Social Identity, Market Memory, And First-Mover Advantage

Considerable attention goes to whether there is a "first-mover advantage" among organizations. Technical mechanisms have been considered for this advantage, such as learning and occupancy of preferred market segments. We argue that first movers may also benefit from a social identity advantage because being identified as "the original" in a market implies authenticity. When first-mover advantage is based on such an identity, market memory is important. Initially, audiences distinguish the originality of the first mover, but as time passes, such differences are less recognizable. We find evidence of this pattern--and that organizations are constrained from expanding beyond where their identity is established. The results suggest the usefulness of a sociological approach to understanding the first-mover strategy.