Peer Reviewed Article of Challenges Entering Foreign Markets
1. Introduction
A firm considering entry into a new geographical market place must decide when to enter that market. Numerous studies have been conducted on the advantages of early market entry; for example, Min, Kalwani, and Robinson (2006) studied the controversial topic of whether market place pioneers are at high risk or have a amend take a chance of obtaining a large marketplace share. However, some scholars accept asserted that, through early entry, pioneers are in a disadvantaged position and their return on investment per centum points are lower than after entrants (Boulding & Christen, 2003); furthermore, they are at loftier risk (Lieberman & Montgomery, 1998). Other researchers have discussed the advantages of early entry and, in detail, the importance of early entry into the financial sector (López & Roberts, 2002).
Because that entry timing is a crucial strategic determination that can bear on a firm's success and survival, researchers have recently turned to the antecedents pertaining to the timing of a firm's entry into a new geographical marketplace (Fuentelsaz, Gomez, & Polo, 2002; Gaba, Pan, & Ungson, 2002; Mitra & Golder, 2002; Tan & Vertinsky, 1996; Ursacki & Vertinsky, 1992). Numerous studies have shown that pick of entry timing has critical implications for a business firm's post-entry performance in the market (Isobe, Makino, & Montgomery, 2000; Luo & Peng, 1998; Mascarenhas, 1992, 1997; Pan, Li, & Tse, 1999; Song, Di Benedetto, & Zhao, 1999). For example, early entrants in new markets have often been reported to achieve greater market shares, only they besides take higher exit rates (Lieberman & Montgomery, 1998).
The aforementioned characteristics that help firms to benefit from early entry may also provide them with the organisational slack to defer entry decisions until market dubiety is resolved. To understand how these business firm characteristics influence entry timing requires a comparison of the effect of firm resources in regard to early entry versus deferred entry (Tan, Hung, & Liu, 2007).
With the development of services in the world, the topics of service multinationals enterprises (S.M.N.E.), the globalisation of services and entry of service firms into strange markets have been extensively researched amidst scholars. Scholars have begun to question service firms' fashion of entry into international markets (Dunning, Blomström, & Kogut, 1990; Hood & Young, 2000; Rugman & Verbeke, 1998, 2001, 2002, 2003, 2004, 2005), strategy (Agarwal & Ramaswami, 1992; Barney, 1986, 1996; Klier, Welge, & Harrigan, 2009), entry timing (Boulding & Christen, 2003, 2008, 2009; Brito & Mello, 1995; Buckley & Casson, 1981) and other aspects related to the internalisation of the service manufacture. Service firms are considered to follow their clients when they place an opportunity and sometimes they are nigh forced to do then (Vandermerwe & Chadwick, 1989; Weinstein, 1977).
Entry timing is one of the main characteristics discussed when scholars examine outward foreign directly investment (F.D.I.) and strange market entry. This is considering entry into foreign markets is crucial for whatever company. Pioneer companies gain specific advantages over late-entry firms; even so, they too come across greater risks and disadvantages. Therefore, entry timing has go an appealing topic for researchers. The following questions require answers: (1) When is the optimal time for entry? (2) Is information technology more prudent to be earlier than competitors or to await and enter later, thereby fugitive risk merely sharing a more than saturated foreign market?
Some companies attempt to enter the foreign market earlier to gain competitive advantages. Opportunities exist to capitalise on economies of calibration, proceeds reputation and amass customer loyalty. Researchers, including Lilien and Yoon (1990) and Tuppura, Saarenketo, Puumalainen, Jantunen, and Kyläheiko (2008), take agreed that one of the nigh pivotal reasons for success can be entry timing. If a visitor has a new idea that is prepare for release into a market place or if it just releases information technology earlier than its competitors, a greater chance exists for them to not only captivate the public, but as well maximise perceptual positions and capture distribution channels (Lieberman & Montgomery, 1988). Nevertheless, despite the numerous advantages to pioneering a market, numerous scientists have indicated the risks and disadvantages involved, such equally the elevated costs, fourth dimension-consuming nature and multitude of pitfalls for failure in new foreign markets (Song & Montoya-Weiss, 1998); these often arise through pioneers meeting obstacles, such as lack of knowledge or resources, and also express access to distribution networks. Furthermore, chances ever exist to confront ethnocentrism and cultural differences, which can pb to lowered chances of gaining customers.
The objectives of this study are to determine the entry timing of Taiwanese S.Thousand.N.E., the moderating function of entry timing, the performance of Taiwanese S.M.Due north.E. in new international markets and the influence of firm factors on performance and entry timing.
2. Literature review
A firm'southward decision to internationalise can be influenced past both internal and external factors (Dunning, 1980). The company must possess firm-specific advantages that can efficiently be transferred internationally (Chang, 1995; Dunning, 1980; Hymer, 1976). This study examined the firm-specific factors of companies that plan to internationalise.
2.1. Firm-specific factors
The first firm-specific cistron that we selected was firm size, because it is a critical gene reflecting a company's capacity and capabilities. The second was foreign ownership, considering it is connected to a business firm's internal construction and investment policy. The terminal was economy of scope, which becomes a critical factor when a firm makes the determination to internationalise, because—in our opinion—it reveals whether the company has a broad spectrum of firms to internationalise and how it tin influence the entry timing conclusion.
two.one.ane. Business firm size
Large firms compared with smaller firms tend to invest earlier in a foreign market. Their greater resources can increase their power to cope with the disadvantages and problems faced in foreign markets and to act more successfully under dubiousness. Furthermore, Dunning (1988) argued that large companies have a tendency to integrate operations regionally or globally because they have more opportunities to achieve economies of scale and scope. Lieberman and Montgomery (1998) also asserted that large companies tin can act pre-emptively to limit later entrants' admission to resources such as local suppliers, markets and consumers. Large companies have more than resources to human action under uncertain circumstances and in strange markets under incertitude.
ii.ane.ii. Debt ratio
Compared with other firms, firms with a lower debt ratio tend to invest earlier in foreign markets. A house's majuscule structure tin impact the behaviour of the visitor through influencing their want to either have risks or maintain low-contour strategies (Long & Ravenscraft, 1993). Fong (1995) and Long and Ravenscraft (1993) have continued a firm's debt to arrangement controls. Debt financing firms are not appropriate to contest in F.D.I. situations, and those firms prefer to appoint in lower hazard investment projects and press the direction to postpone investments; therefore, they enter the foreign market place later to avert the primary risks.
ii.1.3. Foreign shareholder
Compared with companies with a smaller percentage of strange shareholders, companies with a higher per centum often enter the market earlier. Foreign ownership is a vital element of the decision-making procedure, considering shareholders tin can apply force per unit area to management decisions and try to persuade firms to human activity in their interests. Shareholders are a crucial group of stakeholders who steer direction and corporate activities. Having a larger number of foreign shareholders tin influence a firm to enter a foreign market place earlier. Because they are not local shareholders, they will mayhap be willing for the company to enter or begin to operate in the foreign market.
2.i.4. Telescopic economies
Compared with firms with a narrower scope of services, firms with a broader scope enter new foreign markets earlier. A broader telescopic allows a visitor to develop synergy in the various product sectors (Shaver, Mitchell, & Yeung, 1997). This interaction leads to both efficiency and quality in product development, expanding the range of products, production, distribution and market support (Lambkin, 1988). Therefore, a house with a telescopic economy is more than confident of having the right production and greater chances of success when entering a market place earlier.
Hypothesis ane: Firm-specific factors (including house size, debt ratio, foreign shareholders and telescopic economies) influence foreign market place entry timing.
2.2. Feel factors
In our written report, age was a proxy for house experience. This is because, with time, a company learns more techniques, attains more knowledge and implements new strategies. We believe that a company's experience is disquisitional when entering new international markets. Managerial incentives were used equally a proxy for management efficiency, which includes direction experience in foreign operations and entry market strategies. We used the degree of internationalisation as the level of a house's international experience; considering this is measured using the number of countries where a firm conducts operations, it shows how experienced a firm is in regard to factors such as cultural knowledge, local markets and foreign operations.
2.2.1. Business firm experience
Linked to cognition, experience and number of assets is house age. Older companies possess more experience, more human being resources, more than knowledge, better access to suppliers and distribution networks, broader networks of foreign operations and greater advantages over newcomers. Freeman and Hannan (1989) proposed that business firm age can reduce the probability of demise for those firms that survive the 'liability of newness' stage. Stinchcombe (1965) indicated that liability of newness characterises the tendency of new firms to take higher failure rates. Barnett and Amburgey (1990) and Baum and Mezias (1992) accept asserted that, after firms survive the initial turbulent menstruation, they receive long-term benefits and the risk of failure is diminished. Moreover, the age of a firm can bestow confidence and the necessary resources to enter the market equally pioneers. Compared with younger companies, older companies tend to enter the marketplace earlier.
2.2.ii. Management efficiency
Human resources are ane of the most critical components for a company (Grant, 1996); therefore, we assumed that managerial incentives affect F.D.I. decisions. Morck and Yeung (1991) were among the first researchers to assume that managers play a vital role in the controlling procedure. Mishra and Gobeli (1998) furthered this topic when they proposed that managerial incentives atomic number 82 to the motivation of managers. We are certain that sufficient managerial incentives attract gifted managers to lead outward F.D.I. in new foreign markets. Thus, we consider that managers volition attempt to act earlier and have a more than aggressive strategy because they are confident in their results. Firms with higher managerial incentives tend to invest earlier in foreign markets.
2.ii.iii. International feel
Sullivan (1994) argued that companies that are more than involved in international markets possess more experience and knowledge associated with international operations and do good from this; therefore, their market network tin can be causeless to exist extended, compared with other companies with a lower level of internationalisation (Shaver et al., 1997). Because they can use their knowledge and experience more than readily, firms with a higher degree of international experience are likely to enter newly opened international markets before than firms with a lower level of international experience.
Hypothesis 2: Experience factors (including firm experience, management efficiency and international feel) influence foreign market entry timing.
2.three. Industry factors
Not only internal factors influence firms' entry timing decisions. Nosotros selected factors relevant to the environment of an industry. External factors too be, such equally ecology, political and social factors.
ii.iii.1. Competitiveness
The nature of competition and industry structures influence firms' entry timing decisions and performance; therefore, we selected competitiveness as a cistron and examined it. Competitors' behaviour supposedly influences firms' choices for entry timing and a competitive environment can influence performance. Mitchell (1991) proposed that firms tend to enter the marketplace before when numerous firms be in the industry and competition is high. Firms in more competitive industries are likely to enter the market place before than firms from less competitive industries.
Hypothesis 3: The manufacture factor of competitiveness influences strange market entry timing.
ii.four. Effects of entry timing on functioning
Lieberman and Montgomery (1988) were among the main researchers of the advantages and disadvantages of early entry. Multiple papers have empirically proven the positive correlation between early entry and performance. The advantages include little competition, as well every bit the ability to achieve a strong market place position, the establishment of relationships with local stakeholders (Alpert & Kamins, 1995; Buckley & Casson, 1981), the opportunity to construct barriers for later entrants and the chance to monopolise the market (Luo, 2002; Schoonhoven, Eisenhardt, & Lyman, 1990). However, numerous disadvantages have too been exposed in studies, such equally the lack of cognition, resources and human capital in the face up of sufficient direction (Beamish & Inkpen, 1998). Marketplace pioneers face uncertainty because of a lack of data and experience. Despite some disadvantages, companies generally prefer to enter markets earlier, in an endeavor to gain brusque-term profits.
Hypothesis 4: Early entrants tend to exhibit superior performance compared with belatedly entrants in a strange market place.
2.five. Effects of firm-specific, feel and manufacture factors on performance
This report attempted to determine the mediating effect of entry timing on house performance. We were interested in non but determining the factors affecting entry timing, but also examining the direct effect of the same factors on functioning. This could be a fully mediating or partially mediating human relationship. Business firm-specific factors such equally firm size, debt ratio, foreign shareholders and scope economies directly touch on house performance; experience factors such as firm experience, management efficiency and international feel directly bear on business firm functioning. Finally, the industry gene of competitiveness straight affects house performance (Effigy 1).
Hypothesis v: Firm-specific, feel and industry factors influence firm performance.
Entry timing into international markets: evidence from the Taiwanese service industry
Published online:
01 May 2018
Figure 1. Conceptual framework. Source: From this research.
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3. Method
three.1. Data and sample
In this study, a firm-level analysis was employed. Specifically, the timings of initial investment in foreign markets were investigated. The original sample consisted of 395 listed companies from various sub-categories of the service industry. The main distinctive features of the listed companies were greater reliability, typically larger size and more historical data. The fiscal data collected were from the year 2015. A major resource for the data was the Taiwan Economic Journal (TEJ) database. The TEJ database is typically used to obtain data about visitor attributes, financial status and details of long-term investments. The other main sources of data were the Ministry of Economic Diplomacy of Taiwan website and statistics from the Investment Commission of Ministry of Economic Affairs. Using their statistics, nosotros could examine the structure of the Taiwanese service sector and the full number of Taiwanese outward F.D.I.
iii.2. Measurements
3.2.i. Dependent variables
three.2.ane.1. Entry timing
Entry timing focuses on the time of a Taiwanese company'south first investment in a foreign market place. In this study, merely the first investment was analysed, despite the fact that several investments in the country could have occurred. The entry timing was measured using the divergence betwixt the first year of first entry and current twelvemonth; for instance, if the entry year was 1988 and the current twelvemonth is 2016, and then the departure was coded as 28 (2016–1988).
3.ii.ane.2. Functioning
Operation can be measured using numerous methods. The common measure used by scholars is the financial performance measure, which measures a house's overall efficiency and operation. Notwithstanding, in full general, 2 performance measures are available: fiscal and not-financial. Crabtree and DeBusk (2008) measured financial operation using key performance indicators, such as render on assets (R.O.A.) and earnings before involvement and income revenue enhancement (East.B.I.T.). They are the nearly mutual because of their availability. ROA and render on sales (R.O.Due south.) take also been used past Geringer, Beamish, and Dacosta (1989) and Sullivan (1994). In this written report, R.O.A. was chosen as a measure of performance.
three.2.ii. Independent variables
Firm-specific factors include house size, debt ratio, foreign shareholders and telescopic economies.
3.2.2.ane. Firm size
To measure firm size, numerous measures have been used by researchers, such every bit sales volume, disinterestedness and deposits (Cho, 1986); number of employees (Norburn & Birley, 1988); and domestic market sales (Kimura, 1989). We considered using two measures: total assets and number of employees. The measure total assets was used by Kogut and Singh (1988) and number of employees was used past Yu and Ito (1988). Ultimately, we selected full assets as our measurement.
3.2.2.2. Debt ratio
Debt ratio has been used as a measurement frequently in numerous types of inquiry. For example, Schwarz and Aronson (1967) used debt ratio equally a proxy for business run a risk. Diverse debt/leverage ratios have been used in entry timing-related papers. Debt ratio is used equally a proxy for the debt position of a company. When selecting the measure for debt ratio, nosotros considered some of the following: debt ratio every bit long-term debt every bit a percent of total capital, long-term debt divided by total avails and the market value of equity divided by full assets (Byrd & Mizruchi, 2005). However, because the limitations of our database, nosotros selected the easiest debt ratio measure, which is full debt divided past full assets.
3.2.ii.3. Foreign shareholders
Foreign ownership was measured by the total number of strange shareholders' total pct. This measurement was used in Lee's (2008) written report. Another measure out, used by Mueller, Dietl, and Peev (2003) and Nenovsky, Peev, and Yalamov (2003), was dummy variables, where they accept measured the degree of offshore ownership on a scale from 0 to 4.
3.2.2.4. Scope economies
Kerin, Varadarajan, and Peterson (1992) made a proposition about telescopic economies and entry into new markets. They suggested that those companies with a broader telescopic are strategically ameliorate prepared to face the uncertainty of new international markets. To mensurate the scope of economies, we used the number of concern sectors that the visitor participates in. To categorise business organization sectors, we used Standard Industrial Nomenclature codes.
Experience factors include firm feel, management efficiency and international experience.
3.ii.2.five. Business firm experience
For firm experience, we considered the 2 measures, namely list age and establishment age. Multiple researchers have used listing age (Fama & French, 2001; Pastor & Veronesi, 2003). Pastor and Veronesi (2003) declared that listing age is the superior measure of determining when a visitor was genuinely established. Despite some researchers preferring listing age (such equally Shumway, 2001), we selected establishment historic period (i.due east., not when the visitor was listed, but the bodily date of establishment). Firm age was calculated using the difference between the electric current year and the year the company was established.
3.two.2.6. Direction efficiency
Managerial incentives correspond the budgetary rewards provided past a firm. We obtained these values through determining the ratio of direction compensation to total sales.
iii.two.2.7. International experience
International experience is measured using the degree of internationalisation. Two measures are typically considered. The starting time is the number of geographic segments in which a visitor is presented, which was used past Sullivan (1994). The second is the foreign sales per centum of a business firm's full sales. In our study, we used the first measure.
iii.ii.2.8. The manufacture gene competitiveness
For competitiveness, we examined sub-industry competitiveness, which is represented past numbers of domestic competitors present in the same sub-industry. We used the number of competitors in that year (Wernerfelt & Karnani, 1987) as a base to develop the variable of competitiveness.
3.3. Command variables
We controlled the variable house size, which was measured past the number of employees. The variable did not showroom pregnant results. All variables were collected from the TEJ database.
iii.four. Analysis
In this study, nosotros applied a linear regression analysis, proceeding from the fact that our sample size revealed every instance of investment as a last event. We considered this to be a strong method of determining the relationships between predictors and the time-to-consequence.
four. Consequence
4.1. Descriptive results
Out of 390 firms in the primary sample, simply 174 fabricated their initial entry into foreign markets. Tabular array 1 presents the sample characteristics.
Table ane. Sample characteristics.
Our sample included Taiwanese service sector listed companies from the following industries, based on the TEJ industry index: financial, insurance (life and realty), telecommunications, securities, cultural and creative, shipping and transportation, tourism, trading and consulting, printing and information service industries. The majority of entrants were from the periods 2000–2005 and 2011–2015. A company's size, based on its total assets, was by and large measured on a scale from 1 mln to 500 mln. Most of the companies had fewer than 1000 employees and were over 10 years old.
The descriptive statistics and correlations betwixt variables (Table 2) did not reveal serious multicollinearity among the independent variables. We subsequently tested the hypotheses using regression analysis.
Table 2. Means, standard deviations and correlations.
iv.2. Main results
Tabular array 3 shows the primary results of our empirical testing and introduces the five models used to calculate the results of our research. Model 1 presents the coefficient of control variables, which was positive and non-meaning. Model 2 was used to examination the firms' feel factors, which showed significant coefficients for every factor. These results demonstrate the importance of firm experience during the entry timing decision-making process. The results imply that older firms (b = 0.205, p < 0.005) with higher levels of internationalisation (b = 0.650, p < 0.005) inside competitive industries (b = 0.062, p < 0.one) are likely to enter international markets before. This model reveals that cognition-based resources are crucial. Model 3 was designed to test the firm-specific factors in highly competitive industries. We observed positive and significant results for the factors debt ratio (b = 12.898, p < 0.005), scope economies (b = 0.765, p < 0.01) and competitiveness (b = 0. 082, p < 0.005), implying that companies with lower debt ratios and broader spectrums of products from highly competitive industries tend to enter new international markets earlier. Furthermore, a negative significant coefficient was observed for foreign ownership (b = −0.071, p < 0.05), revealing that companies with a college percentage of shareholders tend to enter strange markets later. Later analysing Models 2 and iii, nosotros attempted to use specific factors for Model 4. Nosotros selected factors that we considered to exist crucial for modern service companies when entering new markets, in improver to selecting factors that had already shown significant results in the previous models. Accordingly, nosotros selected firm size, firm historic period, level of internationalisation and managerial incentives. Evidently, we selected all firm feel factors, in addition to firm size; this is considering we believed business firm size to be crucial for entry timing decision-making, peculiarly because, in this study, house size was measured by total assets. Specifically, house size was included in our study to decide whether the number of assets influences a company's decision to enter markets earlier or whether firm size influences entry timing. Model 4 factors all showed meaning coefficients. Excluding house size, all factors were positive and indicated earlier entry. Moreover, house size exhibited negative and significant results.
Table 3. Regression results of influencing factors and entry timing.
Model five shows the master results relating to Hypothesis 1. We predicted that larger firms tend to enter earlier than smaller firms. The coefficients of firm size were negative and pregnant (b = −ane.173E-nine, p < 0.01). The hypothesis suggested that firms with lower debt ratios are likely to enter international markets earlier. Equally expected, the results were positive and meaning (b = 3.379, p < 0.05). The hypothesis further stated that firms with a higher percentage of foreign ownership tend to enter the markets earlier. Yet, telescopic economies did show significant results (b = −0.024, p < 0.1). In summary, the results support Hypothesis 1, revealing that firms with a smaller size, lower debt ratios and higher percentages of foreign ownership are probable to enter international markets earlier.
However, one variable was not supported (H1- Business firm size). Among the numerous possible reasons for this result, we believe information technology to be related to the specific industry of the firms nether investigation. Service industry firms are more mobile and non heavily reliant on resources. Furthermore, we selected total assets equally a measure of business firm size; thus, we can assume that smaller companies with smaller assets that are more than mobile tend to enter the international market before.
In Hypothesis 2, we suggested that firms with a more extensive line of products are likely to enter international markets earlier. The coefficients did non show significant results, which was contrary to our expectations (b = 0.229, p < 0.1). We tested the hypothesis, predicting that firm age is positively related to early on international market entry. Consequent with our expectations, the results were positive and significant (b = 0.196, p < 0.005). This ways that older and more experienced companies are not reluctant to enter international markets before. The hypothesis stated that firms with college levels of internationalisation are likely to enter international markets earlier. Equally expected, the coefficients of the level of internationalisation were positive and meaning (b = 0.615, p < 0.005), which suggests that international experience and a broad international network help firms to enter new markets earlier. In summary, the results back up Hypothesis 2, revealing that older companies with more international experience are likely to enter earlier.
Finally, we tested Hypothesis three, which was related to the unmarried industry cistron competitiveness. We predicted that, the greater the number of competitors in a given manufacture, the more aggressive the behaviour of a house and the greater the likelihood of the firm to enter international markets earlier. Consistent with our expectations, the coefficients of competitiveness were positive and significant (b = 0.055, p < 0.05), supporting Hypothesis iii.
Table four shows the results of testing Hypothesis 4, which concerned the relationships between earlier entry and performance.
Table 4. Regression results of entry timing and performance.
Contrary to our expectations, the estimation results showed that the market pioneers from the Taiwanese service sector showed negative performance (b = −0.282, p < 0.005). This could hateful that these results have some limitations and that results may vary profoundly in future research. The results can also be continued to our measurement of performance. All the same, they can as well support previous researchers who found that later entrants showed better performance, whereas pioneers may perform worse in oversaturated markets and under uncertain situations with high risks. The results exercise not support Hypothesis 4.
The factors influencing entry timing are firm size, debt ratio, firm age, level of internalisation and competitiveness. This means that all 3 factor types (firm-specific, experience and industry) take a meaning upshot on before entry. Firms with a higher level of internationalisation enter international markets before; therefore, knowledge-based capabilities are no less valuable than firm-specific factors in the early entry decision-making process. Moreover, competitiveness is another notable cistron; supporting our hypothesis is the fact that firms tend to be influenced by competitor behaviour and follow other companies into international markets in an attempt to occupy a worthy place in the new markets.
Tabular array five presents the results of our investigation of the factors affecting performance. We constructed five models to examine which factors accept the greatest influence on firm performance. In Model 7, nosotros examined the relationships between the control variables and entry timing; the results were significant. Model viii was used to test the experience factors. According to our hypothesis, firm historic period (b = −0.116, p < 0.005) and managerial incentives (b = 13.892, p < 0.005) had a negative human relationship and the results were significant. The results can be linked to firms' loss of inertia and their power to adapt quickly to an environment, which leads to weakening performance. The degree of internationalisation and industry factors did not exhibit pregnant results. Firm-specific factors were tested in Model 9 and they all showed significant results. House size showed significant and negative results. This ways that larger companies prove lower performance, which confirms previous studies reporting the same results (Baumol, 1962; Marris, 1964; Williamson, 1963).
Tabular array v. Regression results of influencing factors and performance.
Contrary to our expectations, telescopic economies showed significant results, only in the opposite direction, which supports the studies of Carman and Langeard (1980) and Normann (1984), who have stated that the diversification of products by service companies has a negative effect on performance. We constructed Model 10 after observing the results from Models 8 and ix. We selected the factors that showed the most significant results and incorporated them into this model. Thus, all results derived from Model 10 were significant, in addition to supporting our hypothesis. This model exhibited the highest adjusted R-foursquare.
We constructed Model eleven afterward observing the results of the previous model. Firm size coefficients were negative and significant (b = −v.027E-9, p < 0.005), which again proves the negative effects of firm size on both performance and entry timing in our sample; this finding tin can be attributed to a negative and significant coefficient of managerial incentives (b = −13.912, p < 0.005) on the basis of principal-amanuensis theory (Jensen & Meckling, 1976; Morck, Shleifer, & Vishny, 1988). The debt ratio coefficient was too pregnant and negative (b = −7.532, p < 0.05), which was in line with our expectations. Foreign ownership showed significant and positive results, which is supported past the findings of other relevant studies (Ahmadjian & Robbins, 2005; Baba, 2009; Douma, George, & Kabir, 2006). As expected, the firm historic period coefficient was negative and meaning (b = −0.087, p < 0.01). Telescopic economies, degree of internationalisation and competitiveness did non exhibit any significant results in whatever of the models, except for scope economies in Model nine. Through analysing the data, we determined that, in full general, firm-specific factors exhibited greater furnishings on performance, whereas feel-related factors exhibited more than meaning effects on entry timing; these results support Hypothesis 5.
We believe the results of this study to be of keen interest. They can serve as a reference for studies on the role of entry timing in firm performance. Most of the significant results for the relationships between firm factors and performance were negative, whereas the same factors showed positive relationships with entry timing. Thus, nosotros assert that our statement for a mediating effect of entry timing is correct and that firms must choose the right entry timing to achieve optimal functioning.
v. Conclusion
five.1. Word
This report examined the determinants of the entry timing of Taiwanese service sector firms into new international markets. We assumed that entry timing decisions are determined through business firm-specific, manufacture, and experience factors. Our inquiry results clearly reveal that firms that are likely to enter international markets earlier are influenced by feel (degree of internationalisation and business firm historic period) and industry factors (competitiveness). The results point that firm-specific factors are more sensitive. Large companies actually defer entry into new foreign markets. However, regarding firm size, the reason for the observed negative result could exist the choice of an inappropriate measure or simply the fact that mobile service companies with smaller assets are likely to enter international markets before than larger companies with greater avails. Nosotros likewise used another measure of firm size to obtain other results; however, the results once more reveal a negative and not-meaning coefficient. Another factor showing negative and opposing results to our expectations was managerial incentives. We hypothesised that companies with higher managerial incentives are more confident and have more feel and, thus, enter new foreign markets earlier than competitors. Yet, all variables showed negative coefficients, thus implying later entry. These results tin can be explained as follows. We can assume that a firm'south management would not cull to enter a new international market if the market promises high risks and uncertainty. In addition, experienced management may choose to defer entry and follow later on or decide that the firm will select a free-riding strategy. Other explanations could exist limited past database or sample size.
Our results back up the hypothesis that early entrants into new international markets from the Taiwanese service sector volition exhibit superior functioning over other entrants.
Numerous discussions take been devoted to the advantages and disadvantages of early market place entry (Lieberman & Montgomery, 1988) and the importance of entry timing (Huff & Robinson, 1993). We affirm that entry timing is a crucial strategic decision that helps companies to perform successfully in new international markets. Therefore, in addition to excluding standard empirical results and testing the connexion betwixt the factors influencing entry timing decisions, nosotros attempted to determine early entry as the mediator in the relationship betwixt the factors and performance to prove its strategic importance.
five.ii. Last remarks
To construct our framework, we studied numerous prominent studies on the relationships between firm factors and entry timing and entry timing and performance (Grewal, Cline, & Davies, 2003; Huff & Robinson, 1993; Johanson & Wiedersheim-Paul, 1975; Lieberman & Montgomery, 1988; Madsen & Servais, 1997). Although all the factors used in our research have been widely used in empirical studies, we argue that not all of them have been broadly and continually studied.
A report was conducted to guide our thesis, which was based on the findings and literature reviews of other relevant studies. We created a linear logarithm to examine the relationships between company factors, entry timing, and functioning.
In our research, nosotros answered the question of which factors bear upon entry timing and how they influence foreign market entry timing controlling. The results of the empirical written report show that the factors affecting entry timing are firm size, debt ratio, firm age, managerial incentives, the degree of internationalisation and competitiveness. All factors, except for firm size and managerial incentives, showed positive and meaning results. The results for house size and managerial incentives can be attributed to management buying and the principal–agent problem, which is when management personnel prioritise their self-interests.
Another question we answered in our research was which factors bear on firm performance and how they influence this performance. We conclude that factors influencing firm operation are business firm size, debt ratio, foreign ownership, house historic period and managerial incentives. All factors, except for foreign buying, showed negative relationships with firm performance.
In addition, we investigated the consequence of entry timing on functioning and discovered that earlier entrants exhibit more positive results than afterward entrants. Nosotros also conclude that entry timing is a strategically critical decision, which can influence company performance in new international markets.
5.three. Contribution
First, we conducted this study using the latest data, thus filling the gaps between previous findings, recently proposed factors and current scientific fields. Moreover, the study contributes to the understanding of when a company should invest in new international markets, which is beneficial to Taiwanese service sector firms. The study extends noesis almost the relationships between factors, entry timing and performance.
5.4. Limitations and future inquiry directions
The first limitation of this study is the database. Our sample included but listed companies, which does non represent the total of Taiwanese firms, thus limiting the generalisability of the findings. To accost this limitation, future studies can compare the investing behaviours of other companies from various countries, which can increase the generalisability of the findings. In addition, despite the pregnant results in this empirical written report, which demonstrated a positive relationship betwixt entry timing and functioning, a low adjusted R-foursquare value was observed; this can be addressed in future studies past including various other factors to examine this relationship. Another limitation is the data collection period considered in our research. We examined only data from 2015. Therefore, future studies tin can consider a period of 5 or 10 years to clearly discover any patterns. Rather than consider linear relationships, we attempted to exam entry timing as a mediator in the relationships between factors and performance. This is because we consider the relationships betwixt business firm characteristics and entry timing to be more than complicated than they seem. Future research should observe not-linear relationships and employ some culling enquiry methods to more deeply explore the relationships among various factors, entry timing and performance.
Disclosure statement
The authors report no conflicts of interest. The authors alone are responsible for the content and writing of the paper.
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Source: https://www.tandfonline.com/doi/full/10.1080/1331677X.2018.1436456
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