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The purpose of this paper is to test the effectiveness of switching costs as an isolating mechanism in the context of the first-mover advantage theory. Whereas both the literature on switching costs and on pioneering propose this as a mechanism through which firms could obtain sustainable competitive advantage, other authors offer a rationale for thinking that this is not the case. We test our hypotheses in the context of the European mobile telecommunications industry. This is a sector that has been characterized by high rates of growth in the number of subscribers, which could reduce the effectiveness of switching costs from being effective as an isolating mechanism. Our results show that switching costs are an important tool through which first-mover advantages materialize.

The optimal time to enter emerging industries is a key concern in strategy, yet scholars struggle to create a theoretical foundation that can integrate conflicting empirical findings. We incorporate categorical dynamics to industry life cycle theory to enhance existing entry timing theories. We introduce the concept of a dominant category—the conceptual schema that most stakeholders adhere to when referring to products that address similar needs and compete for the same market space—linking it to the dominant technological design and entry-timing advantages. In particular, we propose the existence of a window of opportunity for firm entry that starts with the emergence of the dominant category and ends with the emergence of the dominant design.

We explore whether pioneering advantages exist for early-mover acquirers in industry acquisition waves by examining both combined (target and acquirer) and acquirer stock returns. Combined abnormal returns are higher for acquisitions that occur at the beginning of acquisition waves. However, for acquirers' returns, only strategic pioneers--those acting in manners consistent with having superior information--capture significant advantages. Specifically, early-mover acquirers who realize superior stock returns are those that conduct acquisitions in related industries, during industry expansionary phases, and finance their acquisitions as financial theory suggests they should when they possess an informational advantage--with cash. Our findings extend the first-mover literature to corporate practices and link these practices to acquisition returns.

This article reflects upon and updates our prize-winning paper, 'First-mover advantages,' which was published in SMJ 10 years ago. We discuss the evolution of the literature over the past decade and suggest opportunities for continuing research. In particular, we see benefits from linking empirical findings on first-mover advantages with the complementary stream of research on the resource-based view of the firm.

This paper examines the relative importance of platform quality, indirect network effects, and consumer expectations on the success of entrants in platform-based markets. We develop a theoretical model and find that an entrant's success depends on the strength of indirect network effects and on the consumers' discount factor for future applications. We then illustrate the model's applicability by examining Xbox's entry into the video game industry. We find that Xbox had a small quality advantage over the incumbent, PlayStation 2, and the strength of indirect network effects and the consumers' discount factor, while statistically significant, fall in the region where PlayStation 2' s position is unsustainable.

This study examines whether first-mover and early-mover advantages can be sustained in an industry where the barriers to entry are generally low and new product innovations can be easily imitated-namely, the money market mutual fund industry. Using a simultaneous-equation supply-and-demand model of panel data from a variety of money market fund product categories, the study finds that first-movers and early-movers enjoy both a highly sustainable pricing advantage and a moderately sustainable market share advantage. These counterintuitive results are interpreted in terms of the structural characteristics of demand in the industry. Implications of these results for the ongoing debate between the 'sustainability' and 'hypercompetition' perspectives are discussed.

While the currently prevailing conceptual framework of first mover advantages (FMAs) specifies various market mechanisms through which first movers can gain pioneering benefits, it is incomplete by failing to consider the role of political resources in creating FMAs. In this context, this article aims to add the political mechanism to the current classification of FMA mechanisms. The article further serves as a window to an understanding of the long-term process of acquiring, sustaining, and exploiting firm-specific political resources in international business, which has been neglected in prior studies on business--government relations. Detailed analysis of three case studies suggests that the causal relationship between political resources and FMAs is a complex one; while non-market strategies can be used successfully by first movers, they can also be used by late movers to neutralize FMAs. The article proposes a model for understanding the link between FMAs and political resources.

Entry timing benefits and costs typically vary with firms' capabilities. In this study, we empirically examine the entry timing implications of firms' intrinsic speed capabilities, which refer to the ability to execute investment projects faster than competitors. We hypothesize that firms with intrinsic speed capabilities face low preemption risks and, thus, can afford to wait longer for uncertainty resolution before deciding to enter new markets. This hypothesis is more applicable when investment is associated with higher levels of commitment and, thus, greater option value of waiting. A direct implication is that late entrants with intrinsic speed capabilities should have greater expected post-entry performance. We find support for these hypotheses in the Atlantic Basin liquefied natural gas (LNG) industry from 1996 to 2007.

Dynamic competitive settings may create psychological pressure when feedback about the performance of competitors is provided before the end of the competition. Such psychological pressure could produce a first-mover advantage, despite a priori equal winning probabilities. Using data from a randomized natural experiment-penalty shootouts in soccer-we reexamine evidence by Apesteguia and Palacios-Huerta [Apesteguia J, Palacios-Huerta I (2010) Psychological pressure in competitive environments: Evidence from a randomized natural experiment. Amer. Econom. Rev . 100(5):2548-2564]. They report a 21-percentage-point advantage for first movers over second movers in terms of winning probabilities. Extending their sample of 129 shootouts to 540, we fail to detect any significant first-mover advantage. Our results are fully consistent with recent evidence from other sports contests. This paper was accepted by Teck Ho, behavioral economics.

To exploit first-mover advantages, pioneers may be motivated to amass customers before rivals enter the market. Likewise, when they enjoy increasing returns due to network effects, static scale economies, or learning effects, companies have incentives to invest aggressively in growth. This paper presents econometric analysis of factors that determined the intensity of Internet companies' investments in growth, and analyzes the long-term performance consequences of such investments. Results indicate that first movers spent significantly more on upfront marketing than non-pioneers. Contrary to expectations, however, firms in markets that exhibited increasing returns did not spend more on their early customer acquisition efforts than other sample companies. Although the typical sample company did not earn positive long-term returns, heavy early investments in growth were nevertheless economically rational. In most cases, reducing marketing outlays would have worsened a bad outcome, consistent with an inverted 'U' relationship between long-term returns and upfront marketing spending. Thus, the typical sample company invested in marketing, ex ante, at levels close to those that would have maximized returns, observed ex post.