A Model of Market Entry in an Emerging Technology Market

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Date Submitted: 11/16/2012 02:33 AM

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A Model of Market Entry in an Emerging Technology Market

Rajiv K. Sinha and Charles H. Noble

Abstract—The timing of market entry is a critical decision, involving the need to balance the risk of premature entry with the problems of missed opportunities as a result of late entry. Drawing from several theoretical perspectives, we propose a model for explaining the reasons for early or delayed entry into an emerging technology market. A novel feature of our study is the use of a hazard modeling framework to analyze longitudinal data pertaining to over 3500 entrants and nonentrants during the emergence of the automated teller machine market. This approach alleviates the sample selection problems associated with prior entry research. With caution in generalizing the results to other settings, we find compelling evidence in support of the model, extending our knowledge of the dynamics surrounding entry into certain technology markets. Index Terms—Entry timing, hazard models, market entry, technology adoption.

advantages in the first place. In other words, if first mover advantages are so dominant, what are the factors that prevent all or many firms from entering the market as soon as possible? While the consequences of the timing of market entry have been extensively researched, there has been very limited empirical research on explaining the timing of market entry itself. Lieberman and Montgomery [47, p. 52] note that: “ The fundamental (and in our view most interesting) question of how first mover opportunities arise and are pursued by specific firms remains almost completely unexplored. An important theoretical challenge is to flesh out this dynamic process ( )” New forms of technology-driven markets, in particular, have left researchers and managers with a lack of empirical models on which to draw for guidance [59]. The extended-term panels of data used to study more traditional entry...