First-Mover Advantage Revisited: Does Received Wisdom Extend to Electronic Marketplace and Digitized Information Products?

Authors: Rajan Varadarajan, Manjit S. Yadav, Venkatesh Shankar

With the emergence of the Internet as an important conduit for the marketing of products in general, and also as a distribution channel for digitized information products, the competitive landscape has evolved from a physical marketplace to an electronic/hybrid marketplace encompassing the physical and electronic marketplaces. Against this backdrop, this paper focuses on the extent to which extant perspectives on first-mover advantage, developed in the context of the physical marketplace and/or physical products, extend to the electronic/hybrid marketplace and digitized information products, respectively. We develop a conceptual model and advance a series of propositions delineating the sources of first-mover advantage that are likely to be less influential, more influential, or remain invariant in the context of the electronic/hybrid marketplace relative to the physical marketplace, and digitized information products relative to physical products. Our conceptual analysis suggests that, while potential sources of first-mover advantage that are inward and firm focused (e.g., preemption of scarce assets, preemptive investment in scale, and experience effects) are likely to diminish in importance, sources that are outward and market focused (e.g., network effects and non-contractual switching costs) are likely to assume greater importance in the context of the electronic/hybrid marketplace (digitized information products) relative to the physical marketplace (physical products). Thus, the inferences drawn on the basis of our discussion are in contrast with the assertions often made to the effect that being first to market in the emerging competitive landscape automatically engenders a business with competitive advantages.