General business theory suggests that a new company is more likely to thrive if it faces less competition. Therefore, entrepreneurs try to launch their businesses in uncontested markets so they can avoid the potential problems usually associated with going head-to-head with an entrenched rival.
However, a recent study has shown that exposure to competition in the introductory stage can actually increase the likelihood of long-term survival. Andrew Burke and Stephanie Hussels (Harvard Business Review, March, 2013, p 24) found that “companies launched in crowded markets had higher odds than others of failing in the first year — but if a company survived during this early period, it had a much greater chance of making it to the three-year mark.”
Stephanie Hussels
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