-196, June.
    18. Catherine Tucker & Juanjuan Zhang, 2010. "Growing Two-Sided Networks by Advertising the User Base: A Field Experiment," Marketing Science, INFORMS, vol. 29(5), pages 805-814, 09-10.
    19. Corey M. Angst & Ritu Agarwal & V. Sambamurthy & Ken Kelley, 2010. "Social Contagion and Information Technology Diffusion: The Adoption of Electronic Medical Records in U.S. Hospitals," Management Science, INFORMS, vol. 56(8), pages 1219-1241, August.
    20. Karen Ruckman & Nilesh Saraf & Vallabh Sambamurthy, 2015. "Market Positioning by IT Service Vendors Through Imitation," Information Systems Research, INFORMS, vol. 26(1), pages 100-126, March.
    21. Zhe OuYang & Peng Cheng & Yang Liu, 2020. "The role of product line breadth, product pre-entry experience, and market uncertainty in explaining followers’ speed of feature entry," Review of Managerial Science, Springer, vol. 14(6), pages 1221-1249, December.
    22. Øyvind Bjørgum, 2016. "MNCs entering an emerging industry: The choice of governance mode under high uncertainty," Cogent Business & Management, Taylor & Francis Journals, vol. 3(1), pages 1258135-125, December.
    23. Christian Garavaglia & Claudia Sartirana, 2022. "Incumbent vs. New Firms’ Entry into an Innovative Niche Market: Electric Motorcycles in Italy, 2010–2021," Sustainability, MDPI, vol. 14(11), pages 1-20, May.
    24. Germann, Frank & Lilien, Gary L. & Rangaswamy, Arvind, 2013. "Performance implications of deploying marketing analytics," International Journal of Research in Marketing, Elsevier, vol. 30(2), pages 114-128.
    25. König, Andreas & Schulte, Martin & Enders, Albrecht, 2012. "Inertia in response to non-paradigmatic change: The case of meta-organizations," Research Policy, Elsevier, vol. 41(8), pages 1325-1343.

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