Technological capabilities and cost efficiency as antecedents of foreign market entry
F. Cesaroni, Marco S. Giarratana & Ester Martínez-Ros
#2012-049
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.
Keywords: Innovation and R&D; Patents; Trademarks; Competitive
Advantage; Firm-Specific Advantages; Foreign Market Entry.
JEL Classification: F2, M16, O30
