Late Mover Advantage Research Articles

Optimal Markup Pricing Strategies in a Green Supply Chain under Different Power Structures

Fixed-dollar and flexible markups are two markup pricing strategies commonly adopted in the retail industry, but their impacts on green behaviors of enterprises remain unknown. This paper investigates how the two markup pricing strategies influence firms’ managerial behaviors in a green supply chain, considering three power structures: Manufacturer Stackelberg, Retailer Stackelberg, and Vertical Nash. We find that the retailer’s pricing strategy choice is jointly affected by power structures and consumer sensitivity to product green levels. Particularly under Manufacturer Stackelberg, the fixed-markup strategy makes the retailer earn a higher profit. However, under Vertical Nash, the retailer’s pricing strategy depends on consumer sensitivity to green levels. When consumers are less sensitive to green levels, a flexible-dollar markup strategy is more profitable for the retailer; otherwise, the fixed-markup strategy is better. Additionally, for the manufacturer, the green levels of the product and the firm profit are always higher when the retailer adopts a fixed-dollar markup strategy under Manufacturer Stackelberg and Vertical Nash. Interestingly, if the retailer adopts a flexible-dollar markup strategy, the manufacturer has the “late-mover advantage” only when consumer sensitivity to the green level is high. Furthermore, the supply chain achieves the highest profit when the manufacturer acts as the leader under the fixed markup strategy.

Don’t Hurry, Be Happy! The Bright Side of Late Product Release

When a firm releases its product later than its competitor, the firm loses sales because many consumers prefer to buy the competitor’s product rather than wait for the firm’s product release. Therefore, in the absence of any late-mover advantages, conventional wisdom suggests that competing firms will release their products as soon as possible to avoid losing customers if they were to enter later. However, when the market evolves over time and consumers are forward-looking, we demonstrate that this intuition fails and propose a new explanation for why a firm may strategically release its product later than its competitor. Namely, a firm’s late entry can help alleviate price competition due to some consumers’ decisions to wait for the firm’s product release instead of buying a currently available product. We show that in markets where the growth rate is sufficiently high and differentiation between firms is not too low, the firm’s profit gain from alleviated price competition dominates its profit loss from reduced sales, making the firm better off by releasing its product later than the competitor. Surprisingly, when the fraction of consumers who enter the market relatively early increases, the firm may have even greater incentives to release its product late. Finally, we consider markets where firms are differentiated both horizontally and vertically, with one firm having a higher quality (or stronger brand image) than its competitor. We find that high level of vertical differentiation will induce both high- and low-quality firms to rush to the market, releasing their products in the early period. However, when vertical differentiation is moderately high, the high-quality firm may choose to release late, whereas the low-quality firm will prefer to release its product early. History: Anthony Dukes served as the senior editor for this article. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mksc.2023.0393 .

Industry Concentration, Firm Size and Entry-Timing in Merger Waves

As early mover advantage and late mover advantage have been discussed for decades, the conditions for the best use of them are yet unclear. Using the U.S. merger data during 2000–2019, this study examines the entry-timing and the post-merger performance of 1,376 bidders in the merger waves recognised. We find that early movers have advantages with higher post-merger performance in a merger wave, while the effect of late mover advantage is not significant. Moreover, early mover advantage can only be implemented in competitive industries. Our analysis further provides the entry-timing strategies for large firms and small/mid enterprises, respectively. Our results indicate that late mover advantage can only be adopted in large companies, while small/mid firms should be followers, not early or late movers, in high concentration industries. Overall, our study sheds new light on the entry-timing in a merger wave with the consideration of different market concentration environment and different firm size.

Late-mover advantages, innovation capability, and leapfrogging upgrading of low-carbon technology: evidence from Chinese enterprise groups.

This research examines the ability of Chinese enterprise groups to leapfrog the upgrading of low-carbon technologies. A theoretical model based on backwardness advantage, innovation theory, and technological leapfrogging theory is proposed to investigate the determinants of late-mover advantage and innovation capability in Chinese provinces. The study conducted interviews with 198 selected group managers from China's top 500 manufacturing enterprises and collected data from 248 related departments through questionnaires. The collected data was analyzed using the partial least square-structural equation model (PLS-SEM) to test the reliability and validity of the questionnaire and verify theoretical assumptions. Results show that late-mover advantage positively and significantly affects innovation capability, indicating that Chinese enterprise groups can utilize their late-mover advantage to innovate quickly and upgrade low-carbon technology. These findings have crucial implications for China's medium-term sustainable development trajectory.

Financial subsidies, tax incentives and technological innovation in China's integrated circuit industry

The integrated circuit (IC) industry's role in promoting sustained economic growth makes it highly valued by governments worldwide. Based on the late-mover advantage and market failure theories, this study demonstrates the importance of government intervention in industrial technological innovation. This study uses panel data from 81 A-share listed integrated circuit companies in China for 2011–2019 to analyze the effects and differences between the two most widely used policy tools, financial subsidies and tax incentives. The conclusion shows that financial subsidies inhibit technological innovation in the integrated circuit industry, while the promotion effect of tax incentives is weak. The robustness test also supported this conclusion. Further analysis shows that industry heterogeneity affects both policy tools. In terms of branches of the industrial chain, the policy effect of the core link is more significant than that of the support link. The inhibitory effect of financial subsidies is more obvious in the Pearl River Delta region, and the promotional effect of tax incentives is more pronounced outside the Pearl River Delta region. In addition, the current fiscal decentralization will hinder the promotion effect of the policy, and market competition will enhance the promotion effect of the policy. On the one hand, the research in this paper provides empirical evidence and policy reference for China to optimize fiscal policies related to the integrated circuit industry. On the other hand, a reference for development paths for late-mover countries is also provided in the early stage of industrialization.

The Chinese Strategy for Actively Responding to Population Ageing

The course of population ageing in China has unique features, and the country’s fundamental national conditions, development path and governance model impose special requirements on the country’s response. A path with Chinese characteristics that actively addresses this issue is urgently needed. The Chinese strategy is built on solid foundations, comprising the governance paradigm advantage of “one core and multiple components”; the structural advantage of “state-family-society” governance arrangements; the national endowment of being a major country with a rich culture; and the late-mover advantage conferred by the scientific and technological innovations of our changing times. It is necessary to clarify the relationship between the national strategy of actively responding to an population ageing and the population development strategy; on this basis, a positive view of ageing need to be cultivated to provide a better environment for the implementation of the national strategy; and to establish a holistic governance framework in which individuals, families, communities, the state, and the world are interconnected by integrating Chinese advantages in the governance of an ageing society. Thus, a systemic Chinese strategy for actively responding to population ageing can be continuously refined.

Study on the complexity of channel pricing game in showrooming O2O supply chain

An O2O supply chain consisting of a manufacturer with an online direct channel and a retailer who resells through a brick-and-mortar store is considered. Three channel power structures (vertical Nash, manufacturer Stackelberg, and retailer Stackelberg) and three pricing sequences (simultaneous pricing, manufacturer pricing early, retailer pricing early) are considered. Counter-intuitively, under the manufacturer Stackelberg structure, the retailer has a first-mover advantage and retailer-pricing-early achieves Pareto optimality. In the other cases, the manufacturer and the retailer have a late-mover advantage. Under the vertical Nash structure, both parties may get into a prisoner’s dilemma. Extending the basic model to dynamic pricing, we found that the first mover of sequential pricing has better stability. The retailer Stackelberg structure has better stability than the vertical Nash structure and the manufacturer Stackelberg is the most unstable power structure. To avoid the negative impact of equilibrium price instability, the vertical and horizontal price matching mechanisms are proposed and the effectiveness in improving stability is proved.

Government intervention, spillover effect and urban innovation performance: Empirical evidence from national innovative city pilot policy in China

Recently, research on government intervention and innovation performance has emerged in large numbers. However, the endogenous problems arising from the indirect investigations make the results open to discussion. Against this background, this study uncovers the impacts of innovation intervention represented by the national innovative city pilot (NICP) on urban innovation performance and innovation convergence within the causal inference framework considering the policy spillover effect. Results reveal that NICP has a long-term positive effect on innovation performance in local and surrounding areas, while the spillover effect only exists in cities within the provinces and geographical neighboring cities in surrounding provinces, and conforms to the distance attenuation law. Moreover, the positive impacts of NICP on innovation performance in local and neighboring cities continue to be amplified as the quantiles of innovation performance increase. Not only that, NICP plays a positive role in accelerating innovation convergence across cities, resulting from the yardstick competition of fiscal expenditures on science and technology and the spatial knowledge spillover, and low-level innovation club has a stronger late-mover advantage in innovation convergence. These findings contribute to accurately evaluating the innovation benefits of expanding NICP networks and provide an important reference for innovation-driven development strategy.

The show must go on: Why Korea lost its first-mover advantage in Esports and how it can become a major player again

Korea was once a first mover in the field of esports and could have been the top esports powerhouse due to its unrivaled information and communications technology infrastructure and cultural base in esports. However, Korea now lags behind late movers in the field. China is striving to dominate the industry by replicating Korea's primary strategies, and U.S. game developers are strengthening their control of intellectual properties (IPs). This study reviewed the decline of Korea's esports industry in the global market and proposed measures that could revive it. We employed a qualitative method using relevant literature, secondary data from industry reports and government publications, and expert interviews. To this end, we applied first-mover advantages and late-mover advantages as a theoretical lens. The findings of this study suggest that owning solid IP resources will guarantee the scalability of the esports business. Recovering platform sovereignty is the main agenda for Korea as it maintains and supports the esports industry. Furthermore, educational support for career development is necessary as the esports industry expands. Therefore, systemic approaches from three different stakeholders (i.e., industry, government, and academia) are required to restore Korea's leadership in the esports industry.

Different determinants affecting first mover advantage and late mover advantage in a smartphone market: a comparative analysis of Apple iPhone and Samsung Galaxy

ABSTRACT Entry timing is critical for a firm’s sustainability, and it is determined after comparing the first mover advantage (FMA) and the late mover advantage (LMA). This study aims to continue the extant discussion on FMA and LMA to explore the important determinants and their effects on FMA or LMA in a smartphone market. The methodology of building a theory from a comparative case study is adopted using Apple iPhone and Samsung Galaxy cases in a smartphone market. This study verified that market- and firm-level determinants are more linked with FMA, and the isolating mechanism along with the environment as well as firm-level enablers are useful for explaining FMA. This study also uniquely found that the product-level determinant is closely linked with LMA, which has not been explored much in relation to LMA. This study theoretically contributed to extending the conceptual framework as well as enabling the mechanism of entry advantage, and it has managerial implications of how the first mover or the late mover can benefit from their entry advantage by exploiting their relative strength.

Promoting the High-Quality Development of Central China Through Energy Revolution: Theoretic Analysis and Implementation Paths

The rise of Central China is a major strategy for China’s regional development. In recent years, Central China has gained a notable late-mover advantage. As China enters the stage of high-quality development, Central China needs to keep up with this trend to improve its comprehensive strength and competitiveness. As energy is the foundation for economic and social development, high-quality development requires a high-quality energy system and should be supported by energy revolution. The five provinces (i.e., Hunan, Hubei, Henan, Anhui, and Jiangxi) from Central China have excellent resource endowment; however, the new energy potentials and total energy production of these provinces are inadequate, and the energy supply and demand are imbalanced. In this article, we analyze the internal mechanism of promoting the rise of Central China through energy revolution, and conclude that the quality of energy consumption should be optimized in Central China to promote the rise of this region in terms of economy, society, and ecology. Moreover, the overall goal for the medium- and long-term energy development in Central China is discussed. To this end, Central China should promote energy conservation and emission reduction to improve energy efficiency and green development, develop multi-energy complementary technologies to promote clean energy consumption, and strengthen inter-provincial cooperation in energy to ensure the security of external energy supply. Specifically, several implementing paths are proposed including green and low-carbon development, supply-side reform, innovation-driven strategy, energy allocation optimization, and multi-energy integration.

Beyond first or late mover advantages: timed mover advantage

PurposeThis paper aims to present a new framework that describes the relationship among market entry order and timing, the advantages accruing to first-movers and late-movers, entry timing premium (ETP), marketing strategy and enduring market performance of the firms. The framework, empirically tested using data from 241 business executives, expands extant research into new territory beyond first- and late-mover advantages in an attempt to reconcile a few streams of research in the area and provides an entry related, strategic assessment tool (ETP) for the managers. Contribution to marketing strategy theory and managerial implications are also presented.Design/methodology/approachParticipants included informants in a firm’s strategic business unit who were the most familiar with a new product’s commercial launch, market condition at launch, competitor offerings, marketing activities and capabilities and eventual integration into or withdrawal from the product’s portfolio. Therefore, for the survey, the study targeted chief executive officers, vice presidents of marketing or sales, product or sales managers, general managers and regional managers. Both preference bias (Narus, 1984) and survivor biases among the respondents were addressed.FindingsThe research result of this study reveals two very significant aspects of marketing and marketing strategies. First, the importance of financial, pricing and cost strategies further attests to the fiercely competitive nature of the global market today and the tendency for firms to commoditize most products and services. An effective financial and pricing strategy, coupled with a higher level of ETP, is capable of leading a firm to initial market success in the product-market in which it competes. Both ETP (a positional advantage and resource of the firm) and financial and pricing strategies (a deliberate strategic decision of the management) are important to achieve this goal.Research limitations/implicationsThis study is limited in several ways. The effects of entry order and timing on market performance could be dependent on the types of industries and types of product categories involved. However, as the hypotheses were well supported, the “industry specific” factors would provide “fine-tuning” in the future study. Second, the nature of the product (goods or services) may also present varying effects on the relationship studied (for differences between manufacturing and service firms in pioneering advantages, see Song et al., 1999). Services’ intangible nature, difficulty in protecting property rights, high involvement of boundary-spanning employees and customers, high reliance on delivery and quality, and ease of imitation may alter the proposed relationships in the model and the moderating effects. Third, although this study used a “retrospective” protocol approach in the data collection by encouraging respondents to recall market, product and business information, this study is not longitudinal. Lack of longitudinal data in any study involving strategic planning, strategy execution and the long-term effects is no doubt a weakness. In addition, due to peculiarity and complexity with regard to regulation and other aspects in pharmaceutical and other industries, the theory might be limited to a certain extent.Practical implicationsIn all, the integrated framework contributes to the understanding of the intricate issues surrounding first-mover advantage, late-mover advantage, entry order and timing and the role of marketing strategy. The framework provides practitioners guidance as to when to enter a product-market to gain advantageous positions and how to maintain that advantage. Firms that use a deliberate late-mover strategy could also benefit from the research finding in mapping out their strategic courses of action.Originality/valueThis study believes that the halo effect surrounding first-mover advantage may have obscured the visions of some researchers and managers, and the pursuit of a silver bullet has led to frenzied interests in becoming a “first-mover” or a deliberate “late-mover”. The theoretical framework, which is substantiated by empirical testing, invalidates the long-held claim that entry of a particular kind (first-movers or late-movers) yields any unique competitive advantage. It is a firms’ careful selection of marketing strategies and careful execution of the strategies through effective operational tactics that would lead to enduring competitive advantage, under an adequate level of ETP.

A Structural Model of Correlated Learning and Late-Mover Advantages: The Case of Statins

We propose a structural model of correlated learning with indirect inference to explain late-mover advantages. Our model focuses on a class of products with the following two features: (i) products that build on a common fundamental technology (e.g., computer processor, car, smartphone, etc.) and (ii) that consumers can observe some product attributes of a product (e.g., CPU clock speed, horsepower of a car engine, screen size of a smartphone, etc.), but when making their purchase decisions, consumers are not sure how efficiently the product can translate its observed attributes to performing tasks that they care about. For products that base on a similar technology, it is plausible that consumers use the information signals of one product’s technological efficiency to help them update their belief about another product’s technological efficiency within the same product category. As a result, a late entrant could benefit from the information spillover generated by an early entrant. We apply our framework to the statin market in Canada, where drugs rely on a similar mechanism to reduce the cholesterol level. In our model, patients/doctors can observe a statin’s efficacy in reducing the cholesterol level, but they are uncertain about how effectively it can convert its cholesterol-reducing ability to reducing heart disease risks. Our estimation results show that the combination of correlated learning and informative and persuasive detailing explain the success of the two late entrants in the statin market: Lipitor and Crestor. This paper was accepted by Matthew Shum, marketing.

Game Theoretical Perspectives on Pricing Decisions in Asymmetric Competing Supply Chains

This paper investigates a dual exclusive channel model in which each manufacturer distributes its goods through a single exclusive retailer, but two goods are substitute. The decision rule between two channels is Nash game in Case 1, while it is Stackelberg game in Case 2. From manufacturer Stackelberg (MS), retailer Stackelberg (RS), and Nash game (VN) theoretic perspectives, nine game models are developed to examine the effect of product substitutability and relative channel status on pricing decisions at both horizontal competition and vertical competition levels. The analysis suggests that the type of price leadership scenarios, the level of product substitutability, and the relative channel status play a significant role in decision making. For instance, in case 1, the symmetric leadership (two manufacturers or two retailers are leaders) is always the dominant strategy and equilibrium for either two manufacturers or two retailers regardless of product substitutability and relative channel status. Nevertheless, the asymmetric leadership may lead channel members to encounter a prisoner’s dilemma if the relative channel status is small. By contrast, in Case 2, the symmetric leadership is not the unique dominant strategy for either two manufacturers or two retailers. In contrast to many earlier results, we also show that whether the first-mover and the late-mover advantages exist, depending on the level of related channel status.

Angels in the Valley of Death: An R&D Race with Moral Hazard, Multiple Prizes, and Asymmetric Exit

This article considers a continuous-time R\&D race between firm-investor dyads seeking access to a profitable market. Firms are cash-constrained and rely on their investors' funding. Firms' R&D activities are unverifiable and subject to moral hazard. Investors make mutually optimal contract offers, specifying the funding period, whether and when their firm should undertake R&D, and their equity stake in case of market entry. The profitable market accommodates more than one firm. Early-mover advantages in the market induce asymmetric funding deadlines, resulting in staggered exit from the race. Late-mover advantages induce symmetric deadlines, leading to shakeouts.

Analysis and Inspiration of the Late-mover Advantages and Disadvantages of the "Two Bombs, One Satellite" Project

Based on the theory of Late-mover Advantages and Disadvantages, the late-mover advantages and disadvantages of the "Two Bombs, One Satellite" project and its inspiration to current scientific and technological innovation are analyzed in this paper. The "Two Bombs, One Satellite" project mainly uses risk aversion advantage, follow-up advantage, and opportunity advantage to promote the overall leap-forward development of national defense technology effectively. However, In terms of late-mover disadvantages, it adopts science-technology-engineering simultaneous advancement and technical democracy to fully mobilize limited resources and relatively avoid the adverse effects due to the disadvantages. Finally, it analyzes the inspiration of these practices on current scientific and technological innovation and development in China.

Is the People's Republic of China's Current Slowdown a Cyclical Downturn or a Long-Term Trend? A Productivity-Based Analysis

Whether the People’s Republic of China’s (PRC) economic slowdown since the 2008 financial crisis is a cyclical downturn or a long-run trend has important policy implications. Based on provincial panel data, this article identifies the determinants of productivity and uses counter-factual analysis to decompose the causes of the PRC’s post-crisis slowdown. It finds that economic openness has a significantly positive impact on the technical efficiency of production, whereas the income level has a significantly negative effect. Second, a significantly negative correlation is observed between the stock of inventory and productivity, while the opposite is observed between employment involvement rate and productivity. Third, government size and investment rates both have significantly negative effects on productivity. Lastly, the diminishing late-mover advantage and the growth in investment rate are both major contributors to the current decline in the PRC’s productivity. Although the stimulus-induced investment surge has effectively offset the negative effects of the crisis on the PRC’s growth, it is not conducive to the growth of productivity and consumption. The current economic slowdown does not seem to be a cyclical downturn. Indeed, further reforms are needed to stabilize the PRC’s growth.

Is the People's Republic of China's current slowdown a cyclical downturn or a long-term trend? A productivity-based analysis

ABSTRACTWhether the People's Republic of China's (PRC) economic slowdown since the 2008 financial crisis is a cyclical downturn or a long-run trend has important policy implications. As productivity is the determinant factor for long-term economic growth and the PRC watches soaring labor cost while no serious unemployment recently, this article tries to understand its slowdown from the supply side. Based on provincial panel data, it first identifies the determinants of productivity growth and then uses counterfactual analysis to simulate effects of the PRC's policy-induced investment boom on its economic growth. It finds that economic openness enhances productivity, whereas economies at higher stages of development on average have lower productivity growth. Second, productivity of economies accumulating more stock of inventory grows more slowly, while the opposite is observed for those with higher labor involvement rates. Third, government size and investment rate both have significantly negative effects on productivity growth. Finally, the diminishing late-mover advantage and the growth in investment rate are both major contributors to the current decline in the PRC's productivity growth. The current economic slowdown does not seem to be a cyclical downturn. Indeed, further reforms are needed to stabilize the PRC's growth.

Export market expansion through indirect learning: evidence from Korean exporters

PurposeA appreciable number of exporters have successfully developed their markets in foreign countries although they have little prior experience in those countries. Advocating that indirect learning plays a crucial role in explaining this phenomenon, the purpose of this paper is attempted to investigate whether and how learning indirectly from competitors and interfirm relationships enables exporters to successful expand their business into foreign markets.Design/methodology/approachDrawing on the knowledge-based theory of the firm and the late-mover advantage theory, the authors developed an empirically testable model that explains and predicts the effects of indirect learning on the success of export market expansion. The model was tested using a complied archival data set in regard to exporters’ market expansion events and international accounting. The sampling frame was the events of Korean exporters’ market expansion.FindingsEmpirical evidence shows that exporters’ indirect learning from domestic, local, global competitors and from interfirm relationships influence their success of market expansion. In addition, indirect learning from domestic rivals and from interfirm relationships has a more positive effect on the success of expansion into emerging markets than into developed markets.Research limitations/implicationsBecause the authors employed an event-study method, the limitations of this method can be applied to the present research. In addition, because of the empirical context, the results of the research may lack generalizability. The authors, however, provided an understanding how an exporter can succeed in a foreign market specifically when it has lack of direct experience in the market.Practical implicationsThe results of the current research suggested that an exporter should try to learn from local, domestic, and global rivals experienced in a foreign market in order to succeed in the market. In addition, exporters should be affiliated with business groups or partnerships because these affiliations can strengthen the information-sharing mechanisms. Moreover, an exporter should focus first on learning from local rivals and then domestic rivals in order to develop proper expansion strategies. Finally, an exporter should attempt to more actively learn from rivals and interfirm relationships when it targets an emerging market than a developed market.Originality/valuePrior studies have emphasized the effects of a firm’s direct learning on market development success. The authors, however, filled a knowledge gap of the impacts of learning in two aspects. First, the authors provided an understanding of the effects of indirect learning on market expansion success. Second, the authors demonstrated these effects in the context of export.

The effects of environmental provisions in RTAs on PM2.5 air pollution

ABSTRACTThis article examines the effect of regional trade agreements (RTAs) with and without environmental provisions on the concentration of PM2.5 (fine particulate matter in diameter), which is one of the most significant air pollutants. Using panel data for 136 countries from 2001 to 2010, we estimate the effect of trade liberalization under RTAs and the effect of environmental regulations under RTAs with environmental provisions. Moreover, paired countries are used to examine the effect of RTAs with environmental provisions on the convergence of PM2.5 concentrations. Human behaviours and natural characteristics are added as control variables, and the potential endogeneity and environmental provisions of RTAs as well as the gross domestic product and openness of specific regions are addressed using instrumental variables or difference-in-differences after propensity score matching. The main results indicate that RTAs without environmental provision terms lead to worse air quality in terms of PM2.5 concentrations, whereas RTAs with environmental provision terms are likely to be associated with a lower level of PM2.5 concentrations. In addition, RTAs with environmental provisions, especially environmental cooperation provisions, facilitate the convergence of PM2.5 concentrations between contracting countries, which can be explained by the late-mover advantage after distinguishing North–South, South–South and North–North trade forms.