J PROD INNOV MANAG 2015;32(2):263–278

© 2014 Product Development & Management Association

DOI: 10.1111/jpim.12223

Why Do Firms Enter a New Product Market?

A Two-Dimensional Framework for Market Entry Motivation
and Behavior*
Namwoon Kim, Sungwook Min, and Seoil Chaiy

What are the energetic forces that induce established firms to enter new product markets? While most previous research
has explained the economic profits expected from a new product market as firms’ distinctive motivation for market
entry, some recent studies also emphasize interfirm competition and benchmarking activities as another important
factor that motivates firms’ new market entry. To explain the established firms’ diverse new product market entry
behaviors, this study presents a two-dimensional scheme of entry motivation in terms of the degrees of target market
profit focus and competitor focus. The first dimension captures the economic motivation of firms’ new market entry that
ranges from focusing on the direct expected profits from the target market to considering more strategic/indirect benefit
incentives. The second dimension captures the degree of firms’ external motivation for entry affected by competitors
that ranges from independent entry decisions to fully competitor-oriented entry decisions.
Using multiple-industry survey data, the current study empirically verifies that these two entry motivation dimensions
explain a great portion of actual firms’ new product market entry behaviors and that they are independent of each other.
Subsequently, this study validates that firms’ operational size and their environmental factors like perceived techno-
logical uncertainty and competitive intensity upon new market entry affect the degrees of the two dimensions of firms’
new product market entry motivation. More specifically, large firms less emphasize target-market profits than small
firms, and when perceived technological uncertainty is high, potential market entrants become less target market profit
focused but more competitor focused. Under a highly competitive new market condition, firms focus on both target-
market profits and competitors.
Based on the analysis of new market entry motivation dimensions, the current study proposes a new typology of
established firms’ market entry behaviors. The suggested typology represents the four different types of new product
market entrants and examines specific characteristics and entry strategies for each type of potential entrants. This
entry-motivation framework should provide a deeper understanding of the backgrounds of entry behaviors and assist
firms in developing appropriate entry strategies and in advantageously responding to rival firms’ actions with regard
to entry.

Introduction Varadarajan, 1990; Kerin, Varadarajan, and Peterson,

1992), research outcomes on entry motivation (i.e., “why

W
hile studies on firms’ market entry resources/
capabilities are well incorporated into the
entry barriers and pioneer advantages frame-
work (e.g., Day, 1986; Han, Kim, and Kim, 2001;
Karakaya and Stahl, 1989; Kerin, Mahajan, and
Address correspondence to: Namwoon Kim, Department of Manage-
ment and Marketing, Faculty of Business, Hong Kong Polytechnic Univer-
sity, Hung Hom, Kowloon, Hong Kong. E-mail: namwoon.kim@
polyu.edu.hk. Tel: 852-2766-7141. Fax: 852-2765-0611.
* The authors thank Alan Dubinsky, Ashish Sinha, Mark Uncles, Jack
Cadeaux, and the seminar participants at the University of New South
Wales, Hong Kong Polytechnic University, and Singapore Management
University for their helpful comments. The first author acknowledges the
research support of the Hong Kong Polytechnic University’s Central
Research Grant (G-YJ49).
do firms enter a new product market?”) have yet to be
theoretically assorted or conceptually integrated into
explainable dimensions. Previous studies on established
firms’ new product market entry normally explained their
entry behaviors in terms of the firms’ profit-seeking moti-
vation. For example, the economics literature on norma-
tive firm behaviors underscores the expected economic
return from a new market as a major motivation for market
entry (e.g., Dixit, 1980; Geroski, 1995; Gort and Klepper,
1982; Penrose, 1959; Spence, 1977). However, some
other studies also argue that firms do not necessarily enter
a new product market just for short-term, direct profit-
seeking but for indirect, long-term profit motives such as
using existing firm resources (Helfat and Lieberman,
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2002; King and Tucci, 2002; R. Mitchell, 1989; W.
Mitchell, 1989) or complementing/substituting for exist-
ing product lines (Chen and MacMillan, 1992; Lee,
Smith, and Grimm, 2003). In all, most previous research
has explained firms’ new market entries in terms of one
major dimension, which is economic profit motivation,
although the degree to which firms seek direct versus less
direct profits from a new product market may vary.
On the other hand, recent studies on firms’ strategic
movement began to emphasize another dimension of
new market entry based on the concept of interfirm com-
petition and benchmarking activities. For example,
Lieberman and Asaba (2006) argue that a direct competi-
tor’s entry or prospective entry into a given market can
trigger an established firm’s entry into that market. Or a
firm may want to enter a new market using a newly
developed technology before its competitors use the same
technology to make its current product obsolete. In this
context, an established firm may also interpret a direct
competitor’s entry into a new market as signaling the
existence of promising market benefits, and thus be
prompted to enter that market as well (Debruyne and
Reibstein, 2005).
Along this line, the purpose of this paper is to suggest
a conceptual framework of entry motivation that can help
BIOGRAPHICAL SKETCHES
Dr. Namwoon Kim is professor of marketing in the Department of
Management and Marketing at Hong Kong Polytechnic University,
Hong Kong. He received his Ph.D. from the University of Texas at
Austin. His research interests include marketing and innovation strategy,
new product market entry strategy, channel knowledge management,
and international services marketing. His research has appeared in
Journal of Product Innovation Management, Journal of Marketing,
Management Science, International Journal of Research in Marketing,
Journal of the Academy of Marketing Science, Journal of Service
Research, Industrial Marketing Management, Journal of Management,
Marketing Letters, Journal of Business Research, and other journals.
Dr. Sungwook Min is professor of marketing in the Department of
Marketing at California State University, Long Beach. He received his
Ph.D. from Purdue University. His research interests include survival of
market pioneers and early followers, marketing strategies for new ser-
vices, and motivations and practices of corporate social responsibility.
His research has appeared in Journal of Marketing, Journal of Marketing
Research, Journal of Management, and Journal of Business Research.
Dr. Seoil Chaiy is professor of business administration at Korea Uni-
versity, Seoul Korea. He earned his D.B.A. from Indiana University,
Bloomington, Indiana. His research interests include innovation, corpo-
rate social responsibility, and business/marketing strategies. He served
as the chair of the Korean Academic Society of Business Administration
and also served as the chair of the Korean Marketing Association. His
publications have appeared in many academic journals including
Psychometrica, Journal of Business Research, Journal of Services Mar-
keting, Journal of Consumer Marketing, and others.
N. KIM ET AL.
explain the established firms’ diverse entry behaviors.
This study presents a two-dimensional framework con-
sisting of two continua, one of which is the degree to
which the entry decision is motivated by a target market
profit focus, and the other of which is the degree to which
it is motivated by a competitor focus. The first dimension
is supposed to capture the economic motivation of firms’
new market entry that ranges from focusing on the direct
expected profits from the target market to considering
more strategic/indirect benefit incentives. The second
dimension captures the degree of firms’ external motiva-
tion for entry affected by competitors that ranges from
independent entry decisions to fully competitor-oriented
entry decisions.
In addition to this integrative entry-motivation
scheme, our current study provides three other contribu-
tions to the new product market entry literature. First, this
study empirically shows that these two dimensions
explain a great portion of actual entry behaviors and that
they are independent of each other using a broad
multiple-industry survey. This characterization of entry-
motivation dimensions validated by empirical analyses
suggests a unified theoretical framework and conceptual
scheme that is useful for improving our understanding of
established firms’ new product market entry behaviors.
Second, based on previous market strategy research
(e.g., Lichtenthaler, 2009; Porter, 1980), the current study
argues that firms’ operational size and their environmen-
tal factors like perceived technological uncertainty and
competitive intensity upon new market entry affect their
new product market entry motivation. This study devel-
ops hypotheses and empirically tests them to examine the
impact of these internal (i.e., size) and external (i.e.,
environment) factors on the firms’ new product market
entry motivations.
Third, the current study proposes a new typology of
established firms’ market entry behaviors based on our
analysis of new market entry motivation dimensions.
Although prior research on firms’ market entry capabili-
ties has usually differentiated market entrants on the basis
of their industry experience (e.g., industry incumbents
versus start-ups) and accompanying resource advantage
for entry (Bayus and Agarwal, 2007; Chandy and Tellis,
2000; Mitchell, 1991), it has also been noted that
entrants’ behaviors including entry timing cannot be duly
analyzed without understanding their entry motivations
(Cooper and Schendel, 1976; Kim and Min, 2012). Thus,
this study presents four types of new product market
entry motivations and subsequently illustrates how entry
behaviors can vary across these different entry motivation
types. This entry-motivation typology should help
NEW PRODUCT–MARKET ENTRY MOTIVATION
explain entry behaviors and assist firms in developing
appropriate entry strategies and in advantageously
responding to rival firms’ actions with regard to entry.
Established Firms’ New Product Market
Entry Motivation
The existing literature on market entry has not clearly
conceptualized entry motivation but has used the term
rather flexibly. For the purposes of this paper, the current
study adopts a concept of motivation from the organiza-
tional behavior discipline. Following Steers and Porter’s
(1991) review of the theories of motivation, this study
defines the “motivation” of a firm as the energetic forces
that prompt it to behave in certain ways and maintain or
sustain the direction of its behavior. In this sense, firms’
market entry motivations are the energetic forces that
explain reasons why firms enter a new market. Based on
the previous literature (e.g., Burgelman, Christensen, and
Wheelwright, 2004, pp. 4–6; Porter, 1980, pp. 7–14), this
study also uses the term “market entry by an established
firm” to refer to the firm’s entry into a different (i.e.,
new-to-the-firm) product market instead of its entry into a
new geographical or international market for a product it
already sells. Similarly, this study uses “new product
market” and “new market” interchangeably throughout,
with reference to a firm’s efforts to add another product
line to its business portfolio. The current study focuses on
the entry motivations of established firms (also called
industry incumbents or de alio entrants) and the related
contextual factors that affect them, and leaves aside for
the moment any discussion of start-up firms’ entry moti-
vations. Therefore, unless otherwise specified, the term
“firm” as discussed in this paper indicates an established
firm.
The Target Market Profit Focus
Motivation Continuum
Many studies in business assume profit motivation by a
firm to understand different aspects of firm behaviors.
Penrose (1959) notes “the growth of firms can best be
explained if we can assume that investment decisions are
guided by opportunities to make money” (p. 27). Simi-
larly, the economics and management literatures tend to
explain new market entry as a profit-seeking firm behav-
ior (e.g., Dixit, 1980; Gort and Klepper, 1982; Spence,
1977). Many game-theoretic analyses on new product
market entry (e.g., Conner, 1995; Narasimhan and Zhang,
2000) assume that each specific entry decision is driven
by the entrant’s profit motivation from the new market.
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Investment theory also suggests that a firm should enter a
new market when net present value (NPV) of cash flow
from an entry equals or exceeds zero.
However, despite this pervasive presumption of the
expected profits in entry decisions, Geroski’s (1995)
survey of empirical findings reveals only a small or
insignificant impact of expected profits on new market
entry. These inconsistent results of expected profits as a
major entry motivation may be partly because most
profits variance is observed across different industries,
whereas entry rates variance between firms is more
clearly captured within the same industry (Geroski,
1995, p. 428). At any rate, these results imply that not a
few firms in the same industry also consider noneco-
nomic return as a major market entry motivation (cf.
Penrose, 1959, p. 29) and that when established firms
enter a new target market, direct profitability from the
new market may not always be the most important pre-
dictor in explaining entries. Instead, it is noted that some
firms’ entry motivation is more likely for indirect, long-
term profits that can contribute to overall corporate ben-
efits. Therefore, if pure target market/direct profit is the
one end of the entry motivation continuum, then the
other end could represent entry motivation for indirect,
long-term benefits.
The current study expects the continuum between these
two ends will contain different degrees of firms’ profit-
related entry motivations for new product markets. For
example, some firms are motivated to enter a new market
when they can enjoy entry advantages by using their
existing resources and require relatively less additional
R&D or marketing resources (Geroski, 1995; King and
Tucci, 2002; R. Mitchell, 1989; W. Mitchell, 1989; Teece,
Pisano, and Shuen, 1997). Some others enter a new
market for the purpose of introducing a new product or
product line that will improve their product portfolio. On
the other hand, the possibility that a new product will be a
substitute for the firm’s existing products may decrease
entry motivation because the substitutable new product
might cannibalize sales of existing product lines (Chandy
and Tellis, 1998). Other groups of firms may enter new
product markets to learn new technologies or obtain great
technological spillovers (Cohen and Levinthal, 1990) or
just to sustain the current company business based on a
new business model (Gambardella and McGahan, 2010;
Zott and Amit, 2010). Finally, some firms even enter a
new product market in order to attain legitimacy in con-
formity with the social norms such as corporate social
responsibility (Hannan and Carroll, 1992). These types of
firms’ entry motivations will be located close to the end
of “indirect, long-term benefits” and far from the end of
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Target Market Profit Focus Dimension
HIGH
(Solely Motivated by Immediate/Direct Target Market Profits)
LOW
(Little Regard for
Competitors’ Actions)
Type III
LOW
(Motivated by Indirect Profits for Overall Corporate Benefits)
Figure 1. Two Dimensions of New Product Market Entry Motivation
“solely motivated for direct profits” along the target
market profit focus motivation continuum.
With this background, the current study suggests a
dimension called degree of target market profit focus, the
relative degree to which entry into a new target market is
motivated by the desire for direct economic outcomes
from that market, to explain this interfirm variance. The
one extreme on this continuum is market entry maximally
motivated by the desire for high expected profits from the
new market; and the other extreme is entry motivated, not
by the quest for immediate profits from the new market,
but by the desire to maximize indirect, overall corporate
benefits. Motivation on this continuum varies indepen-
dently of and not to the exclusion of motivation on the
competitor-focused continuum, which will be addressed
below. Figure 1 depicts the target market profit-focused
and competitor-focused entry motivation continua with
real data of firm entries plotted on them.
The Competitor-Focused Motivation Continuum
The second of our proposed dimensions of market entry
motivation pertains to the degree to which the focal firm’s
market entry is affected by competing firms’ entry deci-
sions or behaviors. The current study refers to this as the
competitor-focused continuum, on which the highest
value indicates that a firm’s market entry decision is
maximally affected by competing firms’ observed or
anticipated entries, and the lowest value indicates that the
entry decision is made on the basis of the firm’s own
business analysis and intentions, entirely independent of
competitors’ observed or anticipated entries. Most firms’
N. KIM ET AL.
Competitor Focus
Dimension
HIGH
(Fully Motivated by Competitors’
Observed/Anticipated Actions)
Type IV
entry motivations lie between these two extremes. The
difference between the two ends of this spectrum is
analogous to Riesman, Glazer, and Denney’s (1950)
distinction between other-directedness and inner-
directedness. The other-directed, or competitor-focused,
firm is flexibly responsive to peer groups, tuned in to the
forces shaping other firms’ actions and plans regarding
new product market entries. The inner-directed, or inde-
pendent, market entrant, on the other hand, responds to a
set of values within itself.
When a market entry is independently motivated, that
is, when the firm has a low degree of competitor focus,
the implicit assumption is that competitors’ entries into a
specific new market will not seriously affect the results of
the focal company’s entry into the same market. Gener-
ally, this type of market entry, if successful, tends to be
characteristic of customer-oriented firms, which make
independent entry decisions based on their own readings
of customer preferences and attempt to create products or
services for which they expect a limited number of direct
competitors (Kim and Mauborgne, 1999, 2004). Also,
having few competitors to benchmark, pioneers or early
entrants in new product markets tend to rely on their own
independent entry schemes and commit themselves to
lengthy processes of developing and commercializing
new products (Cooper, 1984; Cooper and Kleinschmidt,
1986). This new product development process prior to
making a new market entry decision includes idea gen-
eration, concept screening, demand analysis, and
precommercialization analysis, all of which are related to
providing new customer value and securing reasonable
market demand (Calantone and Di Benedetto, 1988;
NEW PRODUCT–MARKET ENTRY MOTIVATION
Harmancioglu, McNally, Calantone, and Durmusoglu,
2007).
On the other hand, when an established firm’s new
product market entry is mostly motivated by its competi-
tors, such market entry is considered as a competitive
response to peer industry incumbents’ strategic move-
ment (Chen and MacMillan, 1992; MacMillan,
McCaffery, and van Wijk, 1985). When follow-up
entrants’ market entries are obviously driven by a preced-
ing competitor’s new market entry behavior, some inno-
vators’ new product market entry decisions may also be
motivated by competitors’ observed or anticipated
actions of new product development. This is because
development periods are lengthy for many new products,
and during this time even an innovator faces the threat of
potential competitors that are racing to enter the same
market (Lee et al., 2003).
In summary, based on our discussions above regarding
the proposed two-dimensional new market entry motiva-
tion scheme, it is posited that:
H1: The target market profit-focused entry motivation
dimension and the competitor-focused entry motivation
dimension explain a large portion of different new
product market entry motivations.
Also, as noted earlier, this study argues that estab-
lished firms’ target market profit-focused entry decisions
and competitor-focused entry decisions are conceptually
independent of each other. For example, highly profit-
motivated firms for a new target market may have to
choose either to enter with their own, lengthy new
product development process for differentiation or to
benchmark the pioneer or other competitors for early
market entry (Cooper and Kleinschmidt, 1986; Riesman
et al., 1950). Similarly, even the established firms that
look for a new target market with a long-term vision of
learning new technologies still need to consider whether
their competitors have similar vision or not (Chen and
MacMillan, 1992; MacMillan et al., 1985). Therefore, it
is posited that:
H2: The target market profit-focused entry motivation
dimension and the competitor-focused entry motivation
dimension are independent of each other.
Variables Affecting Entry Motivation
Dimensions
After identifying the scheme of two basic entry motiva-
tion dimensions as above, the current study pays its atten-
tion to the variables that may affect firms’ focus on these
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entry dimensions, which are normally considered to
be the firms’ size (internal driver—Chandy and Tellis,
2000; Kim and Atuahene-Gima, 2010; Porter, 1980;
Schumpeter, 1942) and their perceived environmental
factors (external driver—Homburg and Pflesser, 2000;
Lichtenthaler, 2009). Regarding environmental factors,
previous research has suggested analyzing competitive
intensity (De Luca and Atuahene-Gima, 2007; Jaworski
and Kohli, 1993) and technological uncertainty (Grewal
and Tansuhaj, 2001; Han, Kim, and Srivastava, 1998;
Jaworski and Kohli, 1993) in relation to new product
market entry decision. While there should be many other
factors that may influence the incumbent firms’ new
product market entry motivation, these variables are most
frequently discussed in the new product strategy literature
(Robinson, Fornell, and Sullivan, 1992; Schoenecker and
Cooper, 1998).
Firm Size and Entry Motivation Dimensions
Firm size reflects the firm’s resource diversity or
knowledge-based variety that enables its multiproduct
market entries and leads to scale and scope economies
(Han et al., 2001; Karakaya and Stahl, 1989; Kim and
Atuahene-Gima, 2010; Lichtenthaler, 2009). Compared
to small firms, large firms normally have more embedded
assets that already have been irrevocably invested. This
large investment made on firm assets can be an efficient
and easy-to-access resource when the firm enters a new
market (Helfat and Lieberman, 2002; R. Mitchell, 1989;
W. Mitchell, 1989; Penrose, 1959; Porter, 1980). There-
fore, with such assets a large firm’s entry motivation for
a new product market will be closely related to utilizing
its excess capacity from these irrevocable assets, which
may not be based on direct profits from the new target
market but on overall corporate benefits perspective.
Also, large firms, based on their diverse resource and
product knowledge basis, have broader product portfolios
and markets that should be taken into account when
entering a new market (Kim and Atuahene-Gima, 2010;
Lichtenthaler, 2009). A new product might be a substitute
for or a complement to the existing core product lines.
Therefore, these multiproduct market relationships
provide more complex entry backgrounds for large firms,
rendering their profit-focused entry motivation relatively
less distinctive.
Regarding the impact of size on competitor-focused
entry motivation, a positive relation may arise because of
a tendency that large firms often have to perform more
comprehensive information search than small firms do, in
order to deal with the diverse potential competitors that
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produce similar products in multimarket domains (Baum
and Korn, 1996). Furthermore, because a large firm’s
new product market entry compared to that of a small
firm’s tends to provoke more sensitive reactions from
potential competitors (Aboulnasr, Narasimhan, Blair, and
Chandy, 2008; Kim and Min, 2012), these expected
rivalry reactions or imitations from potential competitors
will cause the large firm to be more competitor focused in
its new market entry decision.
H3: The greater a firm’s size upon entry into the new
product market, (a) the lesser the target market profit-
focused entry motivation and (b) the greater the
competitor-focused entry motivation.
Technological Uncertainty and Entry
Motivation Dimensions
Firms facing highly uncertain technological environ-
ments may not be able to expect stable cash flows and/or
monetary profits because of the constantly required R&D
investments and related costs to adapt to dynamically
changing environments (McGrath, 2001). Instead, it is
more likely that they enter the new product market with
relatively less profit-focused motivation such as learning
new technologies or sustaining business in the existing
market by extending their product portfolio.
On the other hand, in a technologically uncertain
market where new product-related information is hardly
established, rival firms’ market entry could be a reliable
signal that this new product market is worth entering
(Cohen and Levinthal, 1990; Haunschild and Miner,
1997; Lee et al., 2003). This signaling effect will be more
distinctive as the uncertainty in the new market increases,
making potential entrants more competitor focused.
Indeed, the literature on strategic adoption suggests that
as the number of firms adopting a certain practice (e.g.,
new product market entry) grows, that specific practice
comes to be taken for granted by the remaining firms, and
they tend to follow it (Abrahamson and Rosenkopf, 1993;
Debruyne and Reibstein, 2005; Zucker, 1977). Based on
the discussions above, it is hypothesized that:
H4: The greater the perceived technological uncertainty
in the new product market, (a) the lesser the target
market profit-focused entry motivation and (b) the
greater the competitor-focused entry motivation.
Competitive Intensity and Entry
Motivation Dimensions
In relation to the profit-focused entry motivation, a com-
petitively intense market condition requires management
N. KIM ET AL.
to pay more attention to economic benefits based on close
control of profits and costs (Dobni and Luffman, 2003).
This is because such basic economic performance is a
prerequisite to success in a highly competitive market
(Slater and Narver, 1995). In this sense, meeting current
customer needs with the new products of competitive
prices and reasonable costs will lead to more financially
focused market entry motivation in a highly competitive
market.
Under a highly competitive new product market, com-
peting firms’ movements or their market-related signals
constitute important sources of information with which
the focal firm makes a new strategic movement and wins
over competition (Lieberman and Asaba, 2006). At the
same time, a competitive market condition requires the
focal firm to be more alert to proactive as well as reactive
behaviors of its competing firms, which leads to more
learning efforts regarding the financial or technological
benchmarks set by the competing firms for new market
entry (Cooper and Smith, 1992; MacMillan et al., 1985).
In relation to this, some firms even tend to mimic actions
of competitors to respond to the benchmarks in a more
efficient way (Day and Wensley, 1988). Consequently, to
make a prompt move in this highly competitive market,
the focal firm’s market entry decision needs to be more
competitor focused. Formally put:
H5: The greater the perceived competitive intensity in the
new product market, (a) the greater the target market
profit-focused entry motivation and (b) the greater the
competitor-focused entry motivation.
Empirical Validation
This study tests hypotheses by empirically analyzing entry
motivation of established firms for a new product market
with a sample of 182 new market entry cases from well-
established Korean manufacturing firms. Korean indus-
tries were selected for this study primarily because of the
country’s status as a newly industrialized one in which
large established firms are rapidly globalizing and increas-
ingly involved in innovation and new product introduc-
tions of late. The dynamic rather than stable nature of the
Korean economy (Han et al., 2001; Weinberg, 1997) pro-
vides a consummate opportunity to observe different entry
motivations, which should help to validate the suggested
entry motivation framework suggested in this study.
Data Collection
A survey questionnaire was developed for our entry moti-
vation study. For questionnaire items, the current study
NEW PRODUCT–MARKET ENTRY MOTIVATION
adopted related concepts from the existing literature,
modified them into our study context, and incorporated
academic professionals’ comments on these items.
Researchers then performed two sessions of pretests
using a small sample of Korean manufacturing compa-
nies and incorporated any necessary changes based on the
respondents’ comments, ending up with a final version of
the survey.
For a full survey, all manufacturing firms whose stocks
are publicly traded in the stock market of South Korea
were identified, and their contact information obtained
through public information sources. Managers at the
director level or higher at each manufacturing firm were
contacted by telephone. After confirming their willing-
ness to participate, researchers sent the questionnaires by
mail to the respondent at each company, who carried
different titles depending on the company situation,
including strategy and planning director, marketing vice
president, general manager, and new product develop-
ment section director, among others. The respondent at
each company was asked to fill in the questionnaire items
regarding the various entry motivations for a specific new
product market based on a new product that had been
recently commercialized by the firm.
The response rate was as high as 48.8% (number of
completed questionnaires returned = 191; total number
of questionnaires sent = 391) based on four rounds of
follow-up calls and e-mails as well as some company
visits. After removing the questionnaire results that
included too many missing values in their data, the
current study ended up with 182 usable samples for our
final data set. The sample includes most large companies
in South Korea from various industries including
electronics, automobiles, energy, telecommunications,
chemicals, pharmaceuticals, cosmetics, foods, etc. The
majority of new products referred to in the sample were
introduced in the last two years. Researchers also asked
each respondent whether he/she considered the selected
new product a success or not and found that 58% of the
new products in the sample were considered successful
by the respondents.
Researchers first surveyed the contents of target
market profit entry motivation and overall corporate ben-
efits entry motivation, respectively, using 7-point Likert-
type scale items with one being “not at all” and seven
“very much.” For target market performance motivation,
four different aspects of the comprehensive concept of
profit were captured, which reflects the firm’s emphasis
on the expected financial outcomes of the new target
market, such as return on investment (ROI), sales,
market share, and narrowly defined profit (i.e., revenue
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minus cost) (Montoya-Weiss and Calantone, 1994). For
overall corporate benefits entry motivation, researchers
looked at the various aspects mentioned earlier based on
11 items following the previous literature. Table 1 pro-
vides the descriptive statistics on target market perfor-
mance and overall corporate benefits entry motivation
items. It also shows which overall corporate benefit
motivation is perceived to be most important for entry
decision-making.
Measures and Validation of the Two Entry
Motivation Dimensions
After researchers surveyed the contents of target market
performance and overall corporate benefits entry motiva-
tions as in Table 1, they asked each respondent to provide
the relative importance of each of the target market per-
formance motivations compared to overall corporate ben-
efits motivations in a 7-point Likert-type scale (1: overall
corporate benefits are much more important, 7: target
market profit/ROI/market share/sales is much more
important). The current study adopted this concept of the
relative importance of two extreme entry reasons from
the previous studies by Geroski (1995) and Gort and
Klepper (1982) and applied it to measure the degree of
target market performance focus for our study. For the
measure of competitor-focused entry motivation, this
study took a macro/comprehensive concept of competi-
tive entry, including proactive and reactive imitations as
well as competitor intelligence utilizations (Chen and
MacMillan, 1992; Haunschild and Miner, 1997;
Lieberman and Asaba, 2006). Each respondent was also
asked to evaluate seven items in a 7-point Likert-type
scale (1: not at all, 7: very much so). After dropping an
item with low factor loading, the nine items were used to
measure two dimensions of new market entry motivation
(see Table 2 for the measures).
To validate the existence of two entry motivation
dimensions, a principal component analysis was per-
formed on the 12 items in Table 2. According to the scree
test criterion of minimum eigenvalue of one, two factors
were confirmed where the eigenvalue of the first factor
(FACTOR 1) is 2.29 and that of the second factor
(FACTOR 2) is 1.28. The eigenvalues of the remaining
factors were .064 and .041, showing a significant reduc-
tion in magnitude to below one. FACTOR 1 and
FACTOR 2 explain 60.4% and 31.5%, respectively, of the
total variance of the measure items in Table 2, which
validates the existence of the suggested two significant
factors that can jointly explain a great portion of the total
entry motivation variance.
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Table 1. Items of Target-Market Profit-Focused Entry Motivation and Overall Corporate-Benefits Entry Motivation
(n = 182)
Target-Market Profit-Focused Entry Motivation Mean Standard Deviation Minimum Maximum

We entered the new product market

Because of its great profit (revenue-cost) potential 5.07 1.57 1.00 7.00
Because of its great return on investment potential 4.62 1.43 1.00 7.00
Because of its great market-share potential 5.38 1.33 1.00 7.00
Because of its great sales potential 5.76 1.09 2.00 7.00

Standard Most Important Overall

Overall Corporate Benefits Entry Motivation Mean Deviation Corporate Benefits Motivation

We entered the new product market

1. To maximize our existing resources and capabilities 5.10 1.37 12% (n = 22)
2. Because we can use our owned technology 5.06 1.52 3% (n = 6)
3. Because the new-market products and services may substitute for the existing core 4.72 1.78 20% (n = 37)
products and services of the current market
4. Because the new-market products and services may complement our existing core 4.95 1.64 11% (n = 20)
products and services
5. To have an opportunity to learn a new product market 4.28 1.64 5% (n = 9)
6. Because of new technology learning from participating in the new market 4.18 1.70 3% (n= 6)
7. To expand the firm’s product–market boundary 4.96 1.42 9% (n = 16)
8. Because the entry may help us survive in our core existing market 5.43 1.21 21% (n = 38)
9. Because the entry helped improve the image of the firm 5.12 1.34 4% (n = 8)
10. Because the participation in the new market was socially desirable 4.66 1.41 1% (n = 1)
11. Because of other motivation (Specifya_________) N.A. N.A. 10% (n = 19)
a
Other motivations include “because our customers asked for new market entry, to differentiate from the existing product markets, to pioneer a new product
market, to lead in new technologies and preempt the market, etc.”

More importantly, the measure items showed a clearly factor loading on FACTOR 1 (.08, .05, .17). The six items
distinctive pattern of loading between the two factors. for competitor focused had high factor loading on
The three items for target market profit focus had high FACTOR 1 (.55, .61, .67, .43, .75, .75) but had low factor
factor loading on FACTOR 2 (.77, .75, .51) and had low loading on FACTOR 2 (−.06, −.03, −.17, .07, −.05, −.02).

Table 2. Confirmatory Factor Analysis of Target-Market Profit-Focused and Competitor-Focused Entry Motivation
Measures
SFLa t-Value (p-Level)

Target-Market Profit-Focused Entry Motivation Dimension (α = .75b)

1. Importance of target-market profit (revenue minus cost) vis-à-vis the overall corporate benefits .86 —
2. Importance of target-market ROI vis-à-vis the overall corporate benefits .77 6.48 (p < .01)
3. Importance of target-market sales vis-à-vis the overall corporate benefits .51 5.50 (p < .01)
Competitor-Focused Entry Motivation Dimension (α = .84)
1. Rival firms’ new-market entry or possibility of entry was extensively evaluated before our own began .53 —
2. We built the marketing strategy of the new product considering competition .83 6.90 (p < .01)
3. We entered the new market mainly because other firms in our industry had entered or signaled entry .54 5.39 (p < .01)
to the new market
4. Competitors’ new-market entry was underscored .73 6.51 (p < .01)
5. We planned new-product development considering competition .79 6.72 (p < .01)
6. We decided on the timing of new-product launch considering competitors .72 6.37 (p < .01)
7. Most of new product ideas came from other firms’ productsc
Model fit indexes: χ2 = 56.25 (df = 26), GFI = .94, CFI = .95, RMSEA = .06
a
Standardized factor loading from confirmatory factor analysis.
b
Cronbach’s alpha.
c
Item dropped.
CFI, comparative fit index; df, degrees of freedom; GFI, goodness-of-fit index; RMSEA, root mean square error of approximation; SFL, standardized factor
loading.
NEW PRODUCT–MARKET ENTRY MOTIVATION
These results provide supporting evidence for H1 (the
existence of two entry motivation dimensions and the
great explanatory power of the two dimensions). Specifi-
cally, based on the factor-loading pattern on each of the
measure items, it was empirically demonstrated that
FACTOR 1 represents the competitor-focused dimension
and FACTOR 2 the target market profit-focused
dimension.
To confirm the unidimensionality and convergent
validity and reliability of the measurement instruments of
these two entry motivation dimensions, a confirmatory
factor analysis (CFA) was performed, following the pro-
cedure recommended by Anderson and Gerbing (1988).
The CFA results in Table 2 provide a reasonable fit of
measurement model to data (χ2[26] = 56.25, p < .01;
goodness-of-fit index [GFI] = .94; comparative fit index
[CFI] = .95; root mean square error of approximation
[RMSEA] = .06), demonstrating the unidimensionality of
each entry motivation dimension (Anderson and Gerbing,
1988; Browne and Cudeck, 1993). The significant factor
loadings (p < .01) for all of the measure items in Table 2
provide evidence of convergent validity of the measure
(Bagozzi, Yi, and Phillips, 1991). Again, all measurement
items except three (one from the target market profit-
focused and two from the competitor-focused entry
dimension) highly loaded (> .5) onto the corresponding
subject dimensions.
In addition, discriminant validity was tested based on
the average variance extracted (AVE), following Fornell
and Larcker (1981). The AVE value for the target
market profit-focused entry dimension and that for the
competitor-focused entry dimension are .53 and .50,
respectively, which are larger than the squared correlation
between these two dimensions (r2 = .0001 based on the
averaged items values; .000084 based on the latent
factor correlation), showing that discriminant validity is
obtained. In all, these results suggest construct validity
and unidimensionality for the measurement instruments
of the two entry motivation dimensions. The Cronbach’s
alpha values for the two entry dimensions were .75 and
.84, respectively, showing the reliability of the measure-
ment items for these two dimensions.
To test H2 (independence of the two entry motivation
dimensions), an exploratory factor analysis was per-
formed using the PROMAX rotation method, which
allows diverse rotation angles to test the independence/
dependence between the latent axes of rotation (Hair,
Black, Babin, Anderson, and Tatham, 2006). An initial
estimation result on the correlation between the two
extracted reference axes was ρ = −.03, which shows a
very low intercorrelation. For a more stringent test of
J PROD INNOV MANAG 271
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independence between the two latent entry motivation
factors, the intercorrelation between the two was esti-
mated based on CFA. The converged estimation
results showed that the correlation between the two
latent entry motivation dimensions is ρ = −.00915
(p > .1). These results confirm the statistical indepen-
dence between the target market profit-focused dimen-
sion and the competitor-focused dimension, supporting
H2.
The location of each firm entry on the two entry moti-
vation dimensions was measured based on the estimated
value of the corresponding latent entry motivation factors
(FACTOR 1 is the competitor-focused dimension, and
FACTOR 2 is the target market profit-focused dimen-
sion). As five entries had at least one missing value for the
entry measurement items of Table 2, the current study
ended up with 177 (=182−5) actual market entry cases for
locating relative values on the two-latent factor space.
The 177 actual entry locations were plotted based on
these two entry dimensions as provided in Figure 1. The
plot shows that entries are widely spread along the
competitor-focused dimension (FACTOR 1; value vari-
ance = .81) as well as along the target market profit-
focused dimension (FACTOR 2; value variance = .73),
implying that these two dimensions are contributive to
classifying new product market entry behaviors reason-
ably well.
Empirical Analysis of the Variables Affecting Two
Entry Motivation Dimensions
For the two multi-item constructs—perceived technologi-
cal uncertainty and perceived competitive intensity—that
affect two entry motivation dimensions, the measurement
scales developed by the existing literature were adapted
to our study context (Table 3). Validity and reliability
tests for these multi-item constructs were performed fol-
lowing Anderson and Gerbing (1988), as previously done
for the two entry motivation dimensions. The Cronbach’s
alpha values for the two constructs were .84 and .70,
respectively, showing a reliability of the measurement
items.
Again, confirmatory measurement models were esti-
mated. The model fit results are χ2[62] = 129.45, p < .01;
GFI = .90; CFI = .91; RMSEA = .07, demonstrating a
reasonable fit to data according to Anderson and Gerbing
(1988) and Browne and Cudeck (1993), and thereby the
unidimensionality of each of the three constructs. The
factor loadings for all of the measure items in Table 3 are
shown to be significant at p < .01, providing a convergent
validity of the measure.
272 J PROD INNOV MANAG N. KIM ET AL.
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Table 3. Measurement Scales of the Variables that
Affect Two Entry Motivation Dimensions
Technological Uncertainty (New Product Market)
(De Luca and Atuahene-Gima, 2007; Jaworski and Kohli, 1993;
α = .84a)
In the new product market:
1. It is very difficult to forecast technology developments. (.71b)
2. Technology environment is highly uncertain. (.79; t = 8.95c)
3. Technological developments are highly unpredictable. (.80;
t = 9.02)
4. Technologically, this product market is a very complex
environment. (.68; t = 7.95)
Competitive intensity (new product market)
(Grewal and Tansuhaj, 2001; Han et al., 1998; Jaworski and Kohli,
1993; α = .70)
In the new product market:
1. Competition in this product market is cutthroat. (.54)
2. There are many promotion wars in this product market. (.66;
t = 5.70
3. One hears of a new competitive move almost every day. (.84;
t = 5.77)
4. Price competition is a hallmark of this product market. (.45;
t = 4.37)
Product life cycle
(Anderson and Zeithaml, 1984; Day, 1981)
The stage of product life cycle when the product was introduced:
_____(1) introduction, _____(2)growth, ____(3) mature, _____(4)
decline
a
Cronbach’s alpha.
b
Standardized factor loading from confirmatory factor analysis.
c
t-value.
The AVE values for the technological uncertainty and
competitive intensity constructs are .56 and .41, respec-
tively, which are larger than the squared correlation
between each of these constructs and the other constructs
in Table 4, showing that discriminant validity is obtained.
These results show that the antecedent variables have
construct validity and unidimensionality for their mea-
sures. The correlations among the two entry motivation
dimensions—target market profit focused and competitor
focused—and the three antecedent variables hypoth-
esized to affect the two motivation dimensions (firm size,
technological uncertainty, and competitive intensity) are
presented in Table 4. Firm size was measured by the
number of employees of the core business as of the year
2008. This study also included another individual firm
characteristic—firm age (cf. Henderson, 1999) as mea-
sured by the duration that the core business has been
active in the current market; and the product life-cycle
stages of the entered market as control variables.
Firm age and size data are collected from publicly
reported sources and then used as the base for a natural
logarithm because of a possible decreasing marginal
effect for some large extreme values. For the measure of
product life cycle, the current study examines whether the
new product market at the time of entry was in the intro-
ductory, growth, mature, or decline stage as in Table 3.
Three dummy variables are used for the impact of
product life cycle with the decline stage as the base.
To examine the impact of these antecedent variables
on the two entry motivation dimensions, regression
analyses were performed and the estimation results were
provided in Table 5. Based on the regression results in
Table 5, discussion of the impact of each of the anteced-
ent variables follows.
First, our empirical test results show that large firms
(in terms of the number of employees) emphasize target
market profit less than do small firms when they enter a
new product market (β = −.11, p < .05). However, empiri-
cal results show that the impact of firm size on the degree

Table 4. Descriptive Statistics and Correlations (n = 182)

1 2 3 4 5 6 7 8 9 10
a
1. Target market profit focus .73
2. Competitor focus .01 .71
3. Ln age −.16** −.09 —
4. Ln number of employees −.21** .06 .18** —
5. Technological uncertainty −.12** .31*** −.18** .07 .75
6. Competitive intensity .08 .35*** −.11 .08 .21*** .64
7. Introduction stage .03 −.06 .03 −.09 .09 −.17** —
8. Growth stage −.03 .23*** −.05 −.07 .08 .01 −.44*** —
9. Mature stage −.05 −.08 .08 .07 −.10 .20*** −.44*** −.38*** —
10. Decline stage .05 −.14* .02 .09 −.19*** −.09 −.22*** −.20*** −.20*** —
Mean standard deviation 3.79 4.55 3.28 6.66 3.76 4.64 .33 .27 .27 .09
1.10 1.10 .86 1.86 1.22 1.18 .47 .45 .45 .29
a
Diagonal elements in bold represent the square roots of average variance extracted (SRAVE) for multi-item constructs.
*** p < .01; ** p < .05; * p < .10.
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Table 5. Regression Analysis Results for Target-Market technologies so that they might be more motivated to
Profit-Focused and Competitor-Focused Entry enter a new market to learn new technologies. Also, older
Motivations (n = 182) firms may enter a new product market to learn about new
Target-Market business and related market opportunities. As their busi-
Profit-Focused Competitor-Focused nesses are normally in old industries, they enter a new
Entry Motivation Entry Motivation product market not for short-term profit gains but for the
Intercept 5.25*** 2.01*** long-term benefits of the firm based on new businesses
(8.61) (3.44) with different products. Furthermore, compared to
Ln age −.17* .04 younger firms, older firms have more different types of
(−1.66) (.40) interest groups within the firm that have diverse nonprofit
Ln number of employees −.11** .01
entry motivations, which can affect the firm’s new
(−2.46) (.21)
Technological uncertainty −.14* .24*** product market entry decisions.
(−1.96) (3.54)
Competitive intensity .12* .31*** Product life cycle. From Table 5, product life cycle is
(1.66) (4.31) related to competitor-focused entry motivation but not to
PLC: Introduction stage −.14 .08 target market profit-focused entry motivation. The
(-.48) (.30)
PLC: Growth stage −.28 .50*
dummy variable coefficient estimated for the impact of
(−.95) (1.78) Growth stage on the competitor-focused entry motivation
PLC: Mature stage −.32 −.12 is marginally significant (β = .50, p < .10). This indicates
(−1.09) (−.42) that competitor-focused entry is greater in the growth
R square .10 .24 stage than in the baseline stage, i.e., the decline stage. The
*** p < .01; ** p < .05; * p < .1. growth stage normally features a dramatic increase in
PLC, product life cycle. demand and competitive entries as well as sizable market
exits of incapable firms (i.e., shake outs) (Day, 1986;
of competitor-focused entry motivation is not significant Kerin et al., 1990). Our empirical results show that in this
(β = .01, NS) although the direction of the impact is con- turbulent period of time, potential market entrants are
sistent with our hypothesis. These results support H3a but likely to rely on competing firms’ market entries for their
not H3b. own market entry decisions, which is consistent with the
Second, Table 5 demonstrates that high perceived competitor focus under turbulent market conditions, such
technological uncertainty in a new product market relates as technological uncertainty and competitive intensity,
to low target market profit-focused (β = −.14, p < .10) discussed above. It is noted that firms entering in the
and high competitor-focused (β = .24, p < .01) entry introduction stage of a new product market tend to be
motivations for potential entrants. Thus, H4a is margin- motivated to become market leaders (Kerin et al., 1992).
ally supported and H4b is fully supported. Third, it is Although they also consider other firms’ possible future
empirically shown that firms will have both greater target entries, the entrants in this introduction stage could be
market profit-focused and competitor-focused entry moti- rather independent decision-makers. Markets at the matu-
vations when perceived competitive intensity is high for rity or decline stages are relatively more predictable than
the new product market (β = .12, p < .10; β = .31, p < .01, those at the introduction or growth stages of a product life
respectively). Thus, H5a is marginally supported, and cycle, which makes the importance of other firms’ entry
H5b is fully supported. behaviors as a source of information relatively less
distinctive.
Empirical Implications of Control Variables
Discussion: Four Types of Market
Age of firm. The empirical results indicate that older Entry Behaviors
firms tend to have less profit-focused entry motivation
than younger firms when they enter a new product market The two dimensions of market entry motivation lead to
(β = −.17, p < .10). Why then are older firms less moti- four types of entry behaviors as in Figure 1: Type I (high
vated by profit purposes than are younger firms? The target market profit focused and low competitor focused),
literature is silent on this matter, but the reasons may be Type II (high target market profit focused and high com-
found in the general characteristics of older firms. Com- petitor focused), Type III (low target market profit
pared to younger firms, older firms tend to have outdated focused and low competitor focused), and Type IV (low
274 J PROD INNOV MANAG
2015;32(2):263–278
target market profit focused and high competitor
focused). When this study categorizes new market entries
based on the middle point of the latent factor value (i.e.,
zero), it notes that 43 firms out of 177 (24.3%) are clas-
sified as Type I, 46 (26%) as Type II, 43 (24.3%) as Type
III, and 45 (25.4%) as Type IV, representing a relatively
balanced distribution among the four different entry
types. While conventional wisdom presumed indepen-
dent and profit-focused entry motivations would lead to a
major pattern of firms’ entry behaviors (Gort and
Klepper, 1982; Penrose, 1959), this study shows that new
product market entries are almost equally diversified in
terms of the two entry motivation dimensions. Based on
ANOVA, the values of target market profit-focused and
competitor-focused entry dimensions are significantly
different among the four categories of new product
market entrants (F = 106.47, p < .01 for target market
profit focused; F = 115.08, p < .01 for competitor
focused). Also, from the Tukey Grouping test, Type I and
Type II groups have greater average target market profit-
focused values than Type III and Type IV groups, and
Type II and Type IV groups have greater average
competitor-focused value than Type I and Type III
groups. These results are consistent with both the con-
ceptual and empirical typology provided in Figure 1,
adding to the validity of our two-dimensional scheme of
new product market entrants.
Based on strong empirical support of the two-
dimensional framework for entry motivation, the current
study now discusses firms’ motivation and the related
four types of new product market entry behaviors in terms
of the approaches to new product development.
A Type I entry occurs when an established firm
enters a new market mainly because of high expected
financial outcomes from the market and the firm’s own
assessment of its internal and external situations. Type I
entry is usually found when firms perceive less techno-
logical uncertainty and have relatively limited size of
operations upon new market entry. This type of
behavior corresponds to a conventional view of firm
entry that emphasizes expected profits from the market
over all other incentives (Cohen and Levinthal, 1990;
Geroski, 1995; Gort and Klepper, 1982). Firms that
make Type I entry decisions will opt for entry as long as
the expected financial reward from the new market is
greater than their target ROIs. In order to estimate the
expected profit and ensure that it will reach the desired
level, entrants often develop carefully calculated entry
plans, comprehensively forecasting demand and esti-
mating costs of production and commercialization over
at least the product introduction stage. Thus, they
N. KIM ET AL.
often conduct extensive market tests before entering a
market.
The timing of a Type I entry mainly depends on the
firm’s product development schedule since the entry
motivation is relatively independent of other firms’ deci-
sions. The typical product development process starts
with idea generation and proceeds to the idea evaluation
and screening processes (Cooper and Kleinschmidt,
1986). Less peer or competitor focused than other types
of entries, most, if not all, Type I entries tend to empha-
size niche market advantages and the fulfillment of unmet
product market demand (Lieberman and Montgomery,
1988).
A Type II entry occurs when an established firm is
motivated by expectations of high profits from the new
market but differs from a Type I entry in that, in terms of
the competitor-focused dimension, the decision is primar-
ily driven by competing (or peer) firms’ entry behaviors
in that market. Type II firms tend to have a relatively
limited size of operations but perceive high competitive
intensity from the new market. Entrants exhibiting Type
II behavior rely on formal and informal organizational
information sources, both internal and external, for intel-
ligence relating to new products that competitors
develop, test, and commercialize. Such entrants closely
monitor industry competitors’ new product programs and
strategies, and scrutinize customer acceptance and the
financial performances of commercialized new products.
Therefore, they often skip idea generation and go directly
to business analysis of the new market if direct competi-
tors have already generated a new product idea and ini-
tiated the new product development process. They
monitor the market responses to their competitor or com-
petitors’ entries, examine the profitability of the new
product market, and then enter the market if the expected
profit level is higher than their target ROIs.
In this sense, firms exhibiting Type II entry behaviors
do not usually pursue first-mover advantages. Instead,
they react to their competitors’ market entries or market
entry signals and consequently are often early followers,
although a few do become market pioneers. Porter’s
(1980) competitive strategy based on product differentia-
tion and cost advantage also can be seen as representative
of the logic of Type II competitive entries. When entering
after a turbulent period of early market development,
firms engaging in Type II entry often choose a differen-
tiation or cost leadership strategy as a profitable way to
compete against potential competitors in new product
markets (Bryce and Dyer, 2007).
A Type III entry occurs when an established firm is
motivated to enter a new market mainly for overall cor-
NEW PRODUCT–MARKET ENTRY MOTIVATION
porate benefits rather than direct profits from the new
market, and when the entry decision is most driven by the
entrant’s own market assessment. This entry type is more
likely observed for the firms having a larger size and
operating under relatively less competitive business envi-
ronments. Firms engaging in Type III entry behavior are
willing to enter a new product market as long as they
believe the entry will help increase the firm’s value, and
they tend to engage in market screening activities in order
to identify desirable new markets, entry into which will
improve their knowledge base as well as overall firm
status. In this connection, Karim and Mitchell (2000)
argue that established firms exhibit two kinds of long-
term value-oriented market entries, path-deepening
entries and path-breaking ones.
Path-deepening entries are those that result when a
firm’s investment policies encourage entry into new
product markets in which the company has already accu-
mulated a certain level of knowledge. Chang (1996) dem-
onstrates that path-deepening entry is a widely accepted
market-diversification method based on the firm’s current
resources, including owned technologies and acquired
market information. Helfat (1994) and Teece et al. (1997)
also argue that a firm’s current positional advantage
defines its future path, reflecting the importance of the
path-deepening rationale for the product market entry
decision. In this sense, Type III market entry behavior
that is path deepening may be considered defensive
because it tends to place more emphasis on extension into
existing markets than on the creation of new markets.
On the other hand, some Type III entries are made by
firms that substantially expand their businesses in order to
introduce new product categories when such expansion
offers reasonable opportunities for “path-breaking” inno-
vation rather than diversification into existing markets
(Karim and Mitchell, 2000). Since they do not place
much emphasis on the immediate profits to be made in a
new product market, they may regard new market entry as
a type of long-term investment. Therefore, path-breaking
entrants are often viewed as visionary leaders.
In a path-breaking Type III entry decision, less weight
is given to new product sales forecasts and the costs of
serving markets for innovative products than in Type I or
Type II decisions. Often becoming pioneers of radically
new products that must utilize new, yet-to-be-established
technologies, firms exhibiting this kind of entry behavior
find profit estimation quite an uncertain proposition
because the sales diffusion of a radically new product
requires a great deal of learning effort and time from
customers, and hence market demand may not really take
off for a considerable period of time (Urban, Weinberg,
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2015;32(2):263–278
and Hauser, 1996). For these reasons, such entries are
more focused on overall corporate benefits than on target
market profits. Thus, entry theories based on maximiza-
tion of resource use (e.g., King and Tucci, 2002; R.
Mitchell, 1989; W. Mitchell, 1989), which is a way of
increasing overall corporate benefits, are usually appli-
cable to both path-deepening and path-breaking Type III
entries since these entries are focused on precisely such
benefits.
A Type IV entry occurs when high profits from the new
market are not a major motivation, and the entry decision
at the same time heavily depends on other established
firms’ entry behaviors. A reasonably extensive size of
operations can be helpful for this type of firms, which
perceive high technological uncertainty. The technologi-
cal innovation literature shows that even established firms
are continuously threatened by waves of radical innova-
tions, with which it is rather difficult for established firms
to cope (Christensen, 1997; Cooper and Schendel, 1976;
Cooper and Smith, 1992). When this is the case, a firm
enters a new product market not because it expects great
profits from the market, but because it wants to avoid being
replaced by the competitors that produce the new product
in question and to remain competitive in the changing
market context (Mitchell, 1991). In a conservative per-
spective, Type VI entry behavior may also be interpreted
as a firm’s effort to keep pace with the competitors of
similar industries in terms of updating technological
development and exploring new business opportunities
(Lee et al., 2003). Such a firm’s motivation to enter will
therefore increase as more firms—whether start-ups
or established firms in existing markets—enter the
new product market (Debruyne and Reibstein, 2005;
Sinapuelas and Robinson, 2009). Type IV entry decisions
tend to be made quickly on the basis of rather optimistic
expectations about demand in the new product market.
They are not preceded by reasonable efforts to forecast
demand and evaluate market entry costs because other
firms are relied upon as sources for most such information.
Conclusion
The existing literature clearly demonstrates the impact of
interfirm differences in terms of firms’ market entry/
barrier-building capabilities such as industry incumbency
(e.g., King and Tucci, 2002; R. Mitchell, 1989; W. Mitch-
ell, 1989) and order of entry (e.g., Robinson et al., 1992)
but has not explored firm-dependent entry motivation. In
an effort to probe entry behavior patterns, the current
study raised the question, “Why do firms enter a new
product market?” which has led us to a typology of
276 J PROD INNOV MANAG
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market entry motivations encompassing four different
types of product market entry behaviors, distinguished by
their relative levels of target market profit focus and com-
petitor focus. This categorization scheme has the poten-
tial to help new product managers build appropriate new
product line extension strategies based on their firms’
current objectives (e.g., do we need to build a long-term
brand reputation from this new product line?) and
decision-making structures (e.g., does our chief executive
officer usually consult the market research team regard-
ing competitors’ new product line introductions?). More-
over, it can also provide insight into competing firms’
future market entry behaviors through an understanding
of their existing patterns of entry motivation and business
focus.
According to the entry motivation frame, this study
suggests that firms’ post-entry performances should be
evaluated flexibly on the basis of criteria consistent with
their various motivations for entering any given market.
Previous research on market entry has generally used
financial achievement or market dominance as the
measure of performance in a new market (e.g., Geroski,
1995; Gort and Klepper, 1982; Robinson and McDougall,
2001). This type of market performance evaluation,
however, implicitly assumes that a firm’s purpose or
motivation for entering a new market is to obtain either
good cash flows or market share. It is argued that, as long
as firms’ market entry motivation takes different values
along the more profit-focused to less profit-focused con-
tinuum, their market entry performances also should be
evaluated against this motivation continuum. For
example, since Type III entries do not much focus on
profits from the target market but on other benefits such
as technological learning, the successful establishment of
new technological capacity for further development may
be regarded as a more satisfactory performance for such
entries than securing short-run cash flow. On the other
hand, firms making Type I entries may view a similar
establishment of such capacity as a failure if it is
unaccompanied by tangible profits because their entry
motivation is more focused on new market profit maxi-
mization than on any other benefits. As these contrasting
performance evaluations of the same entry outcome dem-
onstrate, the success or failure of a specific market entry
needs to be judged more adaptively and flexibly, contin-
gent on the foci of the firm’s market entry motivation as
discussed in this paper.
Additional study efforts—especially, product market
portfolio analysis—will further develop our knowledge in
the related areas of new product market entry research.
For example, although the current study has included
N. KIM ET AL.
technological uncertainty and competitive intensity as
driving forces for entry motivation, the impact of the
newness (or radicality) of the new product market itself is
not clearly examined. A new study based on a contingency
model approach dealing with varying combinations of
entry motivation and product market newness will provide
more customized managerial implications for different
industries (e.g., radical innovation-based industries versus
incremental innovation-based industries).
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