Early Movers Research Articles

Responding to a Potentially Disruptive Technology: How Big Pharma Embraced Biotechnology

How do incumbent firms respond over time to a potentially disruptive technology? This article documents the strategies of 12 large pharmaceutical firms over 25 years as they addressed the opportunity/threat of biotechnology. All showed awareness of biotechnology’s potential, but their response profiles varied dramatically in terms of timing (early/late) and focus (external/internal). Late movers mostly made large acquisitions to “catch up,” but early movers maintained their lead in terms of biotechnology-based drug sales and profitability, and those with a more “open” response profile performed better. This response involves a three-step process: building awareness (sensing), building capability (responding), and building commitment (scaling).

Reporting on long-term value creation by Canadian companies: A longitudinal assessment

Abstract In the wake of the global financial crisis, a new wave of stakeholder demands has developed calling on companies to shift focus towards long-term value creation and moving away from a short-term earnings emphasis. Aligned with these demands, urgent calls for more transparency and improved reporting on both financial as well as non-financial reports have been made. The objective of this study was to analyze longitudinal disclosure quality and quantity trends in reporting on long-term value creation of 19 publicly traded Canadian energy and mining companies. Content analysis was conducted in order to assess disclosure on long-term value creation in annual financial and sustainability reports. The empirical results show that the companies experienced a substantial increase in the reporting disclosure quality and quantity. This was true for both disclosure in the annual financial reports as well as in the sustainability reports. These results supported the hypotheses that Canadian public energy and mining companies had increased their quantity and quality of long-term value creation disclosure in 2014 as compared to 2012. Even though increases in disclosure quality could be observed (especially in the areas of governance, responsible work practices, outside relationships and risk management), overall disclosure quality (especially in areas such as connectivity between financials and sustainability sections, materiality analysis, projects with high climate risk exposure, cost of energy, responsible work practices, incentives and remuneration) were still at a low level. Therefore, recommendations were developed to introduce globally accepted reporting standards and an external assurance framework in order to restore and sustain stakeholder confidence and trust. In the short-term, a collaborative approach of reporting framework development was proposed while in the long run, mandatory implementation of global standards and assurance is urgently recommended. This early mover study contributes to the existing literature by providing a first of its kind longitudinal analysis of quality and quantity of long-term value creation reporting for publicly listed Canadian companies in the mining and energy industry sector.

The multiple roles of state investment banks in low-carbon energy finance: An analysis of Australia, the UK and Germany

Low-carbon energy technologies (renewable energy and energy efficiency) are considered essential to achieve climate change mitigation goals, so a rapid deployment is needed. However there is a significant financing gap and many policymakers are concerned that investment for the large-scale deployment of low-carbon technologies will not materialise quickly enough. State investment banks (SIBs) can play a key role in closing this finance gap and leverage additional private finance. Based on 52 interviews, this paper presents empirical evidence on the role of three SIBs in addressing the barriers to financing low-carbon energy projects; the Clean Energy Finance Corporation (CEFC) in Australia, the Kreditanstalt fuer Wiederaufbau (KfW) in Germany and the Green Investment Bank (GIB) in the UK. We investigate the activities and financial instruments offered by SIBs and compare these to the need for such from low-carbon developers when sourcing finance. Findings show that aside from capital provision and de-risking, SIBs take a much broader role in catalysing private investments into low-carbon investments, including enabling financial sector learning, creating trust for projects and taking a first or early mover role to help projects gain a track record.

Earnings Management,Ultra ViresBorrowing, and Auditing of a Scottish Brewery 1884–1927

ABSTRACTThis paper concerns a Scottish brewery company, R. & D. Sharp Ltd., an early mover in converting to limited company status in the 1880s. It explores the company's origins, the industry in which it operated, and investigates its financial reporting and auditing practices during the first two decades of the 20th century, a period when regulation of financial reporting and auditing in the U.K. were in their infancy. This was a time of considerable difficulty for all U.K. breweries: industrial production fell and many brewing businesses failed, including the two local breweries that were R. & D. Sharp's immediate competitors. The study finds that the company's response to the industrial decline took two forms: the company auditor manipulated its financial data to maintain an appearance of financial stability, condoned ultra vires borrowing, and kept some defensive financial practices “off the books,” while the general manager managed the company's relationship lending and borrowing. Sources of primary data include the company's statutory annual returns and the general manager's 800-page letter book.

Next generation smart metering: IP metering

Although the smart metering or advanced metering infrastructure (AMI) is being rolled out by electric utilities worldwide, the last mile connectivity continues to haunt the efficiency as well as the rollout programmes in many countries. The widely adopted communication architectures deployed in AMI projects involve radio frequency/power line carrier/broadband over power lines for last mile connection from a data concentrator unit (DCU) to a group of meters; and the DCUs transmit the data to the utility's sever on the wide area network – general packet radio service/fibre networks. This architecture evolved over the past 10 years particularly because early mover utilities wanted dedicated communication network which they could control. Now that most buildings and campuses (even in smaller towns in developing countries) have broadband internet connections, utilities can leverage the existing communication infrastructure for AMI. The meters may be directly connected to internet on Wi-Fi in homes/buildings/factories/commercial centres/campuses etc. Once meters are connected on the internet, the meter data can be aggregated on a server anywhere – in utility's control room or on the cloud. This study describes India Smart Grid Forum vision for the next generation of smart metering using internet – the era of IP metering that would reduce the total cost of ownership and provide excellent last mile connectivity.

Entry-timing, business groups and early-mover advantage within industry merger waves in emerging markets: A study of Indian firms

Merger waves are periods of intense and concentrated merger activity which exhibit a wave-like pattern. Drawing upon the resource-based view, we examine the timing of entry and early-mover advantage within merger waves. Following a robust simulation-based methodology of wave analysis, we identify merger waves in eight industries during the time period 2000–2014. Firms affiliated to business groups were found to be early movers. A higher degree of internationalization is also associated with early movement of a firm. Within business groups, their multi-entity character is positively associated with early entry whereas their board interlock was negatively related with entry-timing. Further, early moving acquirers reap superior post-acquisition performance, thereby suggesting that early-mover advantages exist within merger waves.

Pallas iron—Russia's first meteorite, by H.Pedersen. Copenhagen, Denmark: Books‐on‐Demand, 2017. $25, 2017, (ISBN‐13: 9788771702132).

This book is an exhaustive catalog of information on a meteorite the author is absolutely infatuated with, Krasnojarsk or the Pallas Iron. No fact or figure is too trivial for inclusion in the book, and there are an overwhelming number of facts and figures here, most presented in note form with little introduction or explanation. The text starts with three pages on early history of the meteorite, then a page on pallasites, and five on the early reports about the native iron. Then there are four pages on the main mass and four on “early movers,” portraits and biographies of 30 men who feature in the meteorite's history, listed alphabetically as in an encyclopedia. This section is followed by a short account of how it was established that meteorites were extraterrestrial. Then there are sections on the distribution of fragments across Europe, and 24 “historic images” of the meteorite, mostly small black-and-white engravings. These are followed by a largely photographic record of some fieldwork performed between 1978 and 1981, and a section of some “recent findings.” Here Pederson reveals “for the first time” the name of the person who actually transported the iron from its find site and he reports that a camera obscura was used to help produce drawings for Pallas’s report of his travels. Before the appendices there are five pages of notes and there are sections consisting of about 180 “modern” photographs of Krasnojarsk and 11 pages showing and describing labels used for the many fragments. By and large, the figures are small and of poor quality. Of the 250 pages, 153 consist of three appendices entitled “Pre-Discovery,” “Early Works,” and “Post-Chladni.” These consist of a collection, also in encyclopedia format, of what appears to be notes or excerpts from every publication that mentions or might indirectly mention the Pallas iron from 1680 to 2006, some in French, some in German, some in English. The appeal of such a catalog is limited. I know that there are meteorite aficionados who buy every available book on meteorites who will want to know about this one. Then I imagine there are those who own a piece of Krasnojarsk who might like to have this plethora of information. There is no doubt that the author expended unbelievable amounts of time and energy to assemble this work and no rock was unturned in the search for every fragment of information, every reference, every image, and even every specimen label ever to be attached to the hundreds of fragments of the meteorite. It was an amazing accomplishment to draw all this information together.

Green Marketing Initiatives to Meet Consumer Demands and Sustainable Development-Challenges and Opportunities

Green Marketing has evolved special implications in the modern market. Green indicates purity by means of quality, fair price and worthy in dealings. Green marketing focus to market ecofriendly products to satisfy the needs and wants of customers. It adopts innovative techniques of product modification, dynamic product processes, maintaining sustainability and diversified ways of advertising etc. The vision of Green marketing is doing business along with protecting ecological environment. Present day customers need to be socially responsible by consciously working for the cause of environmental protection. The business based on modern trends have created global pressure upon employers to be environmental friendly. Now, more companies aim to produce consumer and Industrial Goods which are less hazardous to the environment. Every company eventually shifting towards becoming green to enjoy the early mover advantages offered by regulating bodies. Green Marketing ensures long run sustainability and profitability. It is multi beneficial with reduced cost, encourage accessibility to new markets with competitive advantage, increase morale of employee for being a part of environmental cause, satisfies the customer with health products and services. This paper is descriptive in nature and the data are collected from secondary sources like, text books, journal publications, company reports and websites. This paper analyse the implications of green marketing in the Indian business scenario by analysing different Green Business organisations listed in the Go Green Directory published by Eco-Deaz and ranked in the newsweek 2016.

You Needn't Be the First Investor There: First-Mover Disadvantages in Emerging Private Equity Markets

Early movers into emerging private equity markets may capitalize on growth opportunities and build-up networks. However, the deal-making conditions might not (yet) be favorable for the pioneers and they could lack local experience. I support this latter conjecture by analyzing a unique hand-collected dataset on emerging private equity market transactions. From 1,157 deals in 86 host countries between 1973 and 2009 I find that “waiting and learning pays”. Controlling for opportunity cost of capital, cross currency rate fluctuations, GDP growth over the holding periods, for liquidity of the exit markets, and for socio-economic factors, such as a country’s innovation capacity, its legal quality, its human capital and labor market frictions, the analyses reveal that early transactions underperform the later ones. I interpret this as a result from learning benefits and from improvements of the deal-making environment over time. The learning benefits are stronger if investors are located in the country of the investee firm.

The market turn: from social democracy to market liberalism

AbstractSocial democracy and market liberalism provide different solutions to the same problem: how to provide for life‐cycle dependency. Social democracy makes lateral transfers from producers to dependents by means of progressive taxation. Market liberalism uses financial markets to transfer financial entitlement over time. Social democracy came up against the upper limits of public expenditure in the 1970s. The ‘market turn’ from social democracy to market liberalism was enabled by liberalized credit in the 1980s. Much of this was absorbed into homeownership, which attracted majorities of households (and voters) in the developed world. Early movers did well, but eventually easy credit drove house prices beyond the reach of younger cohorts. Debt service diminished effective demand, which instigated financial instability. Both social democracy and market liberalism are currently in crisis.

COMPETITIVE DYNAMICS AND EARLY MOVER ADVANTAGES UNDER ECONOMIC RECESSIONS

ABSTRACT In light of the recent macroeconomic instability in global markets, we examine the evolution of competitive dynamics and firm profitability when industries are subject to recessions. Although ordinary intuition leads most to view recessions as harmful, we highlight conditions under which they enhance the relative value of industry-level supply-side isolating mechanisms, thereby affording early movers significant and sustainable profit advantages vis-à-vis laggards. We observe that the distribution of firm size within the industry switches from a bi-modal distribution (i.e., one dominated by both small and large firms) to a right-skewed one (i.e., dominated mostly by large firms) in these contexts, thereby signaling the rise of important opportunities in the form of less rivalrous competitive contexts for survivors of recessions. We derive our results from formal modeling and multiple simulation runs.

Asset Pricing Anomalies: Two Hedge Factors with Negative Risk Premia Embedded in Portfolios!

The primary purpose of this research is to empirically test a new asset pricing model, the Relative Asset Pricing Model (RAPM), and to confirm whether hedge portfolios on two new risk factors highlighted in that model, and embedded in all portfolios, have negative and significant risk premia. In a number of specifications, this first test of RAPM appears to validate the importance of these two ubiquitous risk factors: (i) a liability proxy or Strategic Asset Allocation (SAA); and (ii) an index of traditional rebalancing back to the SAA (REBAL). A secondary goal of the research is to then examine what RAPM and the inclusion of these two risk factors mean for other commonly used factors (like Value Premium, Capitalization Premium, and Momentum Premium) that are increasingly being added to portfolios in a new trend called “factor-based investing”. In many regressions, adding these two new factors either individually or together causes traditional factors like Capitalization and – in fewer cases – Momentum to lose their significance. Valuation continues to be significant even in tests where the SAA is heavily biased to include Value indices. These findings have interesting implications for improving portfolio performance especially in a low-yielding environment. Investors would do well to consider an intelligent approach to managing portfolio drift. With respect to factor-based investing, two results stand out: (i) Valuation seems to be a very robust strategy; and (ii) early movers probably benefit before these strategies get incorporated into the industry-wide SAA and then lose significance – a seemingly obvious result but validated in the context of a robust asset pricing model, thereby also serving as a first test of (a special case of) the Adaptive Markets Hypothesis.

The Grand Challenge of Carbon Capture and Sequestration

Carbon capture and sequestration (CCS) is designed to reduce atmospheric emissions of greenhouse gases (GHGs). The CCS process captures carbon dioxide (CO2) generated at large-scale industrial sources (power plants, refineries, gasification facilities, etc.) and transports it to an injection site to be permanently stored in the subsurface. With extensive research linking GHG concentrations in the atmosphere to observed changes in global temperature patterns, CCS technology could play an important role in policy efforts to limit the global average temperature rise. Even with the wealth of experience already in place within the oil and gas industry, the obstacles to advancing CCS to the forefront of GHG mitigation technologies remain significant. Large-scale CO2 injection projects remain primarily in the realm of commercial CO2-EOR (enhanced oil recovery) projects. The key challenges to enabling CCS include cost-effective capture and transport of industrial CO2, clear access to pore space for CO2 storage in geologic formations, proven methodologies for demonstrating storage integrity, and dissemination of best practices. SPE members can play a significant role in addressing these challenges. Cost-Effective Capture of Power Sector and Industrial CO2 A major technical challenge facing capture at electric generating facilities is that the CO2 concentration in large-volume flue streams is quite low. Current removal technologies include techniques that apply amines, chilled ammonia, membranes, and ionic liquids to strip the CO2 from the flue stream. However, these technologies were developed to handle smaller-scale operations and higher-CO2-purity streams. When applied to large electric generating plants, process efficiency is reduced, and the energy penalty associated with the capture process drives up costs, increasing the levelized cost of electricity by 50% or more, depending on local factors. Also, to accommodate the substantial volumes of the CO2 and flue gas at full-scale industrial sources, the removal technologies require significant scale up and footprint for deployment. While early movers are developing large-scale capture demonstrations such as SaskPower’s Boundary Dam Project, Southern Company’s Kemper Energy Facility (Fig. 1), and NRG’s Petro Nova Facility, we are still very early on the “learning curve.” Support for more development of next-generation capture technologies and large demonstrations is required to push us down the cost curve. This involves reducing the cost of materials and construction, parasitic costs related to energy for operations, compression, and operation and maintenance costs.

Innovation under regulatory uncertainty: Evidence from medical technology

This paper explores how the regulatory approval process affects innovation incentives in medical technologies. Prior studies have found early mover regulatory advantages for drugs. I find the opposite for medical devices, where pioneer entrants spend 34% (7.2months) longer than follow-on entrants in regulatory approval. Back-of-the-envelope calculations suggest that the cost of a delay of this length is upwards of 7% of the total cost of bringing a new high-risk device to market. Considering potential explanations, I find that approval times are largely unrelated to technological novelty, but are meaningfully reduced by the publication of objective regulatory guidelines. Finally, I consider how the regulatory process affects small firms' market entry patterns and find that small firms are less likely to be pioneers in new device markets, a fact consistent with relatively higher costs of doing so for more financially constrained firms.

Innovation Under Regulatory Uncertainty: Evidence from Medical Technology

This paper explores how the regulatory approval process affects innovation incentives in medical technologies. Prior studies have found early mover regulatory advantages for drugs. I find the opposite for medical devices, where pioneer entrants spend 34 percent (7.2 months) longer than follow-on entrants in regulatory approval. Back-of-the-envelope calculations suggest that the cost of a delay of this length is upwards of 7 percent of the total cost of bringing a new high-risk device to market. Considering potential explanations, I find that approval times are largely unrelated to technological novelty, but are meaningfully reduced by the publication of objective regulatory guidelines. Finally, I consider how the regulatory process affects small firms' market entry patterns and find that small firms are less likely to be pioneers in new device markets, a fact consistent with relatively higher costs of doing so for more financially constrained firms.

Early Mover or Late Mover Advantage for Hotels?

Theories on early and late mover advantages predicate that competitive operating advantages can occur with respect to the relative timing of market entry. Suspecting that “early mover” hotels can preempt desirable micro-locations for hotel operations, the current study tests for early mover advantage created by locations not fully imitable. Estimation of spatial econometric model reveals evidence of an early mover advantage. We also find that the effect of depreciation of older hotels may serve as a competitive advantage for new entrants with new facilities, although there was no considerable benefit for late movers. Furthermore, through additional tests we find the early mover advantage consistently significant for both chain and independent hotels. Implications and suggestions for future research are discussed.

Building local institutional capacity to implement agricultural carbon projects: participatory action research with Vi Agroforestry in Kenya and ECOTRUST in Uganda

Smallholders have begun to take advantage of a growing pool of investment in climate change mitigation. Meanwhile, early movers in this area are working to develop innovative models that will allow projects to be financially sustainable and scalable while benefiting local actors. This study focuses on two of these projects in East Africa, managed by Vi Agroforestry in Kenya and ECOTRUST in Uganda. They engaged in a participatory action research process to identify ways that local actors could take on expanded roles within the projects. Results are presented as case studies which include project context, roles of local project actors, actions selected, and the outcomes of the actions on the key actors targeted. The actions focused on building the capacities of community-based intermediaries, facilitating partnerships with local government and local non-governmental organizations, and supporting a more active role played by women. Key findings from this process were that community-based intermediaries can play a leading role in land management trainings; local government involvement is critical to project success; local non-governmental organizations and businesses can play central roles in training and providing market incentives to farmers to implement sustainable practices; and women’s roles in projects can grow if project benefits are aligned with their needs and trainings are made more accessible. These cases demonstrate that there is substantial scope for the responsibilities within agricultural carbon projects, and by extension climate-smart agriculture initiatives more broadly, to be institutionalized at the local level. However, regardless of the institutional setup, due to carbon market factors beyond the control of these projects, the financial case for smallholder projects that rely solely on financing from carbon credits remains challenging to these projects and others like them. As programmatic and policy-led approaches grow from these project models, it may be easier to find ways to integrate carbon financing with support for climate change adaptation, rural development, and ecosystem services provision. With these new models, the ability to institutionalize management and implementation capacity at the local level will remain critically important.

Early-mover advantages at cross-border business-to-business e-commerce portals

The Internet enables enterprises to sell their products via cross-border business-to-business (B2B) e-commerce portals. However, researchers know little about the early-mover advantages for such third-party platforms. The rapid, convenient, and wide market access offered by these platforms may allow early-mover exporters to enjoy advantages over late movers in terms of learning effects and switching costs. We hypothesize that early-mover advantages may diminish beyond a critical length of tenure because of the free-riding costs, resolution of technological or market uncertainty, as well as the incumbent inertia of early movers. We also argue that product price and diversity will pose different boundary conditions on how early-mover advantages are manifested. Using web search and mining methods, we collect data on approximately 300,000 B2B export transactions conducted by nearly 4000 firms in 2007–2014 through online portals. Employing panel data models, we find strong evidence supporting our hypotheses.

Information technology investment strategies: a review and synthesis of the literature

ABSTRACTIn spite of high importance of information technology (IT) investments, managers do not have sufficient guidelines to formulate IT investment strategy of a firm. In this paper, we review the literature to determine the factors that influence the IT investment strategy. The concept of IT investment strategy so far considered two domains: intensity and proactiveness; we enhance this concept by adding the domain of investment focus. Through this review, we made an attempt to answer three strategic questions related to IT investments: (i) level of investment that a firm should make in IT, that is, investment intensity; (ii) areas of firm where these investments should be more focused, that is, investment focus; and (iii) timing of investment, that is, whether to be an early mover in adopting IT or whether to invest relatively late compared to competitors.

Leaders and followers in hot IPO markets

We model the dynamics of going public within an IPO wave. The model predicts that firms with better growth opportunities can find it optimal to go public early and accept underpricing of their issues to signal quality. Data supports this prediction as, on average, early movers underprice their issues significantly more and we show that leaders (early movers with high underpricing) obtain much higher valuations when going public than other IPO firms. Furthermore, after going public, leaders invest significantly more, their sales grow faster, and their profitability remains higher compared to other IPO firms.