Investigating the effect of market entry and strategic direction on firm's financial performance

Document Type : Research Paper

Authors

1 Assistant Professor of Accounting, Yazd University, Yazd, Iran

2 Assistant Professor, Faculty of Economics, Management and Accounting, Yazd University, Yazd, Iran

3 Master's Degree in Accounting, Yazd University, Yazd, Iran

Abstract

The company's business strategy reflects how the company is competitive in the company's selected market. Many companies are trying to gain competitive advantage by developing appropriate competitive strategies and, by increasing the competitiveness of their products, provide the basis for the growth and development of the company. The paper’s aim is to investigate the effect of market entry and strategic orientations on financial performance of Tehran Stock Exchange companies. Thus, financial data of 150 companies of Tehran Stock Exchange for the period of 1390-1395 used to test the research hypotheses. The generalized least squares regression model has been used to test the combining data. As the research findings, the direct order of entry into the market active by the adoption of strategic performance orientations of the companies. But the initial followers of the strategy of marketing differentiation and the new companies entering the strategy leadership have a successful performance based on asset efficiency and sales returns. The adoption of an innovative differentiation strategy for pioneering and early-stage companies has a positive and significant impact on asset efficiency as a measure of corporate financial performance.

Keywords

References

  1. Abiyat, M. (2015). Investigating the Relationship between Strategic Orientation and Market Learning Ability with Marketing Capabilities and Financial Performance (Case Study: Industrial Estate Manufacturing Companies of Ahvaz City). M.Sc. thesis, Chamran University of Ahvaz (in Persian).
  2. Almajali, A., Alamro, S.A. and Al-Soub, Y.Z. (2012). "Factors affecting the financial performance of Jordanian insurance companies listed at Amman Stock Exchange". Journal of Management Research, 4(2): 266- 289.
  3. Atuahene-Gima, K and Ko, A. (2001). "An Empirical Investingation of the Effect of Market Orientation and Enterpreneurship Orientation Alignment on Product Innovation", Organization Science, 12 (1): 54-63.
  4. Bowman, D., and Gatignon, H. (1996). "Order of Entry as a Moderator of the Effect of the Marketing Mix on Market Share." Marketing Science, 15(3): 222−242.
  5. Bryan, D., Fernando, G and Tripathy, D.  (2013). "Bankruptcy Risk, Productivity and Firm Strategy." Journal of Review Accounting and Finance, 12(4): 309-326.
  6. Dehdasht, Z and biabani, H. (2014). "The company's strategic orientation model using the Delphi technique", Strategic Management Research, 20 (54): 9-35 (in Persian).
  7. Durand, R and Coeurderoy, R. (2001), "Age, order of entry, strategic orientation, and Organizational performance". Journal of Business Venturing, 16: 471–494.
  8. Ibn al-Rasoul, S.A. (2004). System Size Design Performance capture for research systems, PhD thesis, Iran University of Science and Technology (in Persian).
  9. Higgins, d, t.c. omer, and j.d.phiggips. (2011). "does a firms business strategyinfluence itslevel of tax avoidance?" working paper.university of Connecticut .available atURL;Http:/www.ssrn.com

10. Jimens, J. D., Sanz Valle, R., Hernandez Espillardo, M. (2008). "Fostering Innovation the Role of Market Orientation and OrganizationalLearning". European Journal of InnovationManagement, 11 (3): 389-412.

11. Kotler, P. (1997). "Marketing management: Analysis, planning and control. EnglewoodCliffs". NJ: Prentice-Hall.Marketing, 53 (April),

  1. Lashgari Boroujerdi, H. (1396). Investigating the Effect of Organizational Resources and Organizational Market Orientation on New Product Performance with Emphasis on the Order of Entering the Corporate Market. Master thesis. Kharazmi University (in Persian).
  2. Lashkary, M., Samy, A and Ershadi, Z. (2014). "Evaluation of Competitive Strategies and Organizational Performance". Strategic Management Studies, 17: 30-50 (in Persian).

14. Lieberman, M., and Montgomery, D. (1998). "First mover (dis)advantage: retrospective and linkwith the resource-based view". Strategic Management Journal, 19: 1111–1126.

15. Lilien, G.L., and Yoon, E. (1990). "The timing of competitive market entry: An exploratory studyof new industrial products". Management Science, 36: 569–585.

16. Miles R., & Snow C. (1978).Organizational strategy, structure, and process.

17. Miller, Alex, William B. Gartner, and Robert Wilson. (1989). "Entry Order, Market Share, and Competitive Advantage: A Study of Their Relationships in New Corporate Ventures," Journal of Business Venturing, 4: 197-209.

18. Miller, D. (1986). "Configurations of strategy and structure". Strategic Management Journal, 7: 233–250.

19. Miller, D. (1988). "Relating Porter’s business strategies to environment and structure". Academy of Management Journal, 31: 280–308.

  1. Min Sungwook, Manohar U. Kalwani, & William T. Robinson. (2006). "Market Pioneer and Early Follower Survival Risks: A Contingency Analysis of Really New Versus Incrementally New Product- Markets". Journal of Marketing, 70: 15–33.

21. Mitchell, W. (1991). "Dual clocks: Entry order influences on incumbent and newcomer market share and survival when specialized assets retain their value". Strategic Management Journal, 12:85–100.

22. Mohammed, M. (2014). Investigating the Impact of Cost Leadership Strategy on the Financial Performance of Manufacturing Companies Listed in Tehran Stock Exchange. Master thesis. University of Guilan (in Persian).

23. Mosleh, A., Bahreynizadeh, M and Karimi Ghahfarokhi. (2016). "The effect of strategic orientation on export performance in the exportin company Bushehr". Journal of New Marketing Research, 4 (6): 125-140 (in Persian).

24. Nandakumar, M.K.., Ghobadian, A., and O’Regan, N. (2011). "Generic Strategies and Performance – Evidence from Manufacturing Firms". International Journal of Productivity and Performance Management, 60 (3): 222-251.

25. Nouri Fard, Y and Dorstkar. M. (2010). The Impact of Cost Management Strategy on Long Term Financial Performance of Top Companies Listed in Tehran Stock Exchange, Conference on Evaluating Strategies for Promoting Management Accounting in Industry, Dourd, Iran (in Persian).

26. Ozmen, O. N. T., & Deniz Eris, E. (2012). "The effect of market orientation, learning orientation and innovativeness on firm performance: A research from Turkish logistics sector". International Journal of Economic Sciences and Applied Research, 1:  77-108.

27. Porter, M. (1980). Competitive strategy. New York: Free Press.

  1. Porter, M. (2001). "Strategy and theInternet". Harvard Business Review, 79 (3): 62-78.

29. Rajiv, D. B., and Raj, M., and Arindam. T. (2014). "Does a Differentiation Strategy Lead to More Sustainable Financial Performance than a Cost Leadership Strategy?" Management Decision, 52 (5): 872 – 896.

30. Rasouli, R, Zemaheni, M and Shahraeini, S. (2014). "Studying the Impact of Strategic Human Resource Management on Financial Performance of Companies Listed on Tehran Stock Exchange". Financial Management Strategy,2 (7): 33-57 (in Persian).

31. Rezaei dolatabadi, H., amiri aghdaee, S.F., rafat, B and Izadi, F. (2014). "The Impact of Product Market Competition and Business Strategy on the Relationship between Capital Structure and Financial Performance of the Companies".Financial Management Strategy, 2 (1): 39-58(in Persian).

32. Robinson WT, Chiang J. (2002), "Productdevelopment strategies for establishedmarket pioneers, early followers, and lateentrants", Strategy Management Journal, 23: 855–66.

33. Robinson, W., and Fornell, C. (1985). "Sources of market pioneer advantages in consumer goods industries". Journal of Marketing Research, 22:305–317.

  1. Robinson, W., Fornell, C., and Sullivan, M. (1992). "Are market pioneers intrinsically better than later entrants?" Strategic Management Journal, 13:609–624.

35. Rodriguez-Pinto, Javier, Gutierrez-Cillan Jesus and Rodriguez –Escudero Ana I. (2007) "Order and Scale of Market Entry, Firm Resources, and Performance". European Journal of Marketing, .41 (5/6): 590-607.

36. Salavou H.E., & Halikias J. (2009). "Strategy types of exporting firms: a view on the basis of competitive advantage". European Business Review, 21 (2): 144-158

37. Slater, S.F., &Olson, E.M. (2000). "StrategyType and performance: The Influence of Sales Force Management". Strategic Management Journal, 21(8).

38. Teo, Esther. (2002). "Market Entry Strategies of Wireless Startups”. Retrieved from Citeseerx Database.

39. Tirtayasa Satria, Puspowarsito H. (2006). "Impact of Order of Entry onBusiness Performance". Journal Management & Business Sriwijaya, 4(7).

40. Utterback, J.M. (1994). Mastering the Dynamics of Innovation. Boston, MA: Harvard BusinessPress.

41. Yuen, Kum Fai, Thai, Vinh V. Wong, YiikDiew. (2017). "Corporate social responsibility and classical competitive strategies of maritime transport firms: A from a transition economy in Sub-Saharan African". Journal of Business Research, 61 (4): 346–354.

42. Zhang, S., and Markman, A.B. (1998). "Overcoming the early entrant advantage: The role ofalignable and nonalignable differences". Journal of Marketing Research, 35:413–426.

Journal of Business Administration Researches
Volume 12, Issue 23
November 2020
Pages 59-83

Files

Share

How to cite

Statistics