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First Mover Advantage in Business Essay

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Updated: Jul 6th, 2020

In the business world that is characterized by cutthroat competition, businesses do whatever is in their capacity to gain a competitive advantage. One of the common desires for any business is to dominate an industry or a region by being the first to enter into the specific business area. As a business concept, first-mover advantage is a highly preferred concept where businesses seek to dominate given business areas by being the pioneers. Although many examples show first mover advantage is not always the best, there are equally many success stories of being the pioneers in a given business area. In this paper, I argue that the first-mover advantage is preferable for business.

Firstly, from a management viewpoint, any business that acquires customers in an area where other companies have not been established ends up being the market leader as the pioneer in the given business area. Such an organization has the technological leadership of the products it creates. The process of developing new products involves research that leads to the establishment of new technologies that are currently not in the market (Berger and Dick 775). As such, a first-mover business can enjoy a technological advantage over second movers. For example, pioneer companies are often protected through patents and intellectual property laws. Hence, they can use a given technology exclusively before others enter a given area.

The second reason why first-mover advantage is more preferable is the preemption of scarce resources. In the management decision-making process, it is important for organizations to strive to attain scarce resources that offer an advantage over competitors (Thijssen 2448). In this case, in the first-mover scenario, a business can acquire the existing resources such as locations, shelf spaces, or geographical location before others can venture into the business area (Dobrev and Gotsopoulos 1155). Such resources give the first movers a competitive advantage, which allows the businesses to be more successful and profitable. Further, since the business is the first to enter a given market, it can purchase resources at a cheaper price as compared to what will prevail once the market evolves.

The other important advantage that first-mover organizations have is the creation of a brand loyalty. In this case, a business is likely to resonate well with customers who identify with the organization or product (Kopel and Löffler 147). Further, such an advantage allows a business to create a reputation that other later entrants will be benchmarked against (Varadarajan, Yadav, and Shankar 301). Once an organization gains brand loyalty, it is difficult for others to compete with the first mover. For example, some of the companies that have prevailed due to first mover advantage include Coca-Cola and Sony among others that have managed to create a strong brand loyalty and identity (Sirsly and Lamertz 26). Hence, first-mover advantage offers a business an opportunity to create brand uniqueness and allegiance, which can drive its success over is competitors.

In conclusion, the first-mover approach is preferable since it offers important advantages over the second-mover plan. The first-mover strategy allows businesses to develop and attain technological leadership, which is hard to be duplicated by their competitors. Further, the first-mover plan allows a business to gain strategic and scarce resources that are vital in determining the success of an organization. Lastly, the approach allows an organization to create brand loyalty and identity, which is critical in creating a competitive advantage over other industry players.

Works Cited

Berger, Allen, and Astrid Dick. “Entry into Banking Markets and the Early‐Mover Advantage.” Journal of Money, Credit and Banking 39.4(2007): 775-807. Print.

Dobrev, Stanislav, and Aleksios Gotsopoulos. “Legitimacy vacuum, structural imprinting, and the first mover disadvantage.” Academy of Management Journal 53.5(2010): 1153-1174. Print.

Kopel, Michael, and Clemens Löffler. “Commitment, first-mover-, and second-mover advantage.” Journal of Economics 94.2(2008): 143-166. Print.

Sirsly, Tetrault, and Kai Lamertz. “When does a corporate social responsibility initiative provide a first-mover advantage?” Business & Society 22.1(2007): 22-39. Print.

Thijssen, Jacco. “Preemption in a real option game with a first-mover advantage and player-specific uncertainty.” Journal of Economic Theory 145.6(2010): 2448-2462. Print.

Varadarajan, Rajan, Manjit Yadav, and Venkatesh Shankar. “First-mover advantage in an internet-enabled market environment: conceptual framework and propositions.” Journal of the Academy of Marketing Science 36.3(2008): 293-308. Print.

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