Optimal repositioning following failure and time to success on the Google Play app store

Abstract

The optimal distinctiveness literature articulates how firms can increase their odds of success through product positioning strategies. However, new firms lack legitimacy and suffer from other liabilities of newness that increase the likelihood that their early products will fail to create value – even if they adopt optimal positioning strategies. This paper draws on the optimal distinctiveness and vicarious learning literatures to explore repositioning strategies in the wake of product introduction failure. We use survival analysis to test our theory using a unique data set from the Google Play app store. Our findings suggest that app developers can vicariously learn from the products introduced by their competitors and decrease the number of failures they experience before producing a successful app. More specifically, we find that app development organizations can substantially decrease the time to success by maximizing intra-firm product distinctiveness. We also find that the level of performance of a product’s nearest competitors amplifies vicarious learning, further decreasing the time to success. While failure may be difficult to avoid in entrepreneurial contexts, these results help reveal strategies new firms can enact to fail less and succeed sooner.