Abstract
The purpose of this paper is to examine the process by which an incumbent firm with overwhelming competitive power is overtaken by a latecomer, considering the effects of competition among incumbents. If a latecomer improves its competitive position when the incumbent exists alone, then the problem is primarily due to problems within the incumbent firm. Studies on the timing of entry have shown that incumbents are unable to respond adequately to latecomers due to factors such as differences in the quality and quantity of resources and lack of organizational responsiveness. However, when there is competition among incumbents in a product market, competitive relationships among incumbents also affect their ability to respond to latecomers. This is because incumbents need to respond to competition from latecomers and other incumbents. This study examines the above issues through a case study analysis of the Chinese share cycle industry. In this industry, Ofo and Mobike, which had dominated the market, lost their position to the latecomer Hellobike in less than two years. In addition to the factors that have been pointed out in previous studies, there is a competitive behavior among incumbents behind this reversal. Faced with a tradeoff between responding to latecomers and responding to other incumbents, incumbents, even if they were willing to respond to the threat of latecomers, choose the latter for fear of losing their current market position to other incumbents. Incumbents become strongly bound to each other's competitive behavior through previous competition.
