Pioneering advantages and entrepreneurs' first-mover decisions: An empirical investigation for the United States and China

Document Type

Article

Publication Date

1-1-2012

Abstract

© 2012 Product Development & Management Association. New ventures are often launched for the purpose of pioneering an innovative new product or service in the marketplace. Entrepreneurs or founders of new ventures thus often have to make the decision whether to be the market pioneer or the first mover. While being a first mover potentially is advantageous, it also involves taking risks and facing uncertainties. Entrepreneurs must assess the benefits and risks of pioneering in the first-mover decision-making process to realize the potential competitive advantages associated with being a pioneer. Previous research has shown how entrepreneurs perceive potential gains and losses associated with exploring opportunities as the key defining element of entrepreneurial decision-making. Past studies have also indicated that cultural and business environmental factors affect both perceptions and decision-making. However, studies to date have insufficiently addressed the relationship between entrepreneurs' perceived pioneering advantages/disadvantages and their first-mover decisions, with little attention to cross-national differences. This study includes hypotheses postulating how entrepreneurs' perceived advantages and disadvantages of pioneering affect the number of first-mover decisions made by entrepreneurs in two different cultural contexts, the United States and China. We collect data from 152 U.S. entrepreneurs and 140 Chinese entrepreneurs over a four-year period and carry out empirical tests on the hypotheses using Poisson regression models. Our results provide insight on how culture affects perceptions of advantages and disadvantages of pioneering, and how these perceptions impact the likelihood of making a first-mover decision. We find that a higher level of perceived advantages will drive first-mover decisions, whereas perceived disadvantages will deter first-mover decisions. The negative effect of perceived erosion disadvantages on the number of first-mover decisions was higher for Chinese entrepreneurs, consistent with the high risk-aversion culture in China. However, this effect was not found for perceived uncertainty disadvantages, suggesting that the risk-averse characteristics of Chinese entrepreneurs is an oversimplification, and that the Chinese cultural, business, and legal environment helps offset uncertainty disadvantages. We also find an interesting positive moderating effect of perceived advantage on the relationship between perceived disadvantages and the number of first-mover decisions in China only. That is, if perceived advantages are low, Chinese entrepreneurs are more risk averse than U.S. entrepreneurs; but if perceived advantages are high, Chinese entrepreneurs are more risk-seeking than U.S. entrepreneurs. This finding again challenges the risk aversion conclusion found by previous studies of Chinese managers.

Publication Title

Journal of Product Innovation Management

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