Order of Entry and Performance of Multinational Corporations in an Emerging Market: A Contingent Resource Perspective

Abstract

Drawing on the resource-based view, this study examines the contingency effects of industry-and firm-level variables on the first-mover advantages and effective follower strategies in an emerging-market context. Using hierarchical regressions, the authors analyze a large data set of foreign investors in China. Contingency models that include the interactions of entry order with the moderating variables have better fit of the data than the main-effect models. Industry growth and competition, firm size, entry mode, resource commitment, and marketing intensity have significant moderating effects on first-mover advantages. After the authors correct for multicollinearity bias using ridge regression, it seems that pioneers still enjoy a small advantage in market share but not in profitability, indicating a trade-off between the two. Furthermore, followers may augment performance by increasing resource commitment and marketing intensity. These findings have significant implications for entry-order strategies and for improving foreign direct investment performance in foreign markets; they also suggest meaningful directions for further research.

New exports from emerging markets: Do followers benefit from pioneers?

“…Other papers in international marketing empirically explore the order of entry (sequencing) as a determinant of pro tability in a given market. For example Cui and Lui (2005) look at how early entrant multinationals in China do vis-a-vis late entrants in the same market. Magnusson, Westjohn, and Boggs (2009) look at how sequence of entry a ect pro tability in many destination markets, but only for multinationals in the advertisement industry.…”

Investigating Time-in-Market Effects in Kuwait Health Clubs

“…There is no lack of evidence supporting a positive relationship between time-in-market and performance, specifically market shares (e.g., Rodriguez-Pinto et al, 2011; Usero and Fernandez, 2009;Suarez and Lanzolla, 2007;Cui and Lui, 2005;Lieberman and Montgomery, 1988). The positive time-in-market effect on market share is suggested to be one of the most dependable empirical relationships in business (Robinson and Fornell, 1985).…”

Internationalization of Chinese firms : a contingent resource perspective

“…As time goes on, firms may have integrated these resources and developed their own capabilities that are imperfectly imitable and not substitutable. These resources and capabilities have helped firms to become fierce competitors in the domestic market and prepared them for expansion overseas (Cui and Lui, 2005 . Recent development of the RBV suggests that whether resources acquired by a firm can turn into competitive advantages depends on several factors (Cui and Lui, 2005).…”

“…These resources and capabilities have helped firms to become fierce competitors in the domestic market and prepared them for expansion overseas (Cui and Lui, 2005 . Recent development of the RBV suggests that whether resources acquired by a firm can turn into competitive advantages depends on several factors (Cui and Lui, 2005). A number of researchers have attempted to improve the RBV by stressing that the rent-generating resources may be subject to the influences of uncontrollable environment factors (Pfeffer and Salancik, 1978).…”

“…The contingent resource perspective provides plausible explanations for the effects of inward activities on outward activities (Cui and Lui, 2005).…”