Entry to a New Technology-enabled Product Category - How New Market Uncertainty and Old Market Growth Influence Entry-timing Effects

Timo M. Partanen

Research output: ThesisDoctoral ThesisCollection of Articles

Abstract

Timing is an essential part of any decision to enter a new market. Conventional wisdom suggests that early entrants can often gain first-mover advantages, but even after decades of research on entry timing, it remains still somewhat unclear when and how first-mover advantages are achieved. It has been suggested that one reason for that partial inconclusiveness may be that researchers have too myopically investigated the timing only in relation to competitors. Thus, in my dissertation, I suggest and empirically test two other entry-timing anchors besides of competitors' entries: timing in relation to growth in firm's existing market and timing in relation to uncertainty concerning the new market potential. The empirical context of this study is wireless telecommunication operators' adoption of 3G WCDMA technology and introduction of fast wireless data communication services – "the biggest ever gamble on the introduction of a new technology". The new services were believed to have huge potential, but for several years, it was uncertain if the new technology and its ecosystem would be viable. Furthermore, in many markets, new 3G services were introduced when the demand for earlier 2G voice-only services was still rapidly growing. My first essay draws from the technology adoption literature and suggests that post-entry performance is a joint outcome of timing in relation to competitors' entries and timing in relation to the maturity of the new market. In the second essay, I apply opportunity cost theory. I argue that when a firm needs the same non-scale-free and imperfectly fungible resources and competences in both old and new markets, its overall performance will suffer if it enters the new market when the old market is still rapidly growing. In the third essay, I investigate what influences firms' entry-timing decisions when the viability of the new market is uncertain. I apply organizational learning theory, and in contrary to previous research I suggest that in an ambiguous environment, learning from parent group's experience advances the entry timing, and learning from competitors delays it. My empirical findings support all these arguments. This study has a few implications for theory and research practice related to entry-timing effects. First, entry-timing effects depends on multiple anchors, and the timing should not only be measured from pioneer's entry to the market. Indeed, multiple effects can co-exist and even have opposite effects. Thus, researchers should decompose entry-timing effects into smaller sub-effects rather than attempt to explain entry-timing effects on a general level. Second, entry-timing decisions are not isolated events but should be studied in relation to firms' other activities. Indeed, our impression of entry-timing advantages can be seriously biased if we do not pay attention to the opportunity cost of forgoing firms' other growth opportunities. Third, this thesis highlights the need to align timing measure better to the underlying dynamic phenomena.
Translated title of the contributionEntry to a New Technology-enabled Product Category - How New Market Uncertainty and Old Market Growth Influence Entry-timing Effects
Original languageEnglish
QualificationDoctor's degree
Awarding Institution
  • Aalto University
Supervisors/Advisors
  • Maula, Markku, Supervising Professor
  • Keil, Thomas, Thesis Advisor
Publisher
Print ISBNs978-952-60-7630-0
Electronic ISBNs978-952-60-7629-4
Publication statusPublished - 2017
MoE publication typeG5 Doctoral dissertation (article)

Keywords

  • entry-timing effects
  • technology adoption
  • opportunity costs
  • organizational learning

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