IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v55y2009i11p1842-1860.html
   My bibliography  Save this article

Swift and Smart: The Moderating Effects of Technological Capabilities on the Market Pioneering-Firm Survival Relationship

Author

Listed:
  • April M. Franco

    (Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada)

  • MB Sarkar

    (Fox School of Business and Management, Temple University, Philadelphia, Pennsylvania 19122)

  • Rajshree Agarwal

    (College of Business, University of Illinois at Urbana-Champaign, Champaign, Illinois 61820)

  • Raj Echambadi

    (College of Business, University of Illinois at Urbana-Champaign, Champaign, Illinois 61820)

Abstract

We extend the concept of first-mover advantage to the context of high-technology industries with multiple product generations, and propose that the notion of first-mover advantage needs to be viewed not only through a dynamic lens, but also in conjunction with technological capability. Our main finding is that first-mover advantages are best understood in tandem with the firm's technological capabilities; early entry is beneficial only for pioneers that are technically strong. However, pioneers that are low on technological capabilities suffer from poor survival rates vis-à-vis market responders or nonentrants into new product generations.

Suggested Citation

  • April M. Franco & MB Sarkar & Rajshree Agarwal & Raj Echambadi, 2009. "Swift and Smart: The Moderating Effects of Technological Capabilities on the Market Pioneering-Firm Survival Relationship," Management Science, INFORMS, vol. 55(11), pages 1842-1860, November.
    • Handle: RePEc:inm:ormnsc:v:55:y:2009:i:11:p:1842-1860
    DOI: 10.1287/mnsc.1090.1061
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.1090.1061
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.1090.1061?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Adegbesan, Tunji & Ricart, Joan E., 2007. "What do we really know about when technological innovation improves performance (and when it does not)?," IESE Research Papers D/668, IESE Business School.
    2. James G. March, 1991. "Exploration and Exploitation in Organizational Learning," Organization Science, INFORMS, vol. 2(1), pages 71-87, February.
    3. Gambardella, Alfonso & Torrisi, Salvatore, 1998. "Does technological convergence imply convergence in markets? Evidence from the electronics industry," Research Policy, Elsevier, vol. 27(5), pages 445-463, September.
    4. David J. TEECE, 2008. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," World Scientific Book Chapters, in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 5, pages 67-87, World Scientific Publishing Co. Pte. Ltd..
    5. Christensen, Clayton M., 1993. "The Rigid Disk Drive Industry: A History of Commercial and Technological Turbulence," Business History Review, Cambridge University Press, vol. 67(4), pages 531-588, January.
    6. Erwin Danneels, 2007. "The process of technological competence leveraging," Strategic Management Journal, Wiley Blackwell, vol. 28(5), pages 511-533, May.
    7. James R. Dorroh & Thomas R. Gulledge & Norman K. Womer, 1994. "Investment in Knowledge: A Generalization of Learning By Experience," Management Science, INFORMS, vol. 40(8), pages 947-958, August.
    8. Steven Klepper & Kenneth L. Simons, 2000. "The Making of an Oligopoly: Firm Survival and Technological Change in the Evolution of the U.S. Tire Industry," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 728-760, August.
    9. Josh Lerner, 1997. "An Empirical Exploration of a Technology Race," RAND Journal of Economics, The RAND Corporation, vol. 28(2), pages 228-247, Summer.
    10. Christensen, Clayton, 1997. "Patterns in the evolution of product competition," European Management Journal, Elsevier, vol. 15(2), pages 117-127, April.
    11. Granger, Clive W. J., 2003. "Some aspects of causal relationships," Journal of Econometrics, Elsevier, vol. 112(1), pages 69-71, January.
    12. Daniel A. Levinthal & James G. March, 1993. "The myopia of learning," Strategic Management Journal, Wiley Blackwell, vol. 14(S2), pages 95-112, December.
    13. 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.
    14. Michael A. Hitt & R. Duane Ireland & S. Michael Camp & Donald L. Sexton, 2001. "Strategic entrepreneurship: entrepreneurial strategies for wealth creation," Strategic Management Journal, Wiley Blackwell, vol. 22(6‐7), pages 479-491, June.
    15. Andrew A. King & Christopher L. Tucci, 2002. "Incumbent Entry into New Market Niches: The Role of Experience and Managerial Choice in the Creation of Dynamic Capabilities," Management Science, INFORMS, vol. 48(2), pages 171-186, February.
    16. Rajshree Agarwal & Constance E. Helfat, 2009. "Strategic Renewal of Organizations," Organization Science, INFORMS, vol. 20(2), pages 281-293, April.
    17. Gwendolyn K. Lee, 2008. "Relevance of organizational capabilities and its dynamics: what to learn from entrants' product portfolios about the determinants of entry timing," Strategic Management Journal, Wiley Blackwell, vol. 29(12), pages 1257-1280, December.
    18. Ingemar Dierickx & Karel Cool, 1989. "Asset Stock Accumulation and Sustainability of Competitive Advantage," Management Science, INFORMS, vol. 35(12), pages 1504-1511, December.
    19. Marvin B. Lieberman, 1989. "The learning curve, technology barriers to entry, and competitive survival in the chemical processing industries," Strategic Management Journal, Wiley Blackwell, vol. 10(5), pages 431-447, September.
    20. Noel Capon & John U. Farley & Scott Hoenig, 1990. "Determinants of Financial Performance: A Meta-Analysis," Management Science, INFORMS, vol. 36(10), pages 1143-1159, October.
    21. Gautam Ahuja & Curba Morris Lampert, 2001. "Entrepreneurship in the large corporation: a longitudinal study of how established firms create breakthrough inventions," Strategic Management Journal, Wiley Blackwell, vol. 22(6‐7), pages 521-543, June.
    22. Will Mitchell, 1991. "Dual clocks: Entry order influences on incumbent and newcomer market share and survival when specialized assets retain their value," Strategic Management Journal, Wiley Blackwell, vol. 12(2), pages 85-100, February.
    23. David J. Teece & Gary Pisano & Amy Shuen, 1997. "Dynamic capabilities and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 509-533, August.
    24. Kathleen M. Eisenhardt & Jeffrey A. Martin, 2000. "Dynamic capabilities: what are they?," Strategic Management Journal, Wiley Blackwell, vol. 21(10‐11), pages 1105-1121, October.
    25. Gary L. Lilien & Eunsang Yoon, 1990. "The Timing of Competitive Market Entry: An Exploratory Study of New Industrial Products," Management Science, INFORMS, vol. 36(5), pages 568-585, May.
    26. M. J. Foster, 1986. "The value of formal planning for strategic decisions: A comment," Strategic Management Journal, Wiley Blackwell, vol. 7(2), pages 179-182, March.
    27. John M. de Figueiredo & Brian S. Silverman, 2007. "Churn, Baby, Churn: Strategic Dynamics Among Dominant and Fringe Firms in a Segmented Industry," Management Science, INFORMS, vol. 53(4), pages 632-650, April.
    28. William Boulding & Markus Christen, 2003. "Sustainable Pioneering Advantage? Profit Implications of Market Entry Order," Marketing Science, INFORMS, vol. 22(3), pages 371-392.
    29. Constance E. Helfat & Marvin B. Lieberman, 2002. "The birth of capabilities: market entry and the importance of pre-history," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 11(4), pages 725-760, August.
    30. Morris A. Cohen & Jehoshua Eliasberg & Teck-Hua Ho, 1996. "New Product Development: The Performance and Time-to-Market Tradeoff," Management Science, INFORMS, vol. 42(2), pages 173-186, February.
    31. Linda F. Tegarden & Donald E. Hatfield & Ann E. Echols, 1999. "Doomed from the start: what is the value of selecting a future dominant design?," Strategic Management Journal, Wiley Blackwell, vol. 20(6), pages 495-518, June.
    32. S.A. Lippman & R.P. Rumelt, 1982. "Uncertain Imitability: An Analysis of Interfirm Differences in Efficiency under Competition," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 418-438, Autumn.
    33. Ada Leiponen, 2000. "Competencies, Innovation And Profitability Of Firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 9(1), pages 1-24.
    34. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    35. Robert A. Burgelman, 1991. "Intraorganizational Ecology of Strategy Making and Organizational Adaptation: Theory and Field Research," Organization Science, INFORMS, vol. 2(3), pages 239-262, August.
    36. Ingemar Dierickx & Karel Cool, 1989. "Asset Stock Accumulation and the Sustainability of Competitive Advantage: Reply," Management Science, INFORMS, vol. 35(12), pages 1514-1514, December.
    37. Steven Klepper, 2002. "The capabilities of new firms and the evolution of the US automobile industry," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 11(4), pages 645-666, August.
    38. Agarwal, Rajshree, 1998. "Evolutionary trends of industry variables," International Journal of Industrial Organization, Elsevier, vol. 16(4), pages 511-525, July.
    39. Gort, Michael & Klepper, Steven, 1982. "Time Paths in the Diffusion of Product Innovations," Economic Journal, Royal Economic Society, vol. 92(367), pages 630-653, September.
    40. Nils Stieglitz & Klaus Heine, 2007. "Innovations and the role of complementarities in a strategic theory of the firm," Strategic Management Journal, Wiley Blackwell, vol. 28(1), pages 1-15, January.
    41. Agarwal, Rajshree & Gort, Michael, 2001. "First-Mover Advantage and the Speed of Competitive Entry, 1887-1986," Journal of Law and Economics, University of Chicago Press, vol. 44(1), pages 161-177, April.
    42. Glenn Hoetker, 2007. "The use of logit and probit models in strategic management research: Critical issues," Strategic Management Journal, Wiley Blackwell, vol. 28(4), pages 331-343, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ansari, Shahzad (Shaz) & Krop, Pieter, 2012. "Incumbent performance in the face of a radical innovation: Towards a framework for incumbent challenger dynamics," Research Policy, Elsevier, vol. 41(8), pages 1357-1374.
    2. Mehmet Ali Köseoglu & John A. Parnell & Melissa Yan Yee Yick, 2021. "Identifying influential studies and maturity level in intellectual structure of fields: evidence from strategic management," Scientometrics, Springer;Akadémiai Kiadó, vol. 126(2), pages 1271-1309, February.
    3. Lihong Qian & Rajshree Agarwal & Glenn Hoetker, 2012. "Configuration of Value Chain Activities: The Effect of Pre-Entry Capabilities, Transaction Hazards, and Industry Evolution on Decisions to Internalize," Organization Science, INFORMS, vol. 23(5), pages 1330-1349, October.
    4. Corinne A. Coen & Catherine A. Maritan, 2011. "Investing in Capabilities: The Dynamics of Resource Allocation," Organization Science, INFORMS, vol. 22(1), pages 99-117, February.
    5. Hakan Ozalp & J.P. Eggers & Franco Malerba, 2023. "Hitting reset: Industry evolution, generational technology cycles, and the dynamic value of firm experience," Strategic Management Journal, Wiley Blackwell, vol. 44(5), pages 1292-1327, May.
    6. Ming Piao & Edward J. Zajac, 2016. "How exploitation impedes and impels exploration: Theory and evidence," Strategic Management Journal, Wiley Blackwell, vol. 37(7), pages 1431-1447, July.
    7. Tang Wang & Vikas A. Aggarwal & Brian Wu, 2020. "Capability interactions and adaptation to demand‐side change," Strategic Management Journal, Wiley Blackwell, vol. 41(9), pages 1595-1627, September.
    8. Agarwal, Rajshree & Echambadi, Raj & Franco, April M. & Sarkar, M. B., 2002. "Knowledge Transfer through Congenital Learning: Spin-Out Generation, Growth and Survival," Working Papers 02-0101, University of Illinois at Urbana-Champaign, College of Business.
    9. Natarajan Balasubramanian, 2011. "New Plant Venture Performance Differences Among Incumbent, Diversifying, and Entrepreneurial Firms: The Impact of Industry Learning Intensity," Management Science, INFORMS, vol. 57(3), pages 549-565, March.
    10. Thorsten Grohsjean & Tobias Kretschmer & Nils Stieglitz, 2011. "Performance Feedback, Firm Resources, and Strategic Change," DRUID Working Papers 11-02, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    11. Nathan R. Furr, 2019. "Product Adaptation During New Industry Emergence: The Role of Start-Up Team Preentry Experience," Organization Science, INFORMS, vol. 30(5), pages 1076-1096, September.
    12. Basu, Sandip & Phelps, Corey & Kotha, Suresh, 2011. "Towards understanding who makes corporate venture capital investments and why," Journal of Business Venturing, Elsevier, vol. 26(2), pages 153-171, March.
    13. Marshall S. Jiang & Jie Jiao & Zhouyu Lin & Jun Xia, 2021. "Learning through observation or through acquisition? Innovation performance as an outcome of internal and external knowledge combination," Asia Pacific Journal of Management, Springer, vol. 38(1), pages 35-63, March.
    14. J. P. Eggers & Sarah Kaplan, 2009. "Cognition and Renewal: Comparing CEO and Organizational Effects on Incumbent Adaptation to Technical Change," Organization Science, INFORMS, vol. 20(2), pages 461-477, April.
    15. Pamela Adams & Roberto Fontana & Franco Malerba, 2022. "Knowledge resources and the acquisition of spinouts," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(2), pages 277-313, June.
    16. Jaideep Anand & Raffaele Oriani & Roberto S. Vassolo, 2010. "Alliance Activity as a Dynamic Capability in the Face of a Discontinuous Technological Change," Organization Science, INFORMS, vol. 21(6), pages 1213-1232, December.
    17. Maria Chiara Di Guardo & Kathryn Rudie Harrigan & Elona Marku, 2019. "M&A and diversification strategies: what effect on quality of inventive activity?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(3), pages 669-692, September.
    18. Mahka Moeen, 2017. "Entry into Nascent Industries: Disentangling a Firm's Capability Portfolio at the Time of Investment Versus Market Entry," Strategic Management Journal, Wiley Blackwell, vol. 38(10), pages 1986-2004, October.
    19. Gianluigi Giustiziero & Aseem Kaul & Brian Wu, 2019. "The Dynamics of Learning and Competition in Schumpeterian Environments," Organization Science, INFORMS, vol. 30(4), pages 668-693, July.
    20. Mary J. Benner, 2010. "Securities Analysts and Incumbent Response to Radical Technological Change: Evidence from Digital Photography and Internet Telephony," Organization Science, INFORMS, vol. 21(1), pages 42-62, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:55:y:2009:i:11:p:1842-1860. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.