Environmental Dynamics and First-Mover Advantages in Emerging Markets

The study empirically analyzes the conditions under which first-mover advantages are enhanced or impaired for internationalizing service firms in emerging and developing markets. Drawing on the environmental dynamics theory of first-mover advantages (FMA), we posit that unstable and volatile emerging-market conditions hinder early entrants’ ability to develop first-mover advantages. The framework is empirically analyzed using hierarchical linear modeling in the context of the recently opened Eastern European region as well as in the next frontier of Africa and the Middle East. The findings reveal that early entrants outperform later entrants in both geographic regions and the first-mover effect is moderated by environmental dynamics. Specifically, early entry is more likely to lead to sustainable competitive advantage in markets characterized by political stability and limited economic integration.