Abstract
The aim of this study was to explain the determinants of service industry firms’ entry timing into new international markets. On the basis of the relevant literature, a framework was proposed comprising firm-specific, experience and industry factors. Linear regression analysis was conducted to examine the relationships between the factors, entry timing and subsequent performance. This study also investigated the timing of initial investment in a foreign market. The final sample contained 174 listed companies from various service industries in Taiwan. The latest financial data collected were from the year 2015. Based on the entry information of listed Taiwanese companies, the empirical results indicated that older firms exhibiting higher levels of internationalisation, having lower debt ratios and originating from more competitive sub-industries tend to enter new international markets earlier than other firms. Service industry companies exhibit superior performance if they enter the markets later. Furthermore, the study results support the idea that entry timing is a mediator between the factors and international performance, which helps companies achieve greater performance.
Highlights
A firm considering entry into a new geographical market must decide when to enter that market
In Model 7, we examined the relationships between the control variables and entry timing; the results were significant
The results can be linked to firms’ loss of inertia and their ability to adjust quickly to an environment, which leads to weakening performance
Summary
A firm considering entry into a new geographical market 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 pioneers are at high risk or have a better chance of obtaining a large market share. Some scholars have asserted that, through early entry, pioneers are in a disadvantaged position and their return on investment percentage points are lower than later entrants (Boulding & Christen, 2003); they are at high risk (Lieberman & Montgomery, 1998). Early entrants in new markets have often been reported to achieve greater market shares, but they have higher exit rates (Lieberman & Montgomery, 1998)
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