Executive Summary
In the past two decades, various researchers have argued that entry timing is one of the most critical strategic decisions firms make when penetrating foreign markets. While early entrants enjoy various advantages (e.g., higher market shares), they also suffer from survival disadvantages in international markets, in that they encounter higher risks and uncertainties than late entrants. However, suggestions on how to strike a balance between market share performance and firm survival have been limited. In this study, the authors investigate the impact of entry timing on both early entrant advantages and survival disadvantages in a foreign market from a longitudinal perspective. They further provide potential strategies for firms to achieve a better balance between different performance indicators.
Drawing on the strategic choice perspective, the authors investigate the impact of entry timing, entry mode, and investment size on market share performance and survival of foreign-invested firms. The results are based on a longitudinal database of manufacturing firms in China, including 25,513 foreign firms in 610 product sectors. The findings of the study indicate that (1) early entrants enjoy higher market shares but suffer from lower survival than late entrants; thus, striving for a balance between market share performance and firm survival is critical for foreign firms to capitalize on early-mover advantages; (2) early entrants with wholly owned subsidiary entry mode have greater market shares and chances of survival than those with equity and contractual joint ventures; (3) early entrants with large initial investments are more capable of exploiting and realizing first-mover advantages to improve their market share performance.
The findings suggest that achieving a desirable outcome in one performance aspect may regress another. Moreover, this study offers potential strategies that firms can adopt to better balance different performance indicators. To be successful in foreign markets, managers need to develop a deeper understanding of the overall impact of foreign entry timing as well as other important strategic choices. The findings advocate a risk-taking approach for early entrants because opportunities do exist for early entrants to enhance their survival so they can enjoy early entry benefits. Early entrants can experience superior performance by selecting an appropriate entry mode that helps reduce the substantial risks encountered. Furthermore, if early entrants are willing to invest substantial resources in their target markets, they will be able to capture higher market shares.
Biography
Janet Y. Murray is E. Desmond Lee Professor for Developing Women Leaders and Entrepreneurs in International Business and Professor of Marketing at the University of Missouri–St. Louis. She has previously taught at the undergraduate, master’s, and doctoral levels at Saint Louis University, Cleveland State University, and City University of Hong Kong. She served as the President of the Women in the Academy of International Business during 2009–2011. Dr. Murray is a recipient of three research and five best-paper awards, including the S. Tamer Cavusgil and the Hans B. Thorelli Best Paper Awards. Dr. Murray’s research interests focus on global sourcing and international marketing strategies, and competitive strategy in transitional economies. Her research has been published in top journals, such as Journal of Marketing, Strategic Management Journal, Journal of International Business Studies, Journal of the Academy of Marketing Science, and Journal of International Marketing. Dr. Murray has served as a consultant for Fortune 500 and other firms. She currently serves on five editorial review boards, including Journal of International Business Studies, Journal of International Marketing, and Journal of International Management.
Min Ju is Visiting Assistant Professor of Marketing in the College of Business Administration at the University of Missouri–St. Louis. She earned her PhD in Marketing/International Business from Saint Louis University. Her research interests include interfirm relationships, marketing channel management, and firm capabilities. She has published in academic journals as Journal of World Business and Asia Pacific Journal of Management, among others.
Gerald Yong Gao is Associate Professor of Marketing in the College of Business Administration at the University of Missouri–St. Louis. He received his PhD in Marketing from the University of Hong Kong. His research interests include market entry and exporting, international marketing strategy, and strategic orientation, with particular emphasis on emerging markets. He has published in scholarly journals such as Journal of International Business Studies, Journal of Academy of Marketing Science, Journal of International Marketing, International Journal of Research in Marketing, Management International Review, and Journal of World Business, among others.
Journal International Marketing, Volume 20, Number 3, September 2012
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