The law of the handicap of a head start (original Dutch: Wet van de remmende voorsprong), first-mover disadvantage, or dialectics of lead, is a theory that suggests that an initial head start in a given area may result in a handicap in the long term.
During a trip to London, he wonders why at that time it was still lit by gas lamps, rather than electric lights as were by then common in other European capitals like Amsterdam.
As the streets were already lit there was no pressing need to replace gas lamps, despite the other advantages of electric lighting.
"Late movers may be able to 'free-ride' on a pioneering firms investments in a number of areas including R&D, buyer education, and infrastructure development.
Studies of free-rider effects say the biggest benefit is riding the coattails of a company's research and development,[3] and learning-based productivity improvement.
While first-movers have nothing to draw upon when deciding potential revenues and firm sizes, late-movers are able to follow industry standards and adjust accordingly.
This can occur when the first-mover does not adapt or see the change in customer needs, or when a competitor develops a better, more efficient, and sometimes less-expensive product.
This disadvantage is closely related to incumbent inertia, and occurs if the firm is unable to recognize a change in the market, or if a ground-breaking technology is introduced.
If they don't have the cash on hand, this could lead to high loans and debts which puts increased pressure on the products to do well.
Such inertia can have several root causes: Firms that have heavily invested in fixed assets cannot readily adjust to the new challenges of the market, as they have less financial ability to change.
All in all, some firms are too rigid and invested in the "now", and are unable to project the future to continue to maximize their current market stronghold.