Marvin B. Lieberman

First-Mover (Dis)Advantages: Retrospective and Link with the Resource-Based View

This article reflects upon and updates our prize-winning paper, ‘First-mover advantages,’ which was published in SMJ 10 years ago. We discuss the evolution of the literature over the past decade and suggest opportunities for continuing research. In particular, we see benefits from linking empirical findings on first-mover advantages with the complementary stream of research on the resource-based view of the firm.© 1998 John Wiley & Sons, Ltd. We were honored to receive the 1996 prize of the Strategic Management Society (in cooperation with John Wiley & Sons) for our 1988 paper, ‘First-Mover Advantages.’ It is customary for the award recipients to write a brief article reflecting on the original work. As our paper aimed to provide a unified conceptual framework and critical assessment of the literature, we have chosen to write a somewhat longer piece to update our survey and suggest opportunities for continuing research. Our prize-winning paper began as a series of healthy disagreements between the authors, which took place over brown bag lunches during the summer of 1986. ‘First-mover advantage’ (FMA) was a term widely invoked in strategic management, marketing, and economics. We found, however, that our interpretations of the concept differed greatly. We wondered if our disagreements stemmed from the contrast in our disciplinary backgrounds, or if they reflected a broader lack of consensus among business scholars. During a sabbatical at Northwestern University,

The Learning Curve and Pricing in the Chemical Processing Industries

Data on 37 chemical products are used to test a number of hypotheses about the learning curve and industrial price behavior. The results document a strong and consistent learning effect. Learning is found to be a function of cumulated industry output and cumulated investment rather than calendar time. Standard economies of scale appear significant but small in magnitude relative to the learning effect. Variations in the slope of the learning curve are linked to differences in R&D expenditures and capital intensity. Market concentration is found to be a strong influence on price flexibility and the timing of learning-related price changes.

EXCESS CAPACITY AS A BARRIER TO ENTRY: AN EMPIRICAL APPRAISAL*

This paper examines excess-capacity barriers to entry and investment dynamics in a sample of thirty-eight chemical product industries. Logit and log-linear models of investment behavior are estimated, and specific case examples are considered. The results show that incumbents rarely built excess capacity ereemptively in an effort to deter entry. In general, entrants and incumbents exhibited similar investment behavior. Copyright 1987 by Blackwell Publishing Ltd.

Exit from Declining Industries: "Shakeout" or "Stakeout"?

Data on 30 chemical products are used to examine the sequence of divestment in declining industries. Small firms and plants might be expected to close first, given lack of scale economies. However, recent theories suggest that large producers may have greater incentives to exit or cut capacity. Both predictions receive some empirical support. Small plants had higher rates of closure, and most exiting firms were small. Holding the influence of plant size constant, large multiplant firms were more likely to close individual plants.

Investment and Coordination in Oligopolistic Industries

UNIVERSITY OF CALIFORNIA, BERKELEY Department of Economics Berkeley, C a l i f o r n i a Working Paper 8730 INVESTMENT AND COORDINATION IN OLIGOPOLISTIC INDUSTRIES Richard J . Gilbert and Marvin Lieberman February 17, Key words: Investment, o l i g o p o l y , game theory. Abstract Investment by firms i n 24 chemical product i n d u s t r i e s i s ex- amined to determine whether firms invest preemptively to achieve persistent increases i n market share or whether there i s evidence of maintain-market-share behavior. The data i n d i c a t e that invest- ment reduces the p r o b a b i l i t y of capacity expansion by r i v a l firms, but the e f f e c t i s temporary. Large firms tend to display maintain- market-share behavior, while smaller firms tend to invest simulta- neously with r i v a l s . The role of preemptive investment i s l i m i t e d to that of permitting a f i r m to invest with a lower p r o b a b i l i t y of redundant investment by r i v a l s . Preemption does not allow a per- s i s t e n t increase i n market share, but instead acts as a means by which firms may coordinate capacity investment to help avoid epi- sodes of industry over-capacity. JEL C l a s s i f i c a t i o n :

Inventory Reduction and Productivity Growth: A Comparison of Japanese and US Automotive Sectors

This study assesses the inventory and productivity performance of the Japanese and US automotive industries in recent decades. Within each country we distinguish between vehicle assemblers and parts suppliers. In Japan, assemblers and suppliers made dramatic inventory reductions and productivity gains, particularly during the 1970s. By comparison, we find an unbalanced pattern for the United States: American assembly plants have been streamlined, but parts suppliers have stagnated. In both countries our findings suggest a strong association between inventory reduction and productivity growth

Capacity utilization: Theoretical models and empirical tests

Abstract This paper examines the determinants of industry capacity utilization in 40 chemical product industries over a period of roughly two decades. A series of testable hypotheses are developed based on three operations research models of capacity expansion: the Manne model, the Newsboy model, and the Whitt-Luss model. The hypotheses are tested on the chemical industries sample using multiple regression analysis. The empirical results are consistent with most predictions derived from the Newsboy and Whitt-Luss models, which suggests that firms made expansion decisions in a manner roughly in accordance with these models. Capacity utilization was positively related to capital intensity and the trend rate of demand growth, and was negatively related to demand variability, geographic plant dispersion, and plant ‘lumpiness’. The magnitude of investment scale economies and the extent of multi-plant operation had little effect on capacity utilization.

ORGANIZING FOR TECHNOLOGICAL INNOVATION IN THE U.S. PHARMACEUTICAL INDUSTRY

The organization of RD (2) localized spillovers among competing labs in the U.S.; and (3) globalization of laboratory networks. The findings point to the importance of international spillovers that pharmaceutical companies have harnessed through ownership of foreign laboratories. Thus, foreign labs appear beneficial for innovation, but no evidence is found of more localized spillovers among commercial labs. The analysis shows some benefits of centralization within the U.S., suggesting that an organization with one or two domestic laboratories may be optimal.

Internal and external influences on adoption decisions in multi-unit firms: the moderating effect of experience

Facing uncertainty about whether to adopt a new technology, firms rely on both external and internal sources of information. Firms may learn vicariously about the desirability of adoption; a large body of research has demonstrated a tendency for firms to imitate rival adopters. Organizations with multiple units may also learn from their own experience once an initial unit of the firm has adopted. This article uses data on the establishment of websites by consumer magazines during the early internet era to test the hypothesis that multi-unit firms pay less attention to rivals after an initial unit of the firm has adopted. Consistent with this hypothesis, it is found that the influence of rivals drops sharply following the initial adoption. One explanation for the shift is that vicarious learning becomes less valuable once richer information becomes available from internal sources.

A literature citation study of science-technology coupling in electronics

By tracing the citations made by authors in the IEEE Transactions on Electron Devices to the Physical Review and other scientific journals, a record of information flows from science to technology was obtained. Evaluation of this record revealed the importance of a group of industrial scientists who serve as an intellectual bridge between the scientific and technological sectors. It was found that the scientific papers cited in the IEEE Transactions on Electron Devices tend to be considerably older than the techological papers cited therein. Moreover, the median age of the Physical Review papers cited has been increasing over time, from about five years during the late 1950s to more than ten years during 1971-1975. The number of Physical Review papers cited per year by authors of Transactions papers on solid-state technology has been growing somewhat over the past two decades, but the percentage of the citations which are to the Physical Review and other scientific journals has fallen. This suggests that the magnitude of science-technoloy coupling has been increasing, but at a rate slower than the overall growth of the solid-state components field.