Many incumbent firms respond to the emergence of a disruptive business model by adding the business model into their existing ones. But, not all incumbents perform better after adding new business models to their existing ones; that raises the question about the conditions under which adding a new business model improves incumbent performance. We develop a theoretical framework to address that question. After identifying two types of incumbent assets, complementary and conflicting, we highlight the influence of two managerial choices—timing and organizational mode of the new business model addition—that create opportunities to translate the potential provided by incumbent assets into higher performance. The proposed discriminating alignment thesis states that incumbent performance after new business model addition improves when the incumbent firm aligns complementary assets with earlier addition of the new business model and conflicting assets with an autonomous business unit for the new business model. To test these hypotheses, we analyzed the performance change of those physical store‐based retailers that added online retailing as a new business model. The test results supported all hypotheses, and key theoretical and managerial implications are presented. Copyright © 2015 Strategic Management Society.

When entering a new market, the first entrant typically faces the greatest market and technological uncertainties. Memorable phrases reflect the associated survival risk, such as "the first to market is the first to fail" and "the pioneer is the one with the arrows in its back." Although research estimates the market pioneer's survival rate, the typical pioneer survival rate has not been compared with that of early followers. The authors' study compares survival rates for 167 first-entrant market pioneers versus 267 early followers. For these industrial goods businesses, 66% of the pioneers versus 48% of the early followers survived at least ten years. The main conclusion is that the pioneer's temporary monopoly over the early followers plus its first-mover advantages typically offset the survival risks associated with market and technological uncertainties. These results are consistent with previous research in the sense that first-mover advantages that increase a pioneer's market share also help protect the pioneer from outright failure.

Does the first entrant in a new market have a difficult time surviving or do first-mover advantages provide protection from outright failure? Our empirical study of 264 new industrial product-markets yields insights into this controversial research topic. The key data analysis insights arise by comparing survival risks in markets that were started with a really new product versus an incremental innovation. When the pioneer starts a new market with a really new product, it can be a major challenge just to survive. In contrast, in markets started by an incremental innovation, market pioneer survival risks are much lower. Interestingly, early followers have the same survival risk across both types of markets. Overall, these results indicate that in markets started by a really new product, the first to market is often the first to fail. In contrast, in markets started by an incremental innovation, it appears that first-mover advantages protect the pioneer from outright failure.

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Does the first entrant in a new market have a difficult time surviving or do first-mover advantages provide protection from outright failure? This empirical study of 264 new industrial product-markets yields insights into this controversial research topic. The key data analysis insights arise through a comparison of survival risks in markets that were started with a really new product and in those that were started with an incremental innovation. When a pioneer starts a new market with a really new product, it can be a major challenge just to survive. In contrast, in markets started by an incremental innovation, market pioneer survival risks are much lower. Notably, early followers have the same survival risk across both types of markets. Overall, these results indicate that in markets started by a really new product, the first to market is often the first to fail. In contrast, in markets started by an incremental innovation, it appears that first-mover advantages protect the pioneer from outright failure.