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Technological capabilities and cost efficiency as antecedents of foreign market entry

  • Cesaroni, Fabrizio

    ()

    (Universidad Carlos III de Madrid, and Istituto di Management, Scuola Superiore Sant'Anna)

  • Giarratana, Marco S.

    ()

    (Universidad Carlos III de Madrid)

  • Martínez-Ros, Ester

    ()

    (Universidad Carlos III de Madrid, and UNU-MERIT)

This work explores which factors increase firms' propensity to enter into international markets. The study draws on the resource-based view and assesses the effect played by firms' technological capabilities and cost structures on entry. While many research papers consider those two factors to be independent one from the other, this study focuses on their interactive effect. Empirical analysis covers the whole population of Spanish pharmaceutical firms over the period 1995-2004. By using data on trademarks filed at the United States Patent and Trademark Office (USPTO), the study identifies those firms that have entered the US market with branded products. Then, the study uses a hazard model to empirically estimate which firms' resources and capabilities affect the probability of entry. Results show that firms can maximize the likelihood of entry in foreign markets by pursuing hybrid competitive strategies that combine together scope economies and cost efficiency.

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File URL: http://www.merit.unu.edu/publications/wppdf/2012/wp2012-049.pdf
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Paper provided by United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) in its series MERIT Working Papers with number 049.

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Date of creation: 2012
Date of revision:
Handle: RePEc:unm:unumer:2012049
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