Order and Scale of Market Entry, Firm Resources, and Performance

This paper aims to examine whether order and scale of market entry influence a new product’s market and financial performance, and how marketing and R&D resources strengthen or weaken these effects. Through a mail survey, data were collected on a sample of 136 product launches by Spanish manufacturing firms. A moderated hierarchical regression analysis enabled the assessment of the relevance of order and scale as well as their interactions with marketing and R&D resources to explain a product’s competitive position. Moreover, a mediation analysis allowed us to determine whether market entry strategy (indirectly) affects financial performance. The analyses show that pioneering firms and those entering the market with a full-scale launch achieve advantages in terms of competitive position, and that this variable mediates the relationship of order and scale with profitability. The empirical results also reveal that such advantages are conditioned by the availability of marketing and R&D resources. The decisions regarding order and scale of market entry are contingent. Managers involved in the planning of a new product launch should be knowledgeable about their firm’s resources and capabilities before determining when and how to enter the market. Many papers study the effects of order-of-entry on market share, but other dimensions of a new product launch strategy, such as scale, have largely been ignored. The research examines the effects of both variables on competitive position and profitability. This is also one of the first studies that explores the moderating effect exerted by resources and capabilities in the launch strategy-performance relationship.