Market Entry Timing Research Articles

Worth Waiting for – Evidence of Late-Mover Benefits in Cross-Border Mergers and Acquisitions

The purpose of this paper is to examine how the timing of market entry affects the shareholder wealth gains in cross-border acquisitions made by U.S. firms. We find that cross-border acquisition announcements are generally favorable for late-movers, especially in countries most similar to the U.S. These late movers may be able to learn from early-movers and thereby avoid costly mistakes. While early mover advantages are not evident in the sample as a whole, benefits for early-movers are more apparent in takeovers in countries more dissimilar from the U.S., namely civil law countries and countries with high corruption.

Optimal Marketing Entry Timing for Successive Product/Service Generations

When to introduce successive generations of products or services to the market is an important decision for firms. In this study, we develop analytical models to help decide the optimal market entry timing for each generation. Our analysis is very comprehensive in that we consider two commonly observed revenue streams (i.e., revenue is generated from either one-time sale or continuous service) and two generation transition strategies (i.e., older generation are either gradually phased out or totally replaced). Pioneering research models by Wilson and Norton (1989) and Mahajan and Muller (1996) have considered the specific business scenario corresponding to one-time sale and phase-out transition. Results of these studies conclude that a second generation should be introduced now or never (Wilson and Norton 1989) or now or at maturity (Mahajan and Muller 1996). We find that under one-time sale and phase-out transition, the optimal entry timing is not limited to now or never or now or at maturity, but it can also lie between now and maturity. Interestingly, when continuous service (instead of one-time sale) is the source of revenue and the new generation is less profitable than the older per unit time’s service, the now or never pattern is observed. Lastly, we demonstrate that the proposed modeling framework can be easily used to derive market entry timing for more general business scenarios where a) revenue is generated from both one-time sale and continuous service, and b) there exist three product generations, which also extend previous research.

Foreign Market Entry Timing Revisited: Trade-Off between Market Share Performance and Firm Survival

This study revisits the impact of entry timing on the performance of foreign-invested firms. The authors posit that balancing between market share performance and firm survival is critical for foreign firms to capitalize on early-mover advantages. Using a longitudinal data set of 25,513 foreign firms operating in China, the authors find that early entrants enjoy higher market shares but suffer from lower survival rates than late entrants. In addition, foreign firms’ entry mode and investment size affect their market shares and survival. The results also provide supporting evidence of the interaction effects among entry timing, entry mode, and investment size on foreign firms’ market shares and survival.

Entrepreneurial Optimism and Survival

This paper uses entrepreneurs’ survival expectations around the time of market entry and subsequent venture exits to study entrepreneurial optimism. Using data on a large number of nascent entrepreneurs in the US and start-ups in Finland, we find that new entrepreneurs survival beliefs are on average optimistic but heterogeneous: Some are excessively optimistic, whereas a small subset holds unbiased beliefs. Entrepreneurial optimism is increasing in the relative (interpersonal) optimism and decreasing in entrepreneurs level of education and industry experience in both countries. At least in Finland, those holding optimistic views are more likely to transit into entrepreneurship.

The home country cultural determinants of firms' foreign market entry timing strategies

Firms choose foreign market entry timing strategies based on their perceptions and evaluation of the risks and rewards inherent with early versus late entry into that market. We expect a firm’s home country culture to have a strong impact on these perceptions, resulting in systematic variation in firm entry timing strategy across firms’ country of origin. To this perspective, we integrate extant research which suggests that attributes of the host country environment will impact entry timing as well. Our findings support the argument that home country cultural attributes directly influence whether a firm decides to enter a country earlier or later than other firms, and that the host country’s political environment moderates these effects. Specifically, we find that firms from high performance orientation and high power distance tend to enter countries earlier on average; we also find that countries with weak political freedoms trigger late-entry strategies from high uncertainty avoidance cultures, but earl...

Simulation of personnel requirements during production ramp-up

Nowadays the number of product models constantly increases, due to a strong competition to innovate and the reduction of product life cycles, resulting in a more frequent occurrence of production ramp-ups. The production ramp-up combines the product development with the series production and has an impact on the market entry timing. In order to ensure an ideal ramp-up with new developed products being placed on the market as quickly as possible, there has to be an efficient use of existing resources, especially of human resources. Nevertheless, the planning of these resources turns out to be the most important challenge because it is directly related to a great uncertainty. The following article represents an approach that is being developed at the Institute of Production Science (wbk) of the Karlsruhe Institute of Technology (KIT) to optimize the forecast of the personnel requirements during ramp-up by taking into account the dynamic planning variables and organizational basic conditions. Therefore, a method will be developed that provides support to the responsible persons of the respective production ramp-up to calculate the necessary manpower for every single ramp-up phase and to realize the economic optimum. This method focuses on a simulation of the ramp-up process that allows an economically more efficient use of human resources.

Stay in school or start working? — The human capital investment decision under uncertainty and irreversibility

At any moment a student may decide to leave school and enter the labor market, or to stay in the education system. The timing of their departure determines their level of academic achievement and formal qualification. Education is a multi-stage process of investing in an accumulative human capital stock. How long can I expect to go to school? How much will I invest in my education? To answer these questions we apply the real option approach. We depart from recent literature by (1) adding accumulated education costs and determining the expected time of market entry, (2) considering complete earnings profiles including entry-level wages, sheepskin effects and earning dynamics, and (3) discussing the option value of schooling while introducing potential career opportunities or threats of unemployment modeled as major uncertain events connected with particular formal education achievements.

Effect of Safety Issues with HIV Drugs on the Approval Process of Other Drugs in the Same Class

Knowledge on the safety of new medicines is limited at the time of market entry. Nearly half of all drugs used to treat HIV registered in the EU required ≥1 Direct Healthcare Professional Communication (DHPC) in the past 10 years for safety issues identified post-approval. The aim was to evaluate the extent to which regulators and industry have addressed the risk of safety issues for HIV drugs based on prior experience with other drugs in the same class and whether doing so impacts development time of these drugs. HIV drugs receiving ≥1 DHPC in the Netherlands between January 1999 and December 2008 were identified. Each drug with a DHPC ('index' drug) was paired with subsequently approved HIV drug(s) in the same class (Anatomical Therapeutic Chemical [ATC] 4th level) ['follow-on' drugs]. Characteristics of safety issues were extracted from the DHPCs of the 'index' drugs. European Public Assessment Reports (EPARs) were reviewed regarding whether the safety issues had been considered during development and approval. Consideration of previously identified safety issues in 'follow-on' drug applications was assessed regarding attention paid to adverse drug reaction (ADR) symptoms in pre-marketing studies, Summary of Product Characteristics (SmPC) and postmarketing commitments, and whether size of the safety population was in accordance with Regulatory guidelines. 'Index' drugs were also paired with drugs in the same class already on the market ('older' drugs). For 'older' drugs, we identified whether the safety issue led to appropriate changes in the current SmPC (January 2011) compared with the SmPC at the time of marketing authorization. Clinical development time was assessed using time from first patent application to market authorization as proxy, and comparison was made between 'index' and 'follow-on' drugs. For 9 (43%) of the 21 centrally authorized HIV drugs, 11 serious safety issues that required a DHPC were identified. Two drugs were excluded from our analysis (DHPCs related to contamination/medication error). Six 'index' drugs were paired, each with one to six 'follow-on' drugs. Three concerned drug-drug interactions (DDIs); the other three were intracranial haemorrhage, neuromuscular weakness and severe skin/hepatic reactions. All but one 'follow-on' drug had information in the EPAR on that specific ADR (i.e. attention was paid to the ADR). The DDIs were addressed in pre-marketing studies and/or the SmPC. Two of the other ADRs were addressed by postmarketing surveillance commitments; intracranial haemorrhage was not addressed. Three safety issues for two 'index' drugs could not be paired with a 'follow-on' drug as no drug in the same class was approved after the corresponding DHPCs were issued. Five of the nine safety issues were added to at least one of the current SmPCs for the 'older' drugs already on the market at the time of DHPC issue. Two safety issues were already in the SmPC of the 'older' drugs at time of market approval and two were not introduced into the SmPC of 'older' drugs. Population size to assess short-term safety complied with the guidelines for four 'index', seven 'follow-on' and three 'older' drugs; population size to assess long-term safety complied for one, three and two drugs, respectively. For five drugs, EPARs did not provide adequate information on population size. No statistically significant difference in development time between 'index' and 'follow-on' drugs was found. Generally, safety issues were taken into account in the approval process of other drugs in the class. The approaches were different and determined by the nature of the ADR. Taking safety issues into account in the approval process did not seem to impact on the time taken to perform the pre-approval clinical programme.

Performance Analysis of Pairs Trading Strategy Utilizing High Frequency Data with an Application to KOSPI 100 Equities

In this study, the well-known pairs trading strategy, one of typical market neutral strategies, is modified to be able to utilize high frequency equity data, and it is applied to the constituent shares of the KOSPI (Korea Composite Stock Price Index) 100 index. This study is distinguished from the most of previous work on the traditional pairs trading strategy in that we introduce the use of high frequency data in strategy modeling instead of daily closing prices, which allows us to analyze the performance of the strategy in high frequency domain. More specifically, we extract the trading signal, which is based on the spread between stocks of pair, by estimating time adaptive regression coefficients using the Kalman filter. As for underlying universe for the strategy, we confine ourselves to consider the most liquid 100 stocks in KOSPI as a basket for our experiment. Major findings include that arbitrage profitability is in fact present without being subject to market condition even when conservative transaction costs are taken into account. In particular, our strategy outperforms better in bear market condition while it varies depending on industry group. The results also demonstrate that the performance of the strategy is dependent upon timing of the market entry; the performance of trades entered around at opening and closing of the daily market is appeared to be relatively superior to that of trades executed in the rest of daily trading hours. Furthermore, we introduce an enhanced version of the strategy, which selects high-ranking pairs to trade for the next time period based on a set of in-sample statistics. It is verified that the enhanced strategy has better profitability and reliability compared to our basic strategy.

Genetically Modified Crops: A Pre-Introductory Assessment of Farmer Readiness, Its Determinants and Extent of Support in India

India has become the focal point of biggest debates on GM Crops and their Risk benefit analysis. The present study reveals extent of farmer readiness and support for Genetically Modified crops and biotechnology applications in Indian agriculture. A set of new indices developed could reveal farmers' readiness towards GM Crops, willingness to pay for GM seeds, to trial in time, to invest additionally and to substitute available area. 5 factors namely Biotechnology awareness, innovativeness, extension participation and cosmopoliteness were found to determine farmer readiness towards GM crops. A model was developed for predicting GM readiness which explained up to 78.4 per cent variation. A set of 14 biotechnology applications were rated for their farmer acceptability . Farmer support for ongoing GM research was found highest for crops requiring lesser chemical fertilizers followed by crops requiring less water for growth, crops having longer shelf life periods, drought tolerant crops and saline tolerant crops. The findings will serve researchers, industry and Government in developing biotech communication strategies, pricing, production and timing of market entry as well as development of GM crops based on farmer needs in future.

LIFE: The Case for Early Commercialization of Fusion Energy

This paper presents the case for early commercialization of laser inertial fusion energy (LIFE). Results taken from systems modeling of the US electrical generating enterprise quantify the benefits of fusion energy in terms of carbon emission, nuclear waste and plutonium production avoidance. Sensitivity of benefits-gained to timing of market-entry is presented. These results show the importance of achieving market entry in the 2030 time frame. Economic modeling results show that fusion energy can be competitive with other low-carbon energy sources. The paper concludes with a description of the LIFE commercialization path. It proposes constructing a demonstration facility capable of continuous fusion operations within 10 to 15 years. This facility will qualify the processes and materials needed for a commercial fusion power plant.

Optimal pricing and quality choice of a monopolist under Knightian uncertainty

This paper analyzes a simple vertical product differentiation model with demand uncertainty and derives a risk neutral monopolist's optimal market entry timing, her optimal pricing and optimal quality choice by incorporating Knightian uncertainty, irreversibility, and flexibility in quality-enhancing investment into a continuous-time stochastic model. It is shown that an increase in Knightian uncertainty induces decreases in the optimal price, the optimal quality, and the value of undertaking the quality-enhancing investment by the monopolist. The social optimal entry timing, pricing and quality are also analyzed.

The relationship between market entry timing and consumer preference

The relationship between market entry timing and consumer preference

The First Mover in New Emerging Markets: Balancing Risks versus Opportunities in the Case of Belarus

This article elaborates on the first-mover advantages for foreign companies entering emerging markets based on the example of Belarus. It builds its theoretical framework on international business theories of localization and timing of market entry. The article offers a short review of the current economic situation in Belarus, with an accent on opportunities and incentives for investors versus possible risks and ways to offset them. Finally, several examples are offered demonstrating the performance of investors who managed to evaluate properly the balance between risks and opportunities and voted for an early entry in Belarus. It would appear that first-comer advantages clearly outweighed the risks.

Forests, food, and fuel in the tropics: the uneven social and ecological consequences of the emerging political economy of biofuels

The global political economy of biofuels emerging since 2007 appears set to intensify inequalities among the countries and rural peoples of the global South. Looking through a global political economy lens, this paper analyses the consequences of proliferating biofuel alliances among multinational corporations, governments, and domestic producers. Since many major biofuel feedstocks – such as sugar, oil palm, and soy – are already entrenched in industrial agricultural and forestry production systems, the authors extrapolate from patterns of production for these crops to bolster their argument that state capacities, the timing of market entry, existing institutions, and historical state-society land tenure relations will particularly affect the potential consequences of further biofuel development. Although the impacts of biofuels vary by region and feedstock, and although some agrarian communities in some countries of the global South are poised to benefit, the analysis suggests that already-vulnerable people and communities will bear a disproportionate share of the costs of biofuel development, particularly for biofuels from crops already embedded in industrial production systems. A core reason, this paper argues, is that the emerging biofuel alliances are reinforcing processes and structures that increase pressures on the ecological integrity of tropical forests and further wrest control of resources from subsistence farmers, indigenous peoples, and people with insecure land rights. Even the development of so-called ‘sustainable’ biofuels looks set to displace livelihoods and reinforce and extend previous waves of hardship for such marginalised peoples.

The Evolution of Market Entry Industrial Design Protection: An International Comparative Analysis

The recent US. enactment of the Vessel Hull Design Protection Act is another step in the trend for improved industrial design protection of products when they are first introduced into the market (market entry protection). The goal has been relatively prompt enforcement of a right occurring at the time of market entry. The United States has cautiously added market entry protection for selected products when the economic situation has justified the change.The United States' slow development of market entry industrial design protection is in contrast with other countries, like France, where copyright protection has served that purpose for many years. Some foreign design registration systems have given fairly prompt market entry protection by granting rights back to the filing date. These registration systems had some delays in initiating enforcement owing to the registration procedures. An early example of market entry protection for products was the UK. design right. It protected most appearance features of a product against copying for five years' exclusive right, followed by a requirement to license the design for the following five years. Another example of improved industrial design market entry protection was in Japan, with its new unfair competition law that prevented slavish, almost identical copying of a product for three years from product introduction. In a similar manner, a proposed E. U. registration system will give a three-year right to prevent copying product industrial designs without requiring registration.

Labour Market Entry Conditions, Wages and Job Mobility

Economic conditions at the time of labour market entry can induce wage differentials between workers entering the labour market at different points in time. While the existence and persistence of these entry wage differentials are well documented, little is known about their interaction with employees’ mobility behaviour. This paper contributes to this research area by analyzing the interaction between job mobility and entry wage differentials using German administrative data. The results suggest that labour market entrants earning less than the average starting wage are more likely to change jobs, directly from employer to employer as well as indirectly via an unemployment spell. In addition they are more likely to change occupation. Moreover, job mobility tends to reduce the effects of labour market entry conditions, implying that job mobility operates as an adjustment mechanism that mitigates entry wage differentials. These results hold not only for high-skilled, but also for medium-skilled and unskilled workers.

Prospects for plug-in hybrid electric vehicles in the United States and Japan: A general equilibrium analysis

The plug-in hybrid electric vehicle (PHEV) may offer a potential near term, low-carbon alternative to today’s gasoline- and diesel-powered vehicles. A representative vehicle technology that runs on electricity in addition to conventional fuels was introduced into the MIT Emissions Prediction and Policy Analysis (EPPA) model as a perfect substitute for internal combustion engine (ICE-only) vehicles in two likely early-adopting markets, the United States and Japan. We investigate the effect of relative vehicle cost and all-electric range on the timing of PHEV market entry in the presence and absence of an advanced cellulosic biofuels technology and a strong (450 ppm) economy-wide carbon constraint. Vehicle cost could be a significant barrier to PHEV entry unless fairly aggressive goals for reducing battery costs are met. If a low-cost PHEV is available we find that its adoption has the potential to reduce CO 2 emissions, refined oil demand, and under a carbon policy the required CO 2 price in both the United States and Japan. The emissions reduction potential of PHEV adoption depends on the carbon intensity of electric power generation. Thus, the technology is much more effective in reducing CO 2 emissions if adoption occurs under an economy-wide cap and trade system that also encourages low-carbon electricity generation.

Balancing Development Costs and Sales to Optimize the Development Time of Product Line Additions

Development teams often use mental models to simplify development time decision making because a comprehensive empirical assessment of the trade-offs across the metrics of development time, development costs, proficiency in market-entry timing, and new product sales is simply not feasible. Surprisingly, these mental models have not been studied in prior research on the trade-offs among the aforementioned metrics. These mental models are important to consider, however, because they define reality, specify what team members attend to, and guide their decision making. As such, these models influence how development teams make trade-offs across the four metrics to try to optimize new product profitability. Teams with such an objective should manage to a development time that minimizes development costs and to a proficient market-entry timing that maximizes new product sales. Yet many teams use mental models for development time decision making that focus either just on development costs or on proficiency in market-entry timing. This survey-based study uses data from 115 completed NPD projects, all product line additions from manufacturers in The Netherlands, to demonstrate that there is a cost to simplifying decision making. Making development time decisions without taking into account the contingency between development time and proficiency in market-entry timing can be misleading, and using either a sales-maximization or a cost-minimization simplified decision-making model may result in a cost penalty or a sales loss. The results from this study show that the development time that maximizes new product profitability is longer than the time that maximizes new product sales and is shorter than the development time that minimizes development costs. Furthermore, the results reveal that the cost penalty of sales maximization is smaller than the sales loss of development costs minimization. An important implication of the results is that, to determine the optimal development time, teams need to distinguish between cost and sales effects of development time reductions. To determine the relative impact of these effects this study also estimates the elasticities of development costs, new product sales, and new product profitability with regard to development time. Armed with this knowledge, development teams should be better equipped to make trade-offs among the four metrics of development time, development costs, proficiency in market-entry timing, and new product sales.

The influence of appropriability conditions on the firm's entry timing orientation

In high technology industries the firm's market entry timing may have critical influence on the firm's long-term survival and performance. In addition to the conditions of the firms' operating environments also the appropriability regime has an impact on the firms' eagerness to move early to the market. In this paper we study the influence of two individual appropriability mechanisms; intellectual property rights (IPRs) and tacitness on firm's entry timing orientation. From the viewpoint of the firm, the stronger appropriability regime should encourage earlier entry as the possibilities for first-mover advantage are greater. The results of our study suggest that the firms' orientation to move early is indifferent to tacitness, whereas there is a strong positive correlation between the strength of the IPRs and the firm's orientation to act early. However, running the regression separately for the seven industries reveals that the influence of the two appropriability mechanisms is somewhat industry-specific. Furthermore, in highly dynamic environments the high degree of knowledge tacitness seems to be associated with slower entry.