However, a "wait and see" approach doesn't always carry a competitive
penalty. Making the first move may carry greater risks than a late move. First-mover
disadvantages (or late-mover advantages) arise when: (1) pioneering
leadership is much more costly and only negligible experience curve effects
accrue to the leader, (2) technological change is so rapid that early investments
are soon obsolete (thus allowing following firms to gain the advantages of next generation newest products and more efficient processes), (3) it is easy for late
comers to crack the market because customer loyalty to pioneering firms is
weak, and (4) skills and know-how developed by the market leaders can be
easily copied or even surpassed by late movers. Good timing, therefore, is an
important ingredient in deciding whether to be aggressive or cautious.
However, a "wait and see" approach doesn't always carry a competitivepenalty. Making the first move may carry greater risks than a late move. First-moverdisadvantages (or late-mover advantages) arise when: (1) pioneeringleadership is much more costly and only negligible experience curve effectsaccrue to the leader, (2) technological change is so rapid that early investmentsare soon obsolete (thus allowing following firms to gain the advantages of next generation newest products and more efficient processes), (3) it is easy for latecomers to crack the market because customer loyalty to pioneering firms isweak, and (4) skills and know-how developed by the market leaders can beeasily copied or even surpassed by late movers. Good timing, therefore, is animportant ingredient in deciding whether to be aggressive or cautious.
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