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  • 2020
  • Working Paper
  • HBS Working Paper Series

Pioneer (Dis-)advantages in Markets for Technology

By: Moritz Fischer, Joachim Henkel and Ariel Dora Stern
  • Format:Print
  • | Language:English
  • | Pages:42
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Abstract

This study sheds new light on first- and early-mover advantages in the context of product innovation. Research on this classic topic often assumes that each firm participates in the entirety of the innovation and commercialization process. However, a division of labor between innovative new entrants and incum-bents with complementary assets is common in many industries. In such settings, small new entrants have the additional option to be acquired in a “market for technology.” Using data from the U.S. medical device industry, we find that pioneers “pave the way” for a new product type to reduce the technological and market risks, where the former is of paramount importance. Pioneers enjoy an early-mover advantage in the form of a higher likelihood of acquisition, with the disadvantage that they wait longer to be acquired. Therefore, to some extent, later movers can free ride on early-movers’ efforts.

Keywords

First-mover Advantage; Product; Innovation Strategy; Market Entry and Exit; Acquisition; Technology

Citation

Fischer, Moritz, Joachim Henkel, and Ariel Dora Stern. "Pioneer (Dis-)advantages in Markets for Technology." Harvard Business School Working Paper, No. 19-043, October 2018. (Revised March 2020.)
  • SSRN
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About The Author

Ariel D. Stern

Technology and Operations Management
→More Publications

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More from the Authors
  • Remote Patient Monitoring—Overdue or Overused? By: Keizra Mecklai, Nicholas Smith, Ariel Dora Stern and Daniel B. Kramer
  • Ushering in Safe, Effective, Secure, and Ethical Medicine in the Digital Era By: William J. Gordon, Andrea Coravos and Ariel Dora Stern
  • Food and Drug Administration Guidance Documents and New Medical Devices: The Case of Breast Prostheses By: Rachel E. Weitzman, Ariel Dora Stern and Daniel B. Kramer
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