EXPRESS: Timing Market Entry – the Mediation Effect of Market Potential
Timing a multinational firm’s entry into a new country is a pivotal decision with long-term impact on the firm’s overall performance, thus a deeper understanding of the drivers of the decision and their interrelationship can yield significant managerial benefits. We explore the mediating role of market potential by decomposing the total effects of the decision’s main drivers—macro-economic attractiveness, market concentration, social heterogeneity, population density—into direct and indirect effects. These decompositions explain the countervailing effects of some drivers that simultaneously make both positive and negative impacts. Our dataset encompasses mobile 4G broadband penetration in 130 countries, including market entry timings for 28 international operators in 79 countries. We establish the nature of the mediation effect of market potential on the drivers of entry timing. Using early penetration data, we utilize growth mixture modeling to divide the countries into four latent segments. We validate this segmentation using machine learning with the four key drivers as classifiers; the process establishes macro-economic attractiveness as the predominant classifier. Our analysis offers entry-timing guidance at both pre- and post-launch stages.