How First-Mover Advantage, Once Unquestioned, Lost Its Grip on Entrepreneurs and Business Researchers

A skeptic asked questions that drove decades of study; plenty of ‘first-movers’ weren’t actually first

In the 1970s and early ’80s, when UCLA Anderson’s Marvin Lieberman was just beginning his academic career, the standard advice on launching new products, services or platforms was pretty straightforward: Be first. Business schools taught it, consultants pushed it, and entrepreneurs followed it as gospel. By pioneering a market, the wisdom went, a firm could build market share, lock in customers and force rivals to play catch-up forever after. “Get there first to win” was a mandate so popular in boardrooms and case studies that few questioned the truth of its rewards.  

Lieberman had nothing to do with any of that. In 1982, he was fresh out of Harvard with a dissertation on learning curves and pricing in chemical processing that would bring him some recognition. Research from his first professorship, at Stanford University’s Graduate School of Business, focused on growth and market structures in manufacturing, which he analyzed with his comprehensive chemical markets data. Later studies from his 36-year career at UCLA Anderson mostly revolved around strategic management and industrial economics issues unrelated to the benefits of pioneering markets. Although Lieberman collected data on many facets of market entry strategy over his career, he has never published an empirical study on first-mover advantage.

The distinction started when he and Stanford’s David B. Montgomery published  First-Mover Advantages in 1988, a critical literature review (or survey of existing research) that both popularized the term and demanded proof that such benefits existed. What exactly, they asked, are first-mover advantages?

Mishmash of Results

Surveying research in the field to date, they found sloppy study designs and glaring inconsistencies in the way terms and methodologies were applied. For example, samples of “pioneering” companies were chock-full of followers that got in after the real leader failed. Potential disadvantages of pioneering, including going bankrupt doing it, were largely ignored. And the mere fact that a pioneering firm had a large market share was routinely taken as evidence that going first had produced success, even though few studies had actually examined profits. 

This mishmash of incommensurable results did little to determine if pioneering itself pays off, the authors argued. They offered researchers a theoretical framework for future work, as well as a few practical suggestions intended to help them craft comparable studies.  

Since then, First-Mover Advantages has been cited more than 6,500 times and directly influenced hundreds of studies in the field. In 1996, it won the Strategic Management Society’s Best Paper Prize, an award bestowed years after publication when the work’s significance has become clear.

That original paper sparked a wave of research confirming the field’s serious empirical issues. A well-cited follow-up by Lieberman and Montgomery, published a decade later, convinced more researchers to take up the question. Their third review 25 years on — a rather disheartening recap of four core empirical issues yet unresolved — seemed to dash any lingering interest in trying to precisely define the meaning of “first-mover” and advantages one can expect from risking the first move.   

To Lieberman, the initial research question is played out now. “( First-Mover Advantages)” is the most cited work that I have,” he says, “perhaps because some questions raised (in the 1988 article) have never been resolved and perhaps cannot be resolved.”

In the wake of that search, some popular pioneering success stories look more complicated. Apple didn’t really invent the personal computer. Pampers (Procter & Gamble) was not the first disposable diaper. Microsoft didn’t create that famous early operating system DOS, they bought it. All of those companies just got so much bigger than actual pioneers that faded into history.

Today, optimal timing to enter a market is a more popular research subject, complete with an admission that what’s optimal is often not going first. Clearly, there’s something to be said for following.

Work Too Messy for Its Critics 

Despite the recognition the first-mover papers brought, neither Lieberman nor Montgomery was interested in doing empirical work that might have corrected issues they so famously raised. “After that first paper, I tried to distance myself from this (field of research), because it’s very hard to pin down,” Lieberman says in a recent video interview.

He attempted it once — wrote a working paper asking if worship of go-first strategies served dotcoms well in the 1990s — but walked away after running into the very problems he outlined in 1988. If one firm enters two days after the other, do they both go into the first-mover sample? What about the first one that exploits a niche in the larger field? How do you measure advantages? And over how long? “These were my struggles,” he says. “It’s really hard to do an airtight study of this.”

For Montgomery, the first-mover papers were asides in a prolific career around nerdier aspects of marketing strategy. A giant in his niche, he published more than 100 articles and 10 books, over a 60-plus-year career, which rarely mention the term “first-mover.”  In 1982, he was a founder of Marketing Science, an elite journal dedicated to addressing quantitative research in marketing, both empirical and theoretical. He retired with emeritus status from Stanford in 1999 and died in November 2025 at age 87.

The two scholars came together as outsiders to the topic in the summer of 1986, over brown bag lunches at Stanford. Lieberman, grounded in strategy and industrial economics, was just starting his career. Montgomery, a mentor, was already well-known for quantitative marketing. 

At the time, pioneer advantages was a popular research topic in each of their respective fields, with little agreement between them on how to conduct it. According to Lieberman, he and Montgomery argued over every aspect of that observed process. He says those debates really helped peg the issues. 

A Call for Protocols

First-Mover Advantages was a road map with marching orders, not new data. Surveying the literature, Lieberman and Montgomery suggested future studies focus on three mechanisms that seemed to help pioneers gain advantages: 

• Technology leadership
• Locking competitors out of prime real estate, distribution channels or other scarce resources 
• Capturing customer loyalty 

They also highlighted disadvantages of pioneering that had largely been dismissed, like bearing far more startup costs than followers and possible obsolescence from advancing technology. 

Lieberman and Montgomery laid out suggestions for tackling their laundry list of methodological issues. For example, use profits rather than market share alone to indicate an advantage; the first firm to market will have a bigger market share at some point, successful or not. Look at the common characteristics of firms that are pioneers, and stop comparing them to followers with different strengths. And, please, come to some consensus on what a first mover is. 

Responding studies quickly confirmed the problems Lieberman and Montgomery had raised. Here’s a sample:

• Many firms that researchers were studying as pioneers were not first-movers at all, according to a 1993 study in the Journal of Marketing Research by University of Southern California’s Peter N. Golder and Gerard J. Tellis. Using a historical analysis of firms rather than more popular databases, they discovered nearly half of market pioneers failed and dropped off researchers’ radars, leading their pioneer samples filled with followers. The work both highlighted definition issues and cast doubt around exceptional advantages attributed to entering a market first.   

• A 1997 Management Science study produced damning results around one of the field’s most popular methodologies. Using market share as the key dependent variable, rather than other indicators like profits, made finding a positive relationship between pioneering and performance far more likely, according to the work by Boston University’s Pieter A.VanderWerf and John F. Mahon. When they excluded market share as a variable and avoided several other study design components they questioned, the authors found no evidence of advantages for pioneers.

• On average, being first disadvantages profits over the long term, across industries, Duke’s William Boulding and Markus Christen found in a 2003 Marketing Science paper. That finding contradicted earlier consensus, leading to “questions about the validity of first-mover advantage, in and of itself, as a strategy to achieve superior performance,” they wrote.

• A 1992 study in Strategic Management Journal detailed ways pioneering companies tended to be different than followers. The work, by University of Michigan’s William T. Robinson and Claes Fornell, and University of Chicago’s Mary Sullivan, offered an early glimpse of the field’s later focus, reframing the debate from “does pioneering pay” to “who should pioneer.”

Thanks. Now Fix This

Upon accepting the Strategic Management award in 1996, Lieberman and Montgomery used the opportunity to write a retrospective on First-Mover Advantages. Really, Lieberman says, “I think we were just supposed to say thank you.”

Instead, they surveyed the field again and offered up more pointed criticism and advice. They flatly rejected findings from studies based solely on market share, a datapoint still favored in the field. They wanted more work on determining whether pioneering itself enabled higher profits and longer survival, or if going first was simply more common in already superior firms. They suggested more studies on fast followers, which they suspected might be at least as successful as pioneers. 

Moreover, they proposed future studies take a more resource-based view, a theoretical framework that could complement the research so far. The shift would require considering conditions beyond a firm’s control, such as the pace of technology advancements in its field, as well as the resources and skills the pioneer brings to the table before attempting a new market. 

• Writing in Harvard Business Review in 2005, Boston University’s Fernando F. Suarez and University of London’s Gianvito Lanzolla dismiss the notion of advantages from pioneering that are separate from other factors. “For every academic study proving that first-mover advantages exist, there is a study proving they do not,” they write. As suggested, they uncover some conditions helpful for first movers to sustain advantages. Using models, they find that pioneers’ chances of thriving improved when their market was slow to evolve and without important technological advances. Their full study was published in Academy of Management Review in 2007.

• A 2016 paper in Long Range Planning backed up Suarez and Lanzolla’s theoretical results with empirical findings. (Authored by University of La Rioja’s Jaime Gomez, Lanzolla, and Juan P. Maicas of Colegio Universitario de Estudios Financieros.) Looking at an era when mobile technology progressed from 2G to 3G, they find the European pioneers of the first saw both market share and profit advantages disappear when 3G arrived.  

During this period, Lieberman summarized the evolution of first-mover advantage research for the 2010 edition of Macmillan Encyclopedia of the Social and Management Sciences. He and Montgomery penned a similar synthesis for a chapter of the Handbook of Marketing Strategy published by Edward Elgar Publishing in 2012. 

Adding Insult to Injury

“In this paper we point out several elephants in the room that nobody wants to talk about, as well as a few hiding in the closet that are seldom clearly seen…. We have offered some suggestions but have raised far more questions than answers. Many of the problems seem deeply rooted and thus difficult to overcome.”
– 2013 Conundra and Progress: Research on Entry Order and Performance in Long Range Planning, Lieberman and Montgomery’s last collaboration. 

The elephants, or conundra, here are depressingly similar to those in the original paper: biases and inconsistencies in the data used to measure advantages; lack of consensus over the time period required to determine success; sample selection bias; and varying definitions of all sorts of key components, including “market” and “first-mover.” While the field had catalogued a lot of results on first-movers that did or did not excel, the body of work remained hard to replicate for any definitive conclusions. 

The business world, too, was letting go of the first-mover obsession. It was obvious now that firms could make great money by letting someone else pioneer a market. Some of the most successful companies on the planet — Google, Microsoft and Facebook, for example — were followers.

In the very issue Conundra published, Bocconi University’s Andrea Fosfuri, Lanzolla and Suarez surveyed the field and proposed a consistent framework for future studies, an integrative theory to get disparate research on the same page, just as Lieberman and Montgomery urged. It helped turn the field’s focus from the effects of being first to identifying conditions that might make pioneering more lucrative than following. 

Today, work in the field tackles more nuanced questions of when, and under what conditions, a firm is most likely to find success entering a market, first or not. 

Suarez, now at Northeastern University, continues to publish on issues around market entrance order. Entering a market during a certain window of opportunity is a more reliable way of gaining advantages than simply going first, he finds in a 2015 Strategic Management Journal study with Boston University’s Stine Grodal and Sungkyunkwan University’s Aleksis Gotsopoulos. A 2022 working paper with Eindhoven University of Technology’s George Papachristos offers a model intended to help firms determine optimal market entrance timing by comparing the fates of two firms, one that enters first and another that follows, under certain conditions. 

Ohio State’s Richard Makadok first tested one of Lieberman and Montgomery’s premises in a 1998 Strategic Management Journal paper. More recently, he joined with Louisiana State’s Kubilay Cirik in offering a possible fix for another issue they flagged. The standard research approach of comparing first-mover outcomes to their followers has made it impossible to uncover whether going first conveys advantages or simply reflects the pioneer’s previous strengths, they contend. They suggest including comparisons of what the first-mover’s business would look like if they had not pioneered. The work was published in Academy of Management Review in 2023.

How pioneers fare in digital platforms has become one of the hotter topics around first-movers lately. Especially in social media or online gaming, where the platform becomes more valuable as more people use it, these “network effects” appear to make it difficult for even fast followers to assail their popularity. The same dynamic also makes going first especially risky; it’s hard to predict what customers will want from a new kind of platform potential, and difficult to change if you get it wrong. 

Do First-Movers Win? It Depends 

Sometimes a field’s toughest critics can be its best protectors. In large part because of Lieberman and Montgomery’s agitating, getting to market first is no longer seen as a universally winning strategy. That little nuance probably saved a few firms.

We know now that “on balance, first-movers don’t do well,” Lieberman says. “They go away” and become “the invisible elephant in the room,” unseen in studies they would surely skew. Their anonymity makes finding practical advice from the first-mover advantages research — the search for proof they exist — a bit bittersweet. He considers the problem of accounting for dead pioneer firms in the research still unresolved.

He does see cautious takeaways from the field’s evolution. Giants in their industries should probably aim to be fast followers, ready with the wisdom and resources to go in quickly after the pioneer has borne the cost of market creation. Patents are good enablers of pioneers in some industries, but come with no guarantee. For small startups, the only good option is pioneering the market or at least a niche within it, he says, even though that strategy didn’t help most of those 1990s dotcoms. Being a late follower is probably not a good goal. 

Overall, he says, “we certainly can’t argue being first is better. We can argue that being first is better in some circumstances.” Luck, it seems, plays a larger role in whether a pioneer gains any advantages than researchers like to admit.

He calls that outcome wholly unsatisfying for both himself and a lot of students.

Lieberman will retire June 30 from UCLA Anderson with plenty of honors and no interest in revisiting first-mover advantage questions. He’s writing a book about how firms create and distribute value with a case study of Southwest Airlines, pioneer of low cost carriers.

Featured Faculty

• Marvin Lieberman

  Harry and Elsa Kunin Chair in Business and Society; Professor of Strategy