First-Mover Advantage in the Internet-Enabled Market Environment

Abstract

The past quarter century has been characterized by major and game changing market developments such as the evolution of the competitive market environment from a physical market environment (PME) to an Internet-enabled market environment (IME) that encompasses both the physical and electronic marketplaces, and the digitization of an increasing number of information products. Such developments raise questions concerning the extent to which extant perspectives on first-mover advantage developed in the context of the PME hold in the IME, generally, and for information products in digital form specifically. This chapter addresses this issue by developing a conceptual framework that focuses on selected sources of first-mover advantage delineated in the extant literature and advancing two sets of propositions. The first set of propositions focus on sources of first-mover advantage (network externalities, consumers’ non-contractual switching costs, technological leadership and innovations, consumers’ information asymmetry and consumption experience asymmetry, spatial resource position and installed capacity) that can be expected to have a greater versus lower effect in the IME relative to the PME. The second set of propositions focus on the moderating effect of product form (information products in digital form versus information products in analog form and non-information products).