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Small firm performance in online markets

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  • Gary Madden
  • Md. Shah Azam
  • T. Randolph Beard

Abstract

Firms which enter the online marketplace do so for a variety of reasons. The effects of the motive for entry on the ultimate success of entry, for both online and ‘blended’ firms, are largely unknown. This study utilises a unique data set of small Australian firms and examines the relationship between the strategic motivation for entry and the actual results of entry. Utilising a trivariate probit model with exogenous ‘reason for entry’ dummy variables, estimates of aftermarket business performance are obtained. The study finds that the entry goal materially affects subsequent performance: firms entering to expand their market size ordinarily succeed, but those entering to reduce costs are often disappointed. Blended firms enjoy no strong advantages over pure online entrants.

Suggested Citation

  • Gary Madden & Md. Shah Azam & T. Randolph Beard, 2013. "Small firm performance in online markets," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 22(1), pages 99-111, January.
    • Handle: RePEc:taf:ecinnt:v:22:y:2013:i:1:p:99-111
    DOI: 10.1080/10438599.2012.706062
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