In a dynamic and competitive environment, the decision how to entry into new businesses, which represents diversification for the existing firm, may provide an important source of future growth and profitability. Inspite of many studies on the determinants of new business performance, there have been limited research findings explaining the impacts of entry stategy on new business performance with consideration of interaction effects between entry strategy and other determinants of performance. Specifically, the main objectives of this study are as follows: First, to find out what sort of implementation methods must be adopted in decision making process for a firm to enter into new businesses and what things must be considered in advance in establishing entry strategy.
Second, to find out the relations between market entry strategy and the performance of new businesses.
Third, to find out how organizational capability and pertinences to new businesses make influence on the performance of new businesses and what will be specific factors for that influence.
A field study is undertaken to test hypothesized relationships among business objectives, maket and technological familiarity, organizational capability, entry strtegy, and business performance. With the review of related literatures and industry observation, research framework is formulated. The in-depth case study on four projects with different entry strategies in the information and communication industry is carried out.
The major findings of this study are summarized as follows: First, a decision to enter into new businesses and market entry strategy must be based upon, i) business's objective, ii) technology to adopt, iii) familiarity between technology and market, and iv) organizational capability. On the contrary, a reason why a company should enter into new businesses and how to infilterate market can be decided after evaluating a company's organizational capability.
Second, an entry strategy based on various factors strongly correlates with success or failure of new businesses. In addition to the choice of a right entry strategy, organizational capability to implement a selecred entry strategy is also critical.
Third, an entry strategy can effect new businesses continuously not only for its initial stage, but for the subsequent stage. After entering into new businesses, the degree of a company's involvement can also detrmine its success or failure. Therefore, when a company makes decision to enter into new businesses that are difficult to utilize its exsiting resources and organizational capability, it must reconsider the degree of its involvement by the rearranging the purpose of new businesses.
Fourth, the possibility of new businesses must be evlauated in various view point technically, commercially and strategically. Especially, business objective is the most important factor in evaluating new business opportunity. However, the business objective must be continuously changed in real business environment depending on organizational capability and its effort. For this reason, evaluation of original business objective and that of evenually fixed business objective are both important.
As guideline for practitioners, this study recommends some criteria to judge whether new businesses are success or failure. Also some academic and managerial implications of findings and several directions for future research are discussed.
