Title

Competitive Dynamism in Nascent Markets: An Empirical Exploration of Trademarks and Superstar Firm Entry in the Metaverse

Publication Date

3-24-2023

Abstract

Does entry by a superstar firm change the competitive dynamics of nascent industries? Using USPTO trademark data and a quasi-experimental design, we explore this question by analysing the development of new products and services in the metaverse. We develop a theoretical framework of heterogeneous strategies for market entry under uncertainty, focusing on competition in digital industries. Empirically, we show that firm size is highly correlated with metaverse participation, particularly for born-digital and global, physical-good firms. However, following Facebook’s entry in 2014, we see a general decline in metaverse engagement; this decline is partially offset for larger and born-digital firms, but is exacerbated for global, physical-good firms. These results suggest that global, physical-goods firms are much more sensitive to superstar entry than digital-goods firms in nascent markets. Our analysis contributes to the understanding of the rise in intangible assets as key drivers of firms’ competitive advantage in the global, digital economy.Does entry by a superstar firm change the competitive dynamics of nascent industries? Using USPTO trademark data and a quasi-experimental design, we explore this question by analysing the development of new products and services in the metaverse. We develop a theoretical framework of heterogeneous strategies for market entry under uncertainty, focusing on competition in digital industries. Empirically, we show that firm size is highly correlated with metaverse participation, particularly for born-digital and global, physical-good firms. However, following Facebook’s entry in 2014, we see a general decline in metaverse engagement; this decline is partially offset for larger and born-digital firms, but is exacerbated for global, physical-good firms. These results suggest that global, physical-goods firms are much more sensitive to superstar entry than digital-goods firms in nascent markets. Our analysis contributes to the understanding of the rise in intangible assets as key drivers of firms’ competitive advantage in the global, digital economy.

Document Type

Article

Keywords

trademarks; innovation; virtual worlds; metaverse; technological change

Disciplines

Strategic Management Policy

DOI

10.2139/ssrn.4535176

Source

SMU Cox: Strategy (Topic)

Language

English

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