Jeffrey Robinson
Secondly, I theorize about the relationship between the entry
strategy
and the performance of the firm. Business strategy in inner city
markets will follow patterns consistent with overcoming social and
institutional
entry barriers. In other words, those entrepreneurs whose
background
and experience give them superior knowledge and capabilities within an
inner city market will build more successful firms than those with out
this knowledge and capabilities. The entrepreneurs that build
firms
more adept at overcoming social and institutional barriers to the inner
city market will be more successful than those without.
The contribution of this dissertation to entrepreneurship theory is
its use of the lens of economic sociology to define how the existence
of
‘social’ and ‘institutional’ entry barriers structures the business
opportunities
of inner cities. These types of entry barriers influence the
decision
to enter a new market and the entry strategy chosen for inner city
markets.
Entry barriers to new markets have been classically defined in terms of cost advantages, product differentiation, capital requirements, switching cots, and access to distribution channels. (Porter 1980; Karakaya & Stahl 1991) These types of barriers, however, do not explain the breadth of challenges and opportunities afforded to firms seeking to enter new markets.
I make the case in this dissertation that entry barriers fall into three categories. Traditional entry barriers described Bain (1956) and Porter (1980) conform to the classic economic barriers described above. These economic barriers, originally intended to explain aspects of industry structure, have been extended to explain competition in market structure. To this economic entry barrier, I add two dimensions: social and institutional entry barriers. Social entry barriers such as networks of resources and access to appropriate workforce are related to the social structure of the market. Institutional entry barriers such as political stability, order, norms, and values, are related to the institutional structure of the market.
I borrow the concept of embeddedness (Granovetter 1985, 1992) from economic sociology to explore how both social and institutional entry barriers influence the decision to enter new markets and the entrance strategy. To this end, I theorize how these economic decisions can be embedded within the social and institutional structure of the market. This theory broadens the concept of entry barriers to explain why firms that are able to overcome economic entry barriers may not successfully enter new markets.
This dissertation develops propositions concerning the nature of
business
opportunity and business entry in inner city markets. I ask three
important questions. First, what factors influence the decision
to
enter for firms interested in entering inner city markets?
Second,
for those that enter, what is the relationship between these entry
barriers
and the entrance strategies they use to enter? Third, how do
these
entrance strategies relate to firm performance? I employ three
different
research methodologies to answer these questions: interviews,
vignettes,
and survival analysis of empowerment zone data.
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This theory-development paper proposes a two-stage framework for examining deterrents to market entry. We argue that the decision to enter a new market is a clear example of a firms decision to exploit an opportunity. We propose that managers take into account barriers beyond those cited in structural analyses of markets (e.g., scale economies, intensity of rivalry, power of suppliers, power of buyers, and availability of substitutes), and that these barriers often deter the entry of potentially-viable competitors into markets. Further, we argue that these frictions to entry are widespread, but receive less attention because they are harder to value in most product markets. The paper first proposes a framework and then uses urban new markets to illustrate the ideas proposed. The final section of the paper proposes directions for future research.with Gregory B. Fairchild, University of Virginia
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Dissertation Proposal Document PDFSocial and Institutional Barriers to Market Entry PDF Figures DOC
Updated
June
18,
2003
Contact jrobinson@stern.nyu.edu
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Paul Ingram,
Ph.D. Columbia Business School
Eric Abrahamson,
Ph.D. Columbia Business School
Ray
Reagans, Ph.D
Columbia Business School
Sudhir
Venkatesh, Ph.D. Columbia Sociology 
J. Philip
Thompson, Ph.D MIT
Urban Studies