Competitor See, Competitor Do: Incumbent Entry in New Market Niches

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 wh...

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Bibliographic Details
Published inMarketing science (Providence, R.I.) Vol. 24; no. 1; pp. 55 - 66
Main Authors Debruyne, Marion, Reibstein, David J
Format Journal Article
LanguageEnglish
Published Linthicum INFORMS 01.01.2005
Institute for Operations Research and the Management Sciences (INFORMS)
Institute for Operations Research and the Management Sciences
SeriesMarketing Science
Subjects
Bank accounts
Brokerages
Business innovation
Business structures
Competition
Consumer goods industries
Decision making
Disruptive innovation
Emerging markets
Empirical research
Game theory
Growth models
Incumbency
Incumbents
Industrial economics
Industrial market
Innovation
Market entry
Market segments
Marketing
new product research
Niche marketing
Organizational structure
Product development
Regression analysis
Stockbrokers
Strategic planning
Studies
Technological change
Technological innovation
Technological innovations
U.S.A
United States
United States > US
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Summary: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.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
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ISSN:0732-2399
1526-548X
DOI:10.1287/mksc.1040.0064