I Like the Way you Move - An Empirical Investigation into the Mechanisms Behind First Mover and Follower Strategies
There appears to be an ambivalent dimension in innovation strategies: timing. When is an innovation ready for the market or when is the market ready for the innovation? This paper empirically investigates the determinants of a firm’s decision to become a first mover or a follower in innovation strategies. Much of theoretical and empirical work has focused on whether first mover strategies pay off or not. Here we take a different approach by analysing the determinants that lead companies to opt for either a first mover or a follower strategy. One of this paper’s major goals is to distinguish between firm and industry specific effects on this particular strategic choice. We estimate our model using the most recent data from the German innovation survey of 2003. This dataset allows us to identify deliberate followers rather than outstripped first movers. One of our main findings is that firms choosing a first mover strategy operate in industries with intensive knowledge exchange and further leverage this advantage through excellent internal absorptive capacities. Followers, though, compete by way of their operational excellence for streamlining processes and cutting costs. Hence, we argue that neither of these two innovation strategies is per se superior to the other.
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.:
- Reiko Aoki, 1998. "Strategic Complements with First Mover Advantage," Metroeconomica, Wiley Blackwell, vol. 49(3), pages 284-299, October.
- 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.
- Gal-Or, Esther, 1985. "First Mover and Second Mover Advantages," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 649-53, October.
- Bresnahan, Timothy F, 1985. "Post-entry Competition in the Plain Paper Copier Market," American Economic Review, American Economic Association, vol. 75(2), pages 15-19, May.
- Alan Bryman, 1997. "Animating the Pioneer versus Late Entrant Debate: An Historic Case Study," Journal of Management Studies, Wiley Blackwell, vol. 34(3), pages 415-438, 05.
- A. M. Spence, 1981. "The Learning Curve and Competition," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 49-70, Spring.
- 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.
- Caves, Richard E, 1984. "Economic Analysis and the Quest for Competitive Advantage," American Economic Review, American Economic Association, vol. 74(2), pages 127-32, May.
- Schmidt, Tobias, 2005.
"Knowledge Flows and R&D Co-operation: Firm-level Evidence from Germany,"
ZEW Discussion Papers
05-22 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Tobias Schmidt, 2005. "Knowledge Flows and R&D Co-operation: Firm-level Evidence from Germany," Development and Comp Systems 0506006, EconWPA.
- Schmidt, Tobias, 2005. "Knowledge Flows and R&D Co-operation: Firm-level Evidence from Germany," ZEW Discussion Papers 05-22, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- 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.
- Cremers, Katrin, 2004. "Determinants of Patent Litigation in Germany," ZEW Discussion Papers 04-72, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- 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.
- Stephen Shmanske, 2004. "Market Preemption and Entry Deterrence: Evidence from the Golf Course Industry," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 11(1), pages 55-68.
- Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-96, September.
- Bruno Cassiman & Reinhilde Veugelers, 2002. "R&D Cooperation and Spillovers: Some Empirical Evidence from Belgium," American Economic Review, American Economic Association, vol. 92(4), pages 1169-1184, September.
- Fudenberg, Drew & Tirole, Jean, 1984. "The Fat-Cat Effect, the Puppy-Dog Ploy, and the Lean and Hungry Look," American Economic Review, American Economic Association, vol. 74(2), pages 361-66, May.
- Clayton M. Christensen & Fernando F. Suárez & James M. Utterback, 1998. "Strategies for Survival in Fast-Changing Industries," Management Science, INFORMS, vol. 44(12-Part-2), pages S207-S220, December.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpio:0506010. 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: (EconWPA)
If references are entirely missing, you can add them using this form.