Skip to main content
SpringerLink
Log in

The dynamic nature of survival determinants in e-commerce

  • Original Empirical Research
  • Published:
Journal of the Academy of Marketing Science Aims and scope Submit manuscript

Abstract

The dynamic effects of survival determinants in e-commerce are tested using longitudinal data on 460 e-tailers. This is achieved through the incorporation of both time-varying covariates and coefficients in a discrete hazard rate model. The model includes elements of competitive strategy, industry structure, firm and product characteristics, and the macro environment. The study demonstrates the changing effect over time of factors affecting survival. For example, order of entry advantages are observed, but they are short-lived. This finding shows that e-tailers cannot rely on early entry as a strategic move in the long run. E-tailers with more media presence seem to survive longer. Being publicly traded and selling products with digital characteristics present advantages for e-tailers only in the beginning years, but they are not sustainable over long time periods. Survival chances decrease with higher competitive density, market growth rate, and equity market level at the time of entry. Conversely, economic growth tends to increase survival chances. The study also finds an inverted-U relationship between the hazard of exit and firm age. The conclusion section discusses the implications of the time-varying nature of survival determinants.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Aaker, D. A., & Day, G. S. (1986). The perils of high-growth markets. Strategic Management Journal, 7(5), 409–421.

    Google Scholar 

  • Agarwal, R. (1997). Survival of firms over the product life cycle. Southern Economic Journal, 63(3), 571–585.

    Article  Google Scholar 

  • Agarwal, R., & Bayus, B. L. (2002). The market evolution and sales take-off of product innovations. Management Science, 48(8), 1024–1041.

    Article  Google Scholar 

  • Agarwal, R., Sarkar, M. B., & Echambadi, R. (2002). The conditioning effect of time on firm survival: An industry life cycle approach. Academy of Management Journal, 45(5), 971–994.

    Google Scholar 

  • Aldrich, H. (1999). Organizations evolving. Thousand Oaks, CA: Sage.

    Google Scholar 

  • Allison, P. (1982). Discrete-time methods for the analysis of event histories. Sociological Methodology, 13, 61–98.

    Article  Google Scholar 

  • Baker, G., & Kennedy, R. E. (2002). Survivorship and the economic grim reaper. Journal of Law Economics and Organization, 18(2), 324–361.

    Article  Google Scholar 

  • Bakos, Y. (1997). Reducing buyer search costs: Implications for electronic marketplaces. Management Science, 43(12), 1676–1692.

    Google Scholar 

  • Baum, J., & Mezias S. (1992). Localized competition and organizational failure in the manhattan hotel industry, 1898–1990. Administrative Science Quarterly, 37(4), 580–604.

    Article  Google Scholar 

  • Botman, M., van der Goot, T., & van Giersbergen, N. P. A. (2004). What determines the survival of internet IPOs?” Discussion Paper: 2004/09. Universiteit van Amsterdam.

  • Boulding, W., & Christen, M. (2003). Sustainable pioneering advantage? Profit implications of market entry order. Marketing Science, 22(3), 371–392.

    Article  Google Scholar 

  • Carroll, G. R., & Hannan, M. T. (1989). Density delay and the evolution of organizational populations: A model and five empirical tests. Administrative Science Quarterly, 34(3), 411–430.

    Article  Google Scholar 

  • Day, G., Fein, A. J., & Ruppersberger, G. (2003). Shakeouts in digital markets: Lessons from B2B exchanges. California Management Review, 45(2), 131–150.

    Google Scholar 

  • Debruyne, M., & Reibstein, D. J. (2005). Competitor see, competitor do: Incumbent entry in new market niches. Marketing Science, 24(1), 55–66.

    Article  Google Scholar 

  • Drèze, X., & Zufryden, F. (2004). Measurement of online visibility and its impact on internet traffic. Journal of Interactive Marketing, 18(1), 20–37.

    Article  Google Scholar 

  • Duncan, T., & Moriarty, S. (1998). A communication-based marketing model for managing relationships. Journal of Marketing, 62(2), 1–13.

    Article  Google Scholar 

  • Gardner, E. (2007). Make a new plan, Stan. Internet Retailer, 49–52 (January).

  • Golder, P. N., & Tellis, G. J. (1993). Pioneer advantage: Marketing logic or marketing legend? Journal of Marketing Research, 30(2), 158–170.

    Article  Google Scholar 

  • Golder, P. N., & Tellis, G. J. (2004). Going, going, gone: Cascades, diffusion, and turning points of the product life cycle. Marketing Science, 23(2), 180–191.

    Article  Google Scholar 

  • Henderson, A. (1999). Firm strategy and age dependence: A contingent view of the liabilities of newness, adolescence, and obsolescence. Administrative Science Quarterly, 44(2), 281–314.

    Article  Google Scholar 

  • Horvath, M., Schivardi, F., & Woywode, M. (2001). On industry life-cycles: Delay, entry, and shakeout in beer brewing. International Journal of Industrial Organization, 19(7), 1023–1052.

    Article  Google Scholar 

  • Huff, L., & Robinson, W. (1994). The impact of leadtime and years of competitive rivalry on pioneer market share advantages. Management Science, 40(10), 1370–1377.

    Article  Google Scholar 

  • Kalyanaram, G., & Urban, G. L. (1992). Dynamic effects of the order of entry on market share, trial penetration, and repeat purchases for frequently purchased consumer goods. Marketing Science, 11(3), 235–250.

    Google Scholar 

  • Kerin, R., Varadarajan, P. R., & Peterson, R. (1992). First-mover advantage: A synthesis, conceptual framework, and research propositions. Journal of Marketing, 56(4), 33–52.

    Article  Google Scholar 

  • Lieberman, M., & Montgomery, D. (1998). First-mover (Dis)advantages: Retrospective and link with resource-based view. Strategic Management Journal, 19(12), 1111–1125.

    Article  Google Scholar 

  • Lilien, G., & Yoon, E. (1990). The timing of competitive market entry: An exploratory study of new industrial products. Management Science, 36(5), 568–585.

    Google Scholar 

  • Mahajan, V., Srinivasan, R., & Wind, J. (2002). The Dot.com retail failures of 2000: Were there any winners? Journal of the Academy of Marketing Science, 30(4), 474–486.

    Article  Google Scholar 

  • Maug, E. (2001). Ownership structure and the life-cycle of the firm: A theory of the decision to go public. European Finance Review, 5(3), 167–200.

    Article  Google Scholar 

  • McCall, B. P. (1994). Testing the proportional hazards assumption in the presence of unmeasured heterogeneity. Journal of Applied Econometrics, 9(3), 321–334.

    Article  Google Scholar 

  • Nikolaeva, R., Kalwani, M., Robinson, W. T., & Sriram, S. (2006). Survival determinants for online retailers, working paper. Purdue University.

  • Park, N., & Mezias, J. M. (2005). Before and after the technology sector crash: The effect of environmental munificence on stock market response to alliances of e-commerce firms. Strategic Management Journal, 26(11), 987–1007.

    Article  Google Scholar 

  • Robinson, W., & Fornell, C. (1985). Sources of market pioneer advantages in consumer goods industries. Journal of Marketing Research, 22(3), 305–317.

    Article  Google Scholar 

  • Robinson, W., & Min, S. (2002). Is the first to market the first to fail? Empirical evidence for industrial goods businesses. Journal of Marketing Research, 39(1), 120–128.

    Article  Google Scholar 

  • Varadarajan, P. R., & Yadav, M. S. (2002). Marketing strategy and the internet: An organizing framework. Journal of the Academy of Marketing Science, 30(4), 296–312.

    Article  Google Scholar 

Download references

Acknowledgment

I started working on the topic of survival in e-commerce when I was writing my dissertation at Purdue University. I appreciate the numerous valuable advises I received from Manu Kalwani and Bill Robinson. I would also like to thank Laura Peracchio, Steven Klepper and two anonymous reviewers for their helpful comments.

Author information

Authors and Affiliations

  1. Sheldon B. Lubar School of Business, University of Wisconsin Milwaukee, P.O. Box 742, Milwaukee, WI, 53201, USA

    Ralitza Nikolaeva

Authors
  1. Ralitza Nikolaeva
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Ralitza Nikolaeva.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Nikolaeva, R. The dynamic nature of survival determinants in e-commerce. J. of the Acad. Mark. Sci. 35, 560–571 (2007). https://doi.org/10.1007/s11747-007-0018-4

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11747-007-0018-4

Keywords

Search

Navigation