Are There Any First And Second Mover Advantages For Eco-Pioneers? Lead Market Strategies For Environmental Innovation

In environmental policy first mover advantages for environmental technologiesare often taken for granted. It is a popular view to see the state as a political entrepreneur who introduces a certain environmental policy instrument, e.g. feed-in tariffs for renewable energies, and thus becomes the world market leader or the lead market for the respective technology. Against this background, this paper wants to find out if the idea of first mover advantages can be justified by theories and empirical evidence from the relevant literature on business administration, innovation, environmental and development economics. A review of theoretical and empirical studies at the firm level shows that first mover advantages are not confirmed by empirical evidence. The successful innovator is not necessarily the first but very often one of the early movers within the competition of different innovation designs. Studies carried out at the national level give however only anecdotical evidence on the existence of lead market patterns. However, with regard to emerging countries, there is as well anecdotical evidence on successful latecomers, i.e. states that follow a strategy of environmental leapfrogging. The question under which conditions a country may switch from a second mover to a first mover strategy can’t be answered by the existing literature. This paper argues that it seems to be more reasonable to complement a lead market strategy by a lead supplier position. The lead supplier strategy corrects for the problem that the domestic industry may not participate sufficiently from the growth of the national market due to the demand advantage. It considers also goals from industrial policy, which play an important role also within latecomer strategies in emerging countries.