Entry into Banking Markets and the Early-Mover Advantage

Using a sample for 1972-2002 with over 10,000 bank entries into local markets, we find a market share advantage for early entrants. In particular, the earlier a bank enters, the larger is its market share relative to other banks, controlling for firm, market, and time effects, with a market share advantage for early movers between 1 and 15 percentage points, depending on the order of entry. The strongest early-mover advantage is for banks that were in our sample in 1972 and survive into the 1990s. Moreover, early entrants appear to have such hold in the market by strategically investing in larger branch networks. Even controlling for the potential survivorship bias, we find that a bank's share decreases by 0.1 percentage points for a change in its order of entry from "n"th to ("n"+ 1)th. High growth markets show a smaller difference between late and early movers, consistent with a larger fraction of consumers yet to be locked in with a bank in these markets. Copyright 2007 The Ohio State University.

Success and Risk Factors in the Pre-Startup Phase

Why does one person actually succeed in starting a business, while a second person gives up? In order to answer this question, a sample of 517 nascent entrepreneurs (people in the process of setting up a business) was followed over a 3-year period. After this period, it was established that 195 efforts were successful and that 115 start up efforts were abandoned. Our research focuses on estimating the relative importance of a variety of approaches and variables in explaining pre-start-up success. These influences are organized in terms of Gartner’s (1985) framework of new venture creation. This framework suggests that start-up efforts differ in terms of the characteristics of the individual(s) who start the venture, the organization that they create, the environment surrounding the new venture, and the process by which the new venture is started. Logistic regression analyses are run for the sample as a whole as well as for subgroups within the sample, namely for those with high ambition versus low ambition and for those with substantial versus limited experience. The results point to the importance of perceived risk of the market as a predictor of getting started versus abandoning the start up effort. Copyright Springer 2006performance, survival, nascent entrepreneurs, start-ups, M13,