IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Disentangling Pioneering Cost Advantages and Disadvantages

Listed author(s):
  • William Boulding

    ()

    (Fuqua School of Business, Duke University, Durham, North Carolina 27708)

  • Markus Christen

    ()

    (INSEAD, 77305 Fontainebleau, France)

Registered author(s):

    Existing literature discusses a number of possible pioneering cost advantages and disadvantages. In this paper, we empirically test three different sources of long-term pioneering cost advantage—, and —and three different sources of pioneering cost disadvantage—, , and . We disentangle these sources by breaking total cost of a business unit into three different components—purchasing, production, and selling, general, and administrative (SG&A) costs—and identifying conditions that intensify or reduce the effect of the proposed source. Using two samples of business units, one for consumer goods and one for industrial goods, we find support for five of the six sources of pioneering cost advantage and disadvantage in both samples, while the advantage due to preemption of ideal market space is limited to the consumer goods sample. The unconditional analysis shows a pioneering purchasing cost but even larger pioneering production and SG&A cost . The complexity of our obtained findings suggests that managers need to think carefully about their particular conditions before making assumptions about the cost and, therefore, profit implications of a pioneering strategy.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://dx.doi.org/10.1287/mksc.1070.0324
    Download Restriction: no

    Article provided by INFORMS in its journal Marketing Science.

    Volume (Year): 27 (2008)
    Issue (Month): 4 (07-08)
    Pages: 699-716

    as
    in new window

    Handle: RePEc:inm:ormksc:v:27:y:2008:i:4:p:699-716
    Contact details of provider: Postal:
    7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA

    Phone: +1-443-757-3500
    Fax: 443-757-3515
    Web page: http://www.informs.org/
    Email:


    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as
    in new window


    1. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    2. Gurumurthy Kalyanaram & William T. Robinson & Glen L. Urban, 1995. "Order of Market Entry: Established Empirical Generalizations, Emerging Empirical Generalizations, and Future Research," Marketing Science, INFORMS, vol. 14(3_supplem), pages 212-221.
    3. McLean, Richard P. & Riordan, Michael H., 1989. "Industry structure with sequential technology choice," Journal of Economic Theory, Elsevier, vol. 47(1), pages 1-21, February.
    4. Schmalensee, Richard, 1982. "Product Differentiation Advantages of Pioneering Brands," American Economic Review, American Economic Association, vol. 72(3), pages 349-365, June.
    5. Glen L. Urban & Theresa Carter & Steven Gaskin & Zofia Mucha, 1986. "Market Share Rewards to Pioneering Brands: An Empirical Analysis and Strategic Implications," Management Science, INFORMS, vol. 32(6), pages 645-659, June.
    6. Shantanu Bhattacharya & V. Krishnan & Vijay Mahajan, 1998. "Managing New Product Definition in Highly Dynamic Environments," Management Science, INFORMS, vol. 44(11-Part-2), pages 50-64, November.
    7. Pieter A. VanderWerf & John F. Mahon, 1997. "Meta-Analysis of the Impact of Research Methods on Findings of First-Mover Advantage," Management Science, INFORMS, vol. 43(11), pages 1510-1519, November.
    8. Claes Fornell & William T. Robinson & Birger Wernerfelt, 1985. "Consumption Experience and Sales Promotion Expenditure," Management Science, INFORMS, vol. 31(9), pages 1084-1105, September.
    9. Jonathan D. Bohlmann & Peter N. Golder & Debanjan Mitra, 2002. "Deconstructing the Pioneer's Advantage: Examining Vintage Effects and Consumer Valuations of Quality and Variety," Management Science, INFORMS, vol. 48(9), pages 1175-1195, September.
    10. Pankaj Ghemawat, 1991. "Market Incumbency and Technological Inertia," Marketing Science, INFORMS, vol. 10(2), pages 161-171.
    11. Kevin Lane Keller & Donald R. Lehmann, 2006. "Brands and Branding: Research Findings and Future Priorities," Marketing Science, INFORMS, vol. 25(6), pages 740-759, 11-12.
    12. Amemiya, Takeshi & MaCurdy, Thomas E, 1986. "Instrumental-Variable Estimation of an Error-Components Model," Econometrica, Econometric Society, vol. 54(4), pages 869-880, July.
    13. Gabszewicz, Jean & Pepall, Lynne & Thisse, Jacques-Francois, 1992. "Sequential Entry with Brand Loyalty Caused by Consumer Learning-by-Using," Journal of Industrial Economics, Wiley Blackwell, vol. 40(4), pages 397-416, December.
    14. Robert Jacobson, 1990. "Unobservable Effects and Business Performance," Marketing Science, INFORMS, vol. 9(1), pages 74-85.
    15. Robert Jacobson, 1990. "Unobservable Effects and Business Performance: Reply to the Comments of Boulding and Buzzell," Marketing Science, INFORMS, vol. 9(1), pages 92-95.
    16. Mansfield, Edwin & Schwartz, Mark & Wagner, Samuel, 1981. "Imitation Costs and Patents: An Empirical Study," Economic Journal, Royal Economic Society, vol. 91(364), pages 907-918, December.
    17. J. Luis Guasch & Andrew Weiss, 1980. "Adverse Selection by Markets and the Advantage of Being Late," The Quarterly Journal of Economics, Oxford University Press, vol. 94(3), pages 453-466.
    18. Pankaj Ghemawat & A. Michael Spence, 1985. "Learning Curve Spillovers and Market Performance," The Quarterly Journal of Economics, Oxford University Press, vol. 100(Supplemen), pages 839-852.
    19. William Boulding & Markus Christen, 2003. "Sustainable Pioneering Advantage? Profit Implications of Market Entry Order," Marketing Science, INFORMS, vol. 22(3), pages 371-392.
    20. Holly, Alberto, 1982. "A Remark on Hausman's Specification Test," Econometrica, Econometric Society, vol. 50(3), pages 749-759, May.
    21. Douglas Bowman & Hubert Gatignon, 1996. "Order of Entry as a Moderator of the Effect of the Marketing Mix on Market Share," Marketing Science, INFORMS, vol. 15(3), pages 222-242.
    22. William Boulding & Richard Staelin, 1993. "A Look on the Cost Side: Market Share and the Competitive Environment," Marketing Science, INFORMS, vol. 12(2), pages 144-166.
    23. Chaim Fershtman & Vijay Mahajan & Eitan Muller, 1990. "Market Share Pioneering Advantage: A Theoretical Approach," Management Science, INFORMS, vol. 36(8), pages 900-918, August.
    24. Breusch, Trevor S & Mizon, Grayham E & Schmidt, Peter, 1989. "Efficient Estimation Using Panel Data," Econometrica, Econometric Society, vol. 57(3), pages 695-700, May.
    25. William Boulding & Richard Staelin, 1995. "Identifying Generalizable Effects of Strategic Actions on Firm Performance: The Case of Demand-Side Returns to R&D Spending," Marketing Science, INFORMS, vol. 14(3_supplem), pages 222-236.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:inm:ormksc:v:27:y:2008:i:4:p:699-716. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.