<i>De novo</i> venture strategy: arch incumbency at inaugural entry

Fan, Terence Ping Ching

doi:10.1002/smj.795

Cited by 31 publications

(40 citation statements)

References 59 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Our empirical findings indicate that incumbents respond not only to (perceived) marketplace consequences of the entry (e.g., Chen & Miller, ; McCann & Vroom, ; Simon, ), but simultaneously consider longer‐term behavioral intentions of the entrant (i.e., aggressiveness and commitment). We extend previous literature by elaborating on how these considerations differ theoretically as well as by showing how they can be disentangled empirically (e.g., Chen et al, ; Fan, ). Finally, we show how seemingly minor changes in the entry strategy (e.g., coupling a low entry price with a PMG) can serve the function of cuing the incumbent about the entrant’s behavioral intentions.…”

Section: Introductionmentioning

confidence: 74%

“…This study explores the possibility that this trade‐off may not be that clear‐cut. Indeed, prior theoretical arguments suggest that highly impactful market entry strategies may sometimes deter incumbent firm counterattacks (e.g., Fan, ; McGrath, Chen, & MacMillan, ; Wang & Shaver, ). Consequently, we ask if and how a firm might be able to dampen the waves associated with a big splash market entry.…”

Section: Introductionmentioning

confidence: 99%

“…Apart from that, managers’ assessments of the entrant’s longer‐term behavioral intentions might also affect the incumbent’s competitive responses. In particular, we predict that managers are likely to be less motivated to attack entrants who are expected to act aggressively in the market (e.g., Fan, ), due to a fear of triggering a destructive “race to the bottom.” Conversely, managers are more prone to attack entrants perceived as committed to the market (e.g., Heil & Walters, ), due to the belief that such entrants present a long‐term competitive threat unless dealt with immediately. Thus, the incumbent’s response may be mitigated if the entrant succeeds to foster perceptions high aggressiveness or low commitment.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Big splash, no waves? Cognitive mechanisms driving incumbent firms’ responses to low‐price market entry strategies

Luoma

Falk

Totzek

et al. 2018

Strategic Management Journal

View full text Add to dashboard Cite

Research Summary: Low‐price market entries, aiming for rapid sales growth, tend to prompt strong competitive reactions. This research explores whether and how firms using low‐price entry strategies can mitigate retaliatory incumbent reactions. An experiment with 656 managers shows that entrants can attenuate the strength of incumbents’ responses by fostering perceptions of high aggressiveness or low commitment. Entrants may be able to accomplish this by adjusting their entry strategy to embed (subtle) cues of aggressiveness and (lack of) commitment. A replication experiment with university students reinforces our overall theoretical argument. However, the results also indicate that the interpretation of cues embedded in the entry strategy may be affected by the experience of incumbent firm managers. Overall, these results clarify the cognitive foundations of competitive responses to market entry. Managerial Summary: What drives incumbents to respond strongly to market entries, and what can the entrant, if anything, do to mitigate those responses? This research offers empirical evidence and theoretical insights for managers faced with these questions by shedding light on the thinking processes preceding competitive responses. The study shows that while managers are motivated to respond strongly to market entries that appear to be highly consequential to their business, these responses may be mitigated if the entrant manages to foster perceptions of high aggressiveness or low commitment to the market. Managers form these perceptions in part on the basis of the entrant’s behavior, creating an opportunity for entrants to adjust their entry strategies in a manner that demotivates strong competitive responses.

show abstract

Section: Introductionmentioning

confidence: 74%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Big splash, no waves? Cognitive mechanisms driving incumbent firms’ responses to low‐price market entry strategies

Luoma

Falk

Totzek

et al. 2018

Strategic Management Journal

View full text Add to dashboard Cite

show abstract

“…Communication in a small firm is easier as the number of employees is fewer and decision making systems are fluid and transparent, which allows for rich communication and cohesion in the management team (Mosakowski, 1998). Fan (2010) finds that younger firms that focused on explorative activities were more likely to survive. These factors suggest that tacit knowledge-driven innovation has a more favorable environment in younger firms than in older firms.…”

Section: Hypothesis 2a: the Number Of Entries Into New Technological mentioning

confidence: 99%

Entry into new niches: the effects of firm age and the expansion of technological capabilities on innovative output and impact

Kotha

Zheng

George

2011

Strategic Management Journal

198

116

View full text Add to dashboard Cite

We provide evidence that young firms systematically differ from older firms in their innovative output when they enter 'new to the firm' technological niches. We analyze data from 128 biotechnology firms since their inception and track these firms over time. Our analyses reveal that the organizational age at which the firm branches into new technological niches significantly influences its innovative activity. We refine the focus of the extant literature by separately examining the effects of branching on the quantity of innovative output, and the impact that this output has on the technology domain. Subsequent to branching into new niches, we find that older firms have a higher quantity of output than their younger counterparts; whereas young firms tend to outpace their older rivals with higher impact. The implications of these findings for the literature on dynamic capabilities and entrepreneurship are discussed. Entry into New Niches 3How does the timing of capability development matter? We examine whether the benefits that accrue to expanding technological capabilities are contingent upon firm age. We draw on the organizational aging and dynamic capability literatures to study how the expansion of a firm's capabilities by entering 'new to the firm' technological niches, termed as branching, at different points in the firm's age would vary in its influence on subsequent innovative activity.Though commonly assumed that startups create breakthrough inventions, some contrarian evidence suggests that mature incumbents also generate such discoveries (Dushnitsky and Lenox, 2005;Phene et al., 2006). In a study of large chemical firms, Ahuja and Lampert (2001) proffer evidence to suggest that mature incumbents overcome pathologies of aging by branching into new domains and by recombining new with old knowledge. Other researchers have investigated the temporal and structural effects of recombining new with old knowledge on innovative output (Nerkar, 2003;Rosenkopf and Nerkar, 2001;Rothaermel and Boeker, 2008;Yayavaram and Ahuja, 2008). We contribute to this conversation by examining the role of entry into novel technology areas, i.e. branching, and how the effects of branching on innovative activity vary with firm age.To examine whether the pattern of optimal technological expansion is conditional on firm age, we study innovative output of biotechnology firms from their inception over a twenty year period. This sample allows us to investigate the underlying conditions when firms optimize their output and impact by managing entry into new technological niches. The study engages the literature on capability development, especially in young firms. The entry into new niches corresponds with the expansion of a firm's technological capabilities to drive innovation within and across these technological domains. We also refine the focus of the extant literature by Entry into New Niches 4 separately examining the effects of branching on the quantity of innovative output and the impact that the output has on the technol...

show abstract

“…Entrepreneurs of new airline ventures, especially those in increasing numbers in the deregulated market within the European Union (Fan, 2010), should also take a read of the volume. However, few studies on international travels focus squarely on business travellers because these individuals are inherently difficult to identify: they do not always travel in business cabins (p. 79) and it is increasingly difficult to quantify the duration and function of business trips as travellers build in extra time to allow for flight delays or for other leisure activities (p. 69).…”

Section: Jon Shawmentioning

confidence: 99%

Untitled

Fan¹

2010

Journal of Transport Geography

View full text Add to dashboard Cite

De novo venture strategy: arch incumbency at inaugural entry

Cited by 31 publications

References 59 publications

Big splash, no waves? Cognitive mechanisms driving incumbent firms’ responses to low‐price market entry strategies

Big splash, no waves? Cognitive mechanisms driving incumbent firms’ responses to low‐price market entry strategies

Entry into new niches: the effects of firm age and the expansion of technological capabilities on innovative output and impact

Untitled

Contact Info

Product

Resources

About