Controlling for Observed and Unobserved Managerial Skills in Determining First-Mover Market Share Advantages

Abstract

Empirical research on pioneering advantage establishes a strong association between pioneering and market share. Researchers, however, suggest that managerial skills may account for the relationship and underscore the need to control for such skills. The authors develop efficiency measures to represent a firm's managerial skills, employing the data envelopment analysis framework as well as a regression-based approach. Furthermore, they account for unobserved, firm-specific factors that include unobserved managerial skills. With such systematic control for observed and unobserved managerial skills, they reexamine the impact of pioneering on market share and find that it is robust even after they control for managerial skills.