Order-of-Entry Effects for Service Firms in Developing Markets: An Examination of Multinational Advertising Agencies

The internationalization process of service firms has received increased attention in recent years. Yet the question whether entry order affects firm performance for service firms in developing markets has remained unanswered. Despite lacking empirical evidence, prior research has suggested that first-mover advantages (FMAs) do not translate to service firms and developing markets. However, framed in a resource-advantage theory perspective, the authors' empirical analysis of 379 multinational subsidiaries of advertising agencies in 43 developing markets indicates a significant relationship between entry order and firm performance. The authors also examine the moderating effects of international experience, firm size, subsidiary ownership structure, and rate of economic development to assess how late entrants can mitigate late-mover disadvantages. The authors provide empirical evidence that, contrary to recent literature, service firms do enjoy FMAs. They add to the understanding of the FMA phenomenon as well as to the broader issue of the internationalization process and performance effects for service firms.