Asset Details
Do you wish to reserve the book?
Internet companies' growth strategies: determinants of investment intensity and long-term performance
Hey, we have placed the reservation for you!
By the way, why not check out events that you can attend while you pick your title.
Oops! Something went wrong.
Looks like we were not able to place the reservation. Kindly try again later.
Are you sure you want to remove the book from the shelf?
Internet companies' growth strategies: determinants of investment intensity and long-term performance
Do you wish to request the book?
Internet companies' growth strategies: determinants of investment intensity and long-term performance
Please be aware that the book you have requested cannot be checked out. If you would like to checkout this book, you can reserve another copy
We have requested the book for you!
Your request is successful and it will be processed during the Library working hours. Please check the status of your request in My Requests.
Oops! Something went wrong.
Looks like we were not able to place your request. Kindly try again later.
Journal Article
Internet companies' growth strategies: determinants of investment intensity and long-term performance
2006
Overview
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.
