The erosion of pioneer advantage in the European mobile telecommunications industry

Abstract

This paper studies first-mover advantage in the mobile telecommunications services industry. There are very few empirical studies of pioneer advantage in service industries, possibly because of the difficulty of building competitive advantages in an industry where innovations cannot be protected and competitive actions can be easily imitated. The empirical research was carried out using data from a sample of European mobile telecommunications firms from 1993 to 2005. The findings indicate that an order of entry advantage does exist, but that this advantage diminishes with time in competition. Regarding the impact of the main sources of pioneering advantages, the results show that it is harder for follower firms to erode first-mover advantages when the pioneer has prior experience in the industry and when there are two pioneers instead of one. Lastly, number portability between different operators was found to damage the competitive position of the pioneer firms.