Posts

Showing posts from March, 2018

First mover advantage theory of entrepreneurship

Image
Should entrepreneurs strive to be first? This is an important question that is relevant to myriads of decisions that entrepreneurs make involving commitments of resources and attention. For instance, given the option to implement two ideas, one with early entry potential and the other with late entry potential, which should an entrepreneur run with?

According to Kerin et al. (1992), "studies purport to demonstrate the presence of a systematic direct relationship between order of entry for products, brands, or businesses and market share."

First mover advantage theory posits that new entrants that are earliest to a new market niche get several advantages, such a brand awareness and a reputation for innovativeness. Followers can built great brands too, though at a greater cost.

Another first movers advantage is the ability to tie up factor markets by engaging in long term contracts with key suppliers, which makes it harder for followers to acquire the necessary complement…