Intangible assets, entry strategies, and venture success in industrial markets

This study assesses the impact of intangible assets on the venture success of firms as they enter into industrial markets that are new to them. A "new" market is one that is geographically new for the firm or is a product market where this firm did not originally compete. The analysis is based on the Profit Impact of Market Strategy database, which contains information on 91 new ventures into industrial markets. Five hypothesis were tested in this study: 1. H1: High levels of intangible assets will be positively associated with performance of firms entering new markets. 2. H2: High levels of intangible assets increase the likelihood of success, regardless of the timing of entry. 3. H3: In explaining venture performance, there will be a positive interaction effect between promptness of entry and level of intangible assets. Pioneer entrants will benefit substantively more from high levels of intangible assets then will later entrants. 4. H4: High levels of intangible assets enhance success irrespective of aggressiveness of entry. 5. H5: In explaining performance, there will be a positive interaction between level of intangible assets and aggressiveness of entry-firms with high levels of intangible assets will gain substantively more from aggressive pricing, promotion, and high quality, than firms with low levels of intangible assets. One specific intangible asset (corporate image) is empirically analyzed, and the results support our hypotheses. A strong corporate image enables the firm to achieve greater success when they enter into new ventures, and the interaction of image with aggressive promotional, pricing, and quality strategies is significant in explaining this success. Implications for practioners are: high-image firms reap enormous benefits from increased promotional efforts, high quality, and aggressive entry. Low-image firms are severely penalized when they aggressively enter a market and may he better off entering the market slowly and at low prices.