Be Early or Swim Against the Tide: An Institutionalist Account of Windows of Opportunity to Enter New Markets
Universitat Passau, Working Paper Series, 2014
40 Pages Posted: 6 Jan 2017
Date Written: May 15, 2014
Abstract
We integrate product life cycle theory and research on mimetic isomorphism to add a fresh perspective to the long-standing debate over first-mover and later-entrant approaches to market entry. We suggest that environment-level and firm-level mechanisms interdependently cause variance in (1) the maximum number of companies that can operate profitably in a given market; and (2) the number of companies that are actually active in that market. Theorizing on the divergent slopes of the development of these two factors over the course of industry evolution, we derive a model that extends existing accounts of “windows of opportunity” arguments. Entry success is likely in times when there are fewer firms active in a market than the market can bear. This is, ceteris paribus, the case in two of four phases of industry development: during the genesis of a market and, later on, during a cascade of market abandonment. We build testable theory for future empirical work and conclude with a discussion of implications for research and practice.
Keywords: first mover advantage, second mover advantage, product life cycle theory, mimetic isomorphism, institutionalism, market entry
JEL Classification: L10, L20, M10, N00
Suggested Citation: Suggested Citation