Abstract
This chapter indicated that digitalization largely disrupts borders between sectors and analyzed how firms can break away from traditional forms of competition and redefine their value proposition by opening up new market spaces. This can be done first by gaining insights into new market spaces through the value curve. This chapter also discussed timing issues for market entry in e-business. More specifically, it analyzed the different types of early-mover advantages and disadvantages that an Internet venture can exploit (or should avoid).
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Notes
- 1.
- 2.
See C. Kim and R. Mauborgne, 1999, op. cit. and 2015, op. cit.
- 3.
- 4.
See Porter (2001).
- 5.
S. Rangan and R. Adner discuss the pitfalls of early-mover advantages in the Internet world in the article “Profits and the Internet: seven misconceptions,” Sloan Management Review, 2001, Summer, pp. 44–46.
- 6.
For different types of early-mover advantages, see Besanko et al. (2003). W. Boulding and M. Christen point out that there are also important early-mover disadvantages in “First-mover disadvantage,” Harvard Business Review, 2001, October, pp. 20–21. Likewise, see R. Varadarajan et al.’s paper “First-mover advantage in an Internet-enabled market environment: conceptual framework and propositions,” Journal of the Academy of Marketing Science, 2008, 36, pp. 293–328; also, see the chapter by R. Varadarajan et al. published in Springer’s research handbook on “e-business Strategic Management,” edited by F.J. Martínez-López, 2013.
- 7.
The importance of learning and experience first received attention through the development of the experience curve: Henderson (1998).
- 8.
J. Cassidy discusses the story of Amazon in Dot.con, Perennial, 2003, pp. 135–150.
- 9.
Ibid., p. 300
- 10.
Acquired by Tradeshift in 2017
- 11.
However, at the same time, this lack of lock-in is also the greatest danger that Google faces today as competitors, such as Yahoo! or Microsoft (Bing), heavily invest in search engine development. Nevertheless, recent search engines’ rankings clearly show the dominant of Google.
- 12.
See R. Varadarajan et al., 2008, op. cit., p. 300.
- 13.
S. Liebowitz refutes the frequently cited QWERTY keyboard and VHS/Betamax examples in Re-thinking the Network Economy, New York, Amacom, 2002, pp. 47–48.
- 14.
A good discussion and critique of the impact of network effects on e-commerce companies can be found in Liebowitz (2002). S. Rangan and R. Adner also discuss network effects in e-commerce in “Profits and the Internet: seven misconceptions,” Sloan Management Review, 2001, Summer, pp. 44–46.
- 15.
- 16.
See R. Varadarajan, 2008, op. cit., p. 298.
- 17.
For a detailed discussion of first-mover disadvantages, see Liebermann and Montgomery (1998).
References
Besanko, D., Dranove, D., Shanley, M., & Schaefer, S. (2003). Economics of Strategy (pp. 438–446). John Wiley.
Henderson, B. (1998). The experience curve reviewed. In C. Stern & G. Stalk (Eds.), (pp. 12–15). Perspectives on strategy: John Wiley.
Johnson, G., Scholes, K., & Whittington, R. (2002). Exploring corporate strategy (7th ed., pp. 132–133). New Jersey: Prentice Hall.
Kim, W. C., & Mauborgne, R. (1997). Value innovation: The strategic logic of high growth. Harvard Business Review, 75, 102–112.
Kim, C., & Mauborgne, R. (1999). Creating new market space. Harvard Business Review, 77, 83–93.
Liebowitz, S. (2002). Re-thinking the network economy (pp. 13–48). New York: Amacom.
Metcalfe, B. (2013). Metcalfe’s law after 40 years of ethernet. IEEE Xplore, 46(12).
Porter, M. E. (2001). Strategy and the internet. Harvard Business Review, 79, 63–78.
vcmike. Guest blogger Bob Metcalfe: Metcalfe’s law recurses down the long tail of social networks. VCMike’s Blog, 18 August 2006. Available at https://vcmike.wordpress.com/2006/08/18/metcalfe-social-networks/
Further Reading
V. Atluri, M. Dietz, and N. Henke, ‘Competing in a world of sectors without borders’, Mckinsey Quarterly, July 2017.
Building on their insights from the value innovation studies, C. Kim and R. Mauborgne published the book Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant, Harvard Business School Press, Expanded edition, 2015.
C. Kim and R. Mauborgne developed the concept of creating new market spaces by looking outside one’s own industry in ‘Creating new market space’, Harvard Business Review, 1999, January–February, pp. 83–93. See also: ‘Value innovation – the strategic logic of high growth’, Harvard Business Review, 1997, January–February, pp. 103–112. And: C. Kim and R. Mauborgne, ‘Nondisruptive Creation: Rethinking Innovation and Growth’, MIT Sloan Management Review, 21 February 2019.
R. Varadarajan et al.’ analyze the first-mover advantage in the digital market space in ‘First-mover advantage in an Internet-enabled market environment: conceptual framework and propositions’, Journal of the Academy of Marketing Science, 2008, 36, pp. 293–328; also, see the chapter by R. Varadarajan et al. published in F.J. Martínez-López (Ed.) Research Handbook on e-business Strategic Management, Series PROGRESS in IS, Springer, 2013.
Weblinks
www.blueoceanstrategy.com revolves completely around value innovations and provides up-to-date examples of successful innovations and their underlying drivers.
www.innovationzen.com provides information on innovation management, business strategy, technology and more.
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Jelassi, T., Martínez-López, F.J. (2020). Exploiting Opportunities of New Market Spaces in e-Business. In: Strategies for e-Business. Classroom Companion: Business. Springer, Cham. https://doi.org/10.1007/978-3-030-48950-2_7
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