Entry Barriers: A Dull-, One-, or Two-Edged Sword for Incumbents? Unraveling the Paradox from a Contingency Perspective

• Main Authors: HAN, Jin K., KIM, Namwoon, KIM, Hong-Bumm
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2001
• Subjects: entry barriers; contingency effects; firm performance; incumbent advantage; switching costs; Business; Marketing
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/2143; https://www.jstor.org/stable/3203402
• Institution: Singapore Management University

The long-held precept of equating entry barriers with sustainable incumbent advantage increasingly is met with skepticism as incidents of innovative late entrants leapfrogging over market incumbents become more pervasive across industries. Ostensibly, the reassessment of the traditional assumptions underlying entry barrier strategy has become imperative; to this end, a study presents a framework that investigates the contingent effects of incumbents' barrier building on their own performance. Specifically, the study examines 5 types of entry barriers (capital requirements, cost advantages, switching costs, distribution access, and proprietary assets) for the nature of their impact in the following presupposed yet unresolved roles: as effectual versus ineffectual entry deterrents and as enablers versus inhibitors of incumbents' innovativeness. In addition, the study takes other variables into account to identify the contingencies of the framework. Using data from Korean consumer product industries, the study empirically tests and substantiates the variable impact of entry barriers on incumbents' performance.