A new venture's optimal entry time

A new venture's optimal entry time

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Article ID: iaor20023176
Country: Netherlands
Volume: 139
Issue: 3
Start Page Number: 626
End Page Number: 642
Publication Date: Jun 2002
Journal: European Journal of Operational Research
Authors: ,
Abstract:

We formulate a model of the decision of when a new venture should enter the market based on the uncertain evolution over time of environmental volatility and market competition. We characterize the performance-maximizing time to enter the market, and show how this entry time is affected by changes in the business environment. By further focusing our modeling assumptions, we are able to translate our time-based criteria into environmental terms and propose that management set a target environment level that must be met before entering the market. We also demonstrate that management should adjust this target over time to respond to changes in the business context. This modeling feature is important because it allows for a better assessment of when to enter a market based on future performances. We translate the model's theoretical insights into testable propositions, and explore possible ways to operationalize these for empirical testing.

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