We find it useful to distinguish between durable first-mover advantages, which improve a firm’s market share or profitability over a long period, and those that are short-lived. What Kind of First-Mover Advantage?Ī first-mover advantage can be simply defined as a firm’s ability to be better off than its competitors as a result of being first to market in a new product category. Knowing how fast or slow the technology and the market are moving will allow you to understand your odds of succeeding with the resources you possess. Specifically, we identified two factors that powerfully influence a first mover’s fate: the pace at which the technology of the product in question is evolving and the pace at which the market for that product is expanding. Our research, based on a thorough examination of the literature on first-mover advantage, as well as an analysis of more than 30 cases of early entry into new product spaces, has enabled us to identify situations in which companies are likely to gain first-mover advantages and those in which such advantages are less likely. Yes, a firm’s resources-and luck-are important, but certain other factors and conditions can be decisive as well. And Sony, despite its brand and marketing muscle, could not translate being the first mover in home VCRs into anything approaching its success with the Walkman. But Xerox, too, had a great brand name, deep pockets, and many valuable skills. One possible explanation for Sony’s success is that its strong brand name, substantial financial resources, and excellent marketing skills allowed it to make the most of its first-mover status. Much depends on the circumstances in which it is sought.įirst-mover status can confer advantages, but it does not do so categorically. We have found that the differences in outcome are not random-that first-mover status can confer advantages, but it does not do so categorically. While some well-known first movers, such as Gillette in safety razors and Sony in personal stereos, have enjoyed considerable success, others, such as Xerox in fax machines and eToys in Internet retailing, have failed. Business executives from every kind of company maintain, almost without exception, that early entry into a new industry or product category gives any firm an almost insuperable head start.īut for every academic study proving that first-mover advantages exist, there is a study proving they do not. Although the fate of its most-convinced adherents, the dot-coms, offers a cautionary lesson, managers’ faith that first-mover status brings important competitive advantages, even when network effects are not available to accelerate and entrench it, remains undiminished. First-mover advantage is one such concept. Some management concepts have such intuitive appeal that their validity is almost taken for granted.
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