Innovation policy in emerging domains of activity: First-mover advantage or curse?

Do first-mover advantages exist for public policy? The theory of the first-mover advantage has been well studied in organization theory and marketing science. It is generally accepted that first-mover firms have multiple benefits such as technological leadership, asset preemption, and heightened buyer switching costs. First-mover firms also have the disadvantages of free-ridership, technology uncertainty resolution, enabling new entrants, and incumbent inertia. Previous work has focused on the application of the first-mover theory to firms. However, much can be learned by applying first-mover advantage theory to other areas. Specifically, this study applies the arguments of first-movers to the development of innovation policy in nanotechnology. In addition to the insights provided by this application, additional conditions must be considered when examining the order of entry in innovation policy. The article concludes with a discussion of what follower policies can learn from first-movers. The maximization of later-stage advantages is also discussed.