Pioneers do have a market advantage if they can lock in key customers, suppliers, or intellectual property (e.g. patents). The key is to build up market share, brand awareness, and an ecosystem that hinders upcoming competition. YouTube and LinkedIn have done this and have become dominant exchanges. In other instances, it pays to wait and learn lessons from earlier players. The pioneering Osborne was the first successful personal computer - widely imitated and then overtaken by several other computer companies who improved on deficiencies.
The paper “Entrepreneurs' Decisions on Timing of Entry: Learning from Participation and from the Experiences of Others” written by Moren Lévesque, Maria Minniti, and Dean Shepherd in Entrepreneurship Theory and Practice, Vol. 33, Issue 2, March 2009 states that the decision to be the pioneer depends on how “hostile” the learning environment is - how much entrepreneurs can learn by observing other players before they launch compared to what they learn from participating after they enter.
Patrick Barwise, Emeritus Professor at the London Business School, wrote in The Myth of Pioneer Advantage, that in new markets, it is not the pioneer but what he coins as the “fast follower” who reaps the rewards, specifically the fast follower with “a mass-market perspective, willingness and ability to invest in scale and marketing, a focus on customer understanding and continuous improvement, and an existing customer base. The follower learns from the initial market response to the pioneer’s offer, improves that offer, scales up production and distribution, reduces cost, and builds a dominant market share during the new category’s critical early growth phase--which it also helps to drive by investing in marketing as well as in distribution and production. Once the successful follower has established market leadership, it can (and should) aim to be the “first mover,” with relentless incremental and adjacent innovations, to sustain its lead. At that point, there is an advantage in being the first to innovate.”
A perfect example is the famous story of how Bill Gates got rich. Gates started by licensing the DOS operating system software to IBM - software originally named QDOS that Bill Gates actually bought for $50,000. IBM engineers then debugged it further for market release and IBM/Microsoft did all the steps outlined by Professor Barwise to mass market DOS as the dominant PC operating system. Microsoft arguably took steps to also become the “first mover” by incremental updates and to DOS, then moving to Windows 3.1*, etc.
Innovation is critical but effective imitation and timing should never be overlooked. The early bird can catch the worm but the second mouse gets the cheese. It is a matter of situation and timing.
*One may argue that Microsoft stole the Windows GUI from Apple. This still supports the “fast follower” concept (and it could be further argued that Apple was a fast follower who imitated Xerox PARC for the mouse and GUI).