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Pioneer burnout: Radical product innovation and firm capabilities

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  • Christina Guenther

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    Abstract

    The question of whether and when to enter a newly emerging product market has been the focus of practitioners as well as researchers. This paper contributes to the literature by investigating the order of entry as well as pre-entry experiences with a population-based approach for the radically new product market of multifunctional machine tools for the case of Germany between 1949 and 2002. Estimation results show, that later entrants outperform pioneers. Moreover, it turns out that industry and technology specific capabilities do not increase survival chances. But when decomposing the known positive age effect on survival, we see that particularly dynamic capabilities, i.e. the competence to integrate additional business activities into the current product portfolio, significantly lower the risk of failure in the new product market.

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    Paper provided by Max Planck Institute of Economics, Evolutionary Economics Group in its series Papers on Economics and Evolution with number 2009-22.

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    Date of creation: Dec 2009
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    Handle: RePEc:esi:evopap:2009-22

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    Keywords: Length 20 pages;

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    1. Schnaars, Steven P., 1986. "When entering growth markets, are pioneers better than poachers?," Business Horizons, Elsevier, vol. 29(2), pages 27-36.
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    8. Richard Schmalensee, 1978. "Entry Deterrence in the Ready-to-Eat Breakfast Cereal Industry," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 305-327, Autumn.
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    16. Dirk Fornahl & Christina Guenther, 2009. "Persistence and Change of Regional Industrial Activities – The Impact of Diversification in the German Machine Tool Industry," Papers on Economics and Evolution 2008-16, Max Planck Institute of Economics, Evolutionary Economics Group.
    17. Edward C. Prescott & Michael Visscher, 1977. "Sequential Location among Firms with Foresight," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 378-393, Autumn.
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