Technological regimes and the persistence of first-mover advantages

Abstract

This article investigates first-mover and early-entrant advantages in terms of market share and its growth by analyzing a unique panel data set of Korean manufacturing firms. Specifically, this article examines the existence and persistence of first-mover and early-entrant advantages across different technological regimes. We find that these advantages are influenced by characteristics of the firms, as well as, of the technological regimes under which they operate. In general, early entry into a market benefits a firm in terms of the size and growth rate of its market share. Early entrants, including first movers, have higher market shares, except in regimes with high technological opportunity and low R&D appropriability. However, first movers are disadvantaged in terms of market share growth, except in regimes with low technological opportunities and high R&D appropriability. We also find that firm-specific competences in R&D and advertising help to maintain (attenuate) first-mover and early-entrant advantages (disadvantages).