Timing Market Entry: The Mediation Effect of Market Potential

Abstract

Timing a multinational firm’s entry into a new country is a pivotal decision with long-term impact on the firm’s overall performance, thus a deeper understanding of the drivers of the decision and their interrelationship can yield significant managerial benefits. We explore the mediating role of market potential by decomposing the total effects of the decision’s main drivers—macro-economic attractiveness, market concentration, social heterogeneity, population density—into direct and indirect effects. These decompositions explain the countervailing effects of some drivers that simultaneously make both positive and negative impacts. Our dataset encompasses mobile 4G broadband penetration in 130 countries, including market entry timings for 28 international operators in 79 countries. We establish the nature of the mediation effect of market potential on the drivers of entry timing. Using early penetration data, we utilize growth mixture modeling to divide the countries into four latent segments. We validate this segmentation using machine learning with the four key drivers as classifiers; the process establishes macro-economic attractiveness as the predominant classifier. Our analysis offers entry-timing guidance at both pre- and post-launch stages.

Can entrepreneurial marketing compensate for late market entry? A moderated mediation analysis

“… Entry cannot guarantee competitive advantage, superior firm performance, and higher market share, as late disruptors can equally enjoy substantial market share through innovative and entrepreneurial marketing. Islam et al [ 17 ]; Chavez & Chen [ 5 ]; Gómez et al [ 6 ]); Giachetti et al [ 39 ]; Ashrafi & Ravasan [ 18 ]; Heiens et al [ 40 ]; Pleshko et al [ 41 ]; Zachary et al [ 13 ] Challenges the dominance of early market entry, arguing optimal market entry timing Entrepreneurial marketing efforts may overcome limitations due to later entry-timings. It reduces risks associated with late entry and organizes control over customer acquisition.…”

“…As the research on market entry developed, it broadened its focus to capability-driven marketing strategies combined with entry timing. As a result, recent studies on market entry timing have evolved from a first-mover advantage to a more robust capability-enhancing strategy focused on achieving desired goals [ 17 ]. Such research endeavors balanced the entry timing debate in the extant literature giving due credit to both early and late entries.…”