Abstract

Mobile platforms offer significant entrepreneurial opportunities for the creation of mobile app startups. Investors who are backing these startups have a vested interest in seeing their mobile apps succeed. However, the market for mobile apps is very competitive, partly due to the threat of new entrants. This study examines how mobile app startups can proactively mitigate new entry threats to ensure their survival. We propose a research model that examines the effect of performance signals on new entry threats. We distinguish between substantive (non-rhetorical) signals provided by investors and consumers and rhetorical signals provided by the mobile app startups themselves on social media platforms. We suggest that, while mobile app startups have less control over substantive signals such as maturity stage and level of consumer attention, they should send rhetorical signals over social media in the “right” way to reduce new entry threats. We posit these signals include utilitarian and hedonic cues, and their effectiveness depends on substantive signals. Our model is tested based on a rich longitudinal data set of over 10,000 startup mobile apps. The findings mostly support our hypotheses. We discuss the research contributions and practical implications of how mobile app startups can effectively use social media to diminish new entry threats.

DOI

10.17705/1jais.00905

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