Environmental Change and Organizational Transformation

Industrial and Corporate Change, Vol. 14, No. 6: 1017-1041, 2005

25 Pages Posted: 4 Dec 2013

See all articles by Fernando Suarez

Fernando Suarez

Northeastern University, D'Amore-McKim School of Business

Rogelio Oliva

Mays Business School, Texas A&M University

Date Written: October 1, 2005

Abstract

Many executives take for granted that the first company in a new product category gets an unbeatable head start and reaps long-lasting benefits. But that doesn't always happen. The authors of this article discovered that much depends on the pace at which the category's technology is changing and the speed at which the market is evolving. By analyzing these two factors, companies can improve their odds of succeeding as first movers with the resources they possess. Gradual evolution in both the technology and the market provides a first mover with the best conditions for creating a dominant position that is long lasting (Hoover in the vacuum cleaner industry is a good example). In such calm waters, a company can defend its advantages even without exceptional skills or extensive financial resources. When the market is changing rapidly and the product isn't, a first entrant with extensive resources can obtain a long-lasting advantage (as Sony did with its Walkman personal stereo); a company with only limited resources probably must settle for a short-term benefit. When the market is static but the product is changing constantly, first-mover advantages of either kind -- durable or short-lived -- are unlikely. Only companies with very deep pockets can survive (think of Sony and the digital cameras it pioneered). Rapid churn in both the technology and the market creates the worst conditions. But if companies have an acute sense of when to exit -- as Netscape demonstrated when it agreed to be acquired by AOL -- a worthwhile short-term gain is possible. Before venturing into a newly forming market, you need to analyze the environment, assess your resources, then determine which type of first-mover advantage is most achievable. Once you've gone into the water, you have no choice but to swim.

Keywords: economic reforms, environmental change, organizational change

Suggested Citation

Suarez, Fernando and Oliva, Rogelio, Environmental Change and Organizational Transformation (October 1, 2005). Industrial and Corporate Change, Vol. 14, No. 6: 1017-1041, 2005. Available at SSRN: https://ssrn.com/abstract=2363327

Fernando Suarez (Contact Author)

Northeastern University, D'Amore-McKim School of Business ( email )

220 B RP
Boston, MA 02115
United States

HOME PAGE: http://www.fernandofsuarez.com

Rogelio Oliva

Mays Business School, Texas A&M University ( email )

430 Wehner
College Station, TX 77843-4218
United States

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