Market entry, a vehicle for innovation?

Abstract

This paper investigates whether market entrants exhibit more product innovation than incumbent firms, and whether a firm’s overall age in the industry relates to its propensity to innovate. Our study found that new entrants were no more likely to innovate than their incumbent competitors, a result that was consistent across industries and types of market entry. However, over an extended timeframe we found a positive, significant, linear relationship between a firm’s age within an industry and its propensity to innovate.