Pioneer (Dis-)advantages in Markets for Technology

39 Pages Posted: 1 May 2019 Last revised: 10 Nov 2019

See all articles by Moritz Fischer

Moritz Fischer

Technische Universität München (TUM)

Joachim Henkel

TUM School of Management - Technische Universität München (TUM)

Ariel Dora Stern

Harvard Business School

Date Written: November 7, 2019

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 entire innovation process. However, a division of labor between innovative new entrants and incumbents 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. Although pioneers ultimately realize a higher likelihood of acquisition, they wait longer to be acquired. Therefore, to some extent, later movers can free ride on early-movers’ efforts.

Keywords: First-Mover Advantages, Markets for Technology, M&A, Technology Acquisition, Medical Devices

Suggested Citation

Fischer, Moritz and Henkel, Joachim and Stern, Ariel Dora, Pioneer (Dis-)advantages in Markets for Technology (November 7, 2019). Harvard Business School Working Paper No. 19-043. Available at SSRN: https://ssrn.com/abstract=3362959 or http://dx.doi.org/10.2139/ssrn.3362959

Moritz Fischer

Technische Universität München (TUM) ( email )

Arcisstrasse 21
Munich, 80333
Germany

Joachim Henkel

TUM School of Management - Technische Universität München (TUM) ( email )

Arcisstr. 21
Munich, D-80333
Germany

Ariel Dora Stern (Contact Author)

Harvard Business School ( email )

Morgan Hall 433
Harvard Business School
Boston, MA MASSACHUSETTS 02163
United States
6174952332 (Phone)

HOME PAGE: http://www.hbs.edu/astern

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