Quality is not strategy : Nash equilibrium and international market entry

Abstract

A recent Harvard Business Review article by Suarez and Lanzolla (2001) entitled the Half-truth of First Mover Advantage argued that this is a business concept which has so much intuitive appeal that its validity is almost taken for granted. In the following paper, we illustrate how typical applications of game theory to describe first mover advantage in the context of international markets are generally set up use an improper theoretical framework and compare incommensurable qualities and quantities. We then review the work of Porter (1996) and others with respect to sustainable competitive advantage and suggest that the Nash equilibrium may provide some guidance as to the kinds of circumstances in which a profitable first mover advantage may or may not be obtainable when entering international markets.