Competitor See, Competitor Do: Incumbent Entry in New Market Niches
Debruyne, Marion Reibstein, David J
Debruyne, Marion
Reibstein, David J
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Publication Type
Journal article with impact factor
Editor
Supervisor
Publication Year
2005-02
Journal
Marketing Science
Book
Publication Volume
24
Publication Issue
1
Publication Begin page
55
Publication End page
66
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Abstract
The ability to keep up with changing technology is critical for a company's long-term survival. However, companies have to balance the risk of rushing into new areas and potentially cannibalizing their existing business against the risk of missing the emerging market. This paper investigates when incumbents enter into new market niches created by technological innovation. We argue that market conditions and company-specific characteristics do not suffice to explain incumbents' entry timing, but that entry is a contagious process. Our results demonstrate that incumbents are more likely to respond to innovations in their industry when their counterparts do so. In particular, we show that incumbents are affected by the entry of firms that are similar in size and resources. When a highly similar company enters the new market, it raises the probability that the company enters itself beyond levels based solely on the attractiveness of the market.
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Keywords
35 Commerce, Management, Tourism and Services, 3507 Strategy, Management and Organisational Behaviour