EFFECTS OF FIRM PERFORMANCE, ORGANIZATIONAL SLACK, AND DEBT ON ENTRY TIMING: A STUDY OF TEN EMERGING PRODUCT MARKETS IN USA

Stefan Wally and Cher-Min Fong

Industry and Innovation, 2000, vol. 7, issue 2, 169-183

Abstract: As technologies change and market environments evolve, firms introduce new products to create or satisfy new market demands or to substitute for existing products. A key strategic decision for firms contemplating entry into emerging product markets is the timing of their entry. Firms may choose to enter earlier and hope to preempt critical strategic resources, but they take the risk of premature entry. On the other hand, firms may prefer to enter later and wait for technical and market uncertainties to subside, but they face the potential problem of being frozen out of a profitable market by participants who risked earlier entry (Lieberman and Montgomery 1988; Mitchell 1989, 1991; Lilien and Yoon 1990; Robinson et al . 1992). This study examines three organizational factors that are hypothesized to affect a firm's strategic decision regarding timing of entry into an emerging product market: performance, organizational slack, and debt position. We begin with an overview of entry-timing research followed by some background on research in performance, organizational slack, and debt. We then develop hypotheses concerned with these three organizational factors and entry timing. We test these hypotheses in a multiindustry sample of firms in USA, and control for the influence of industry and firm variables that could be expected to affect entry-timing decisions.

Date: 2000
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DOI: 10.1080/713670257

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