First-mover advantages versus first-mover benefits: what's the difference and why does it matter?

We present a theoretical framework to address the inherent endogeneity problem in entry-timing research by distinguishing the concept of "first-mover benefits" (FMB) from "first-mover advantages" (FMA)-the former being a counterfactual and (usually) unob-served pure treatment effect, and the latter being an actual observed combination of treatment and selection effects. They differ in the baseline to which the first mover's performance is compared-either to the follower's actual performance (for FMA) or to the first mover's hypothetical performance if it had been a follower (for FMB). We consider the implications of this distinction for entry-order choices, and our formal economic model analyzes this distinction to make predictions about biases arising from using FMA as a proxy to estimate FMB, and also about how FMA, FMB, and their difference are affected by interfirm asymmetries in resources and information.