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Innovative leadership: First-mover advantages in new product adoption

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  • Richard Jensen

Abstract

This paper analyzes innovation adoption when uncertainty about its profitability cannot be resolved immediately. Firms begin with a common estimate of the probability of high demand. If any adopts, all observe realized demand. An increase in the initial estimate can decrease the equilibrium number of initial adopters, because it results in higher updated estimates that can induce future adoption by additional firms that reduces the initial adoption payoff. Moreover, innovative leadership does not imply initial adoption because leadership implies a greater waiting payoff as well as a greater adoption payoff. Leadership does, however, still provide a higher expected payoff. Copyright Springer-Verlag Berlin Heidelberg 2003

Suggested Citation

  • Richard Jensen, 2003. "Innovative leadership: First-mover advantages in new product adoption," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(1), pages 97-116, January.
    • Handle: RePEc:spr:joecth:v:21:y:2003:i:1:p:97-116
    DOI: 10.1007/s00199-002-0263-1
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    Citations

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    Cited by:

    1. Zach, Florian J. & Nicolau, Juan L. & Sharma, Abhinav, 2020. "Disruptive innovation, innovation adoption and incumbent market value: The case of Airbnb," Annals of Tourism Research, Elsevier, vol. 80(C).
    2. Sabatier, Mareva & Chollet, Barthélemy, 2017. "Is there a first mover advantage in science? Pioneering behavior and scientific production in nanotechnology," Research Policy, Elsevier, vol. 46(2), pages 522-533.
    3. Emmanuel Dechenaux & Brent Goldfarb & Scott A. Shane & Marie C. Thursby, 2003. "Appropriability and the timing of innovation: Evidence from MIT inventions," NBER Working Papers 9735, National Bureau of Economic Research, Inc.
    4. Emmanuel Dechenaux & Brent Goldfarb & Scott Shane & Marie Thursby, 2008. "Appropriability and Commercialization: Evidence from MIT Inventions," Management Science, INFORMS, vol. 54(5), pages 893-906, May.
    5. Vedel, Suzanne Elizabeth & Thorsen, Bo Jellesmark & Jacobsen, Jette Bredahl, 2009. "First-movers, non-movers, and social gains from subsidising entry in markets for nature-based recreational goods," Ecological Economics, Elsevier, vol. 68(8-9), pages 2363-2371, June.
    6. Fumio Teramae & Tomohiro Makino & Shintaro Sengoku & Yeongjoo Lim & Takashi Natori & Kota Kodama, 2020. "Research on Pharmaceutical Product Life Cycle Patterns for Sustainable Growth," Sustainability, MDPI, vol. 12(21), pages 1-13, October.
    7. Miller, David A., 2008. "Invention under uncertainty and the threat of ex post entry," European Economic Review, Elsevier, vol. 52(3), pages 387-412, April.

    More about this item

    Keywords

    Keywords and Phrases: Adoption; Innovation; Leadership; First-mover advantage.; JEL Classification Numbers: C73; O31; O33.;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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