The Strategic Issue of Technological Pioneering: The Impact of Radical Product Introductions and Competitors' Reactive Announcements on Share Price Performance

Abstract

This paper seeks to provide a conceptual framework to examine the strategic issue of being the first to introduce and commercialize a radical product innovation arising from the firm's adoption or development of a new technology. This issue is addressed by first, examining how the pioneer's announcement of a radical product innovation impacts its share price performance. Second, it proposes to examine how the impact of the pioneer's announcement on its share price performance is moderated by the first competitor's reactive announcement. Third, this paper suggests how a firm's market position (whether it is a market leader or not) and the extent of the competition in the industry (the degree of concentration) together influence the firm's likelihood to announce in the first place. This paper aims to differentiate and contribute to the investigation of pioneering advantages by examining the short-term performance of pioneering in terms of studying the impact of the pioneer's share price following its first public announcement of a radical product innovation.