J PROD INNOV MANAG 2007;24:471–485

r 2007 Product Development & Management Association

Factors Influencing Brand Launch in a Global Marketplace

Sengun Yeniyurt, Janell D. Townsend, and Mehmet Berk Talay

The purpose of this study is to explore the factors that influence the launch of brands
into new markets in a global environment. Although multiple streams of literature
exist with respect to the entry of brands into new markets and the diffusion of new
brands within and across markets, the process of launching products and brands
globally over time has received relatively limited attention. To address this issue, this
study incorporates multiple indicators of activities that can contribute to experiential
learning relevant for launching brands in a global marketplace. Market uncertainty
and experiential learning provide a conceptual foundation for the development of rel-
evant hypotheses, which are tested in the context of the global automotive industry
from 1981 to 2004. A discrete time event history analysis with time-varying indepen-
dent variables is employed to estimate the effects of the independent variables on the
probability of a brand being launched in a specific market. The global brand launch
observations are extracted from a proprietary dataset containing the global dispersion
of automotive brands including 22 countries of origin and 42 countries of brand entry.
The sample yields 50,572 spells, derived from 99 companies, 173 brands, and 700
market entries. The results of this study contribute to the literature in a variety of
ways. Market attractiveness positively influences the propensity of a brand to be
launched into a new market. This supports the idea that potential demand conditions
are an important managerial consideration in product introduction decisions. The re-
sults reveal significant effects with respect to the role of psychic distance and expe-
riential learning. Brands are reluctant to launch into countries that are culturally and
economically less similar to the home market. Yet firms tend to place a lower degree of
emphasis on factors of cultural distance when launching brands into larger markets,
and global experience enables companies to overcome the uncertainties associated
with launching brands into international markets that are economically distant. The
results also suggest that companies are more likely to introduce additional brands in
markets where they already have a presence. Overall, global dispersion and geo-
graphic scope, coupled with local market knowledge facilitate the launch of brands
globally. From a managerial perspective, this study suggests companies should focus
on acquiring both local and global experience to facilitate the launch of products and
brands in the global marketplace.

Introduction aspects of the value chain, including new product

development (Wind and Mahajan, 1997). In this par-

G
lobalization is noted to be an environmental
change that profoundly impacts business
and has significant implications for various
Address correspondence to: Sengun Yeniyurt, Rutgers University,
School of Business, Department of Marketing, New Brunswick, NJ 08903.
adigm, launching products in a global marketplace
has become a major consideration for firms as they
seek to increase both to- and bottom-line performance
in the face of more diverse competition. On one hand,
customers demand product offerings available in
other geographic locales as a result of the awareness
472 J PROD INNOV MANAG
2007;24:471–485
generated by interconnected media, communications,
and the ease of international travel. Companies that
are unwilling or unable to respond to expectations of
broad product availability are faced with the risk of
new competitors, the rise of gray markets, and out-
right piracy. On the other hand, the fierceness of the
competitive environment created by globalization re-
quires the reduction of costs by spreading the financial
burden of product development and launch across
geographic markets, by mitigating risk through diver-
sification, and by creating economies of scale. Con-
sidering the importance of new market launches in a
global marketplace, it has correspondingly become a
topic of significant interest for study.
The fundamental research question this study seeks
to address is, What factors influence the launch of
brands in a global marketplace? The contribution
of this research is multifaceted and was accomplished
by investigating 700 market launches made by 173
brands in 42 countries over 24 years (1981–2004),
resulting in 50,572 brand–country–year observations
(i.e., spells). The specific extensions to the literature
offered by this research include the following:

Globalization: This investigation includes the role
of the global dispersion of a brand as a measure of
BIOGRAPHICAL SKETCHES
Dr. Sengun Yeniyurt is assistant professor of marketing at Rutgers
University. He earned his Ph.D. from Michigan State University
in marketing and international business. Dr. Yeniyurt’s current
research interests are related to strategic market positioning, new
product performance, and brand management. His work has ap-
peared in Industrial Marketing Management, Journal of Internation-
al Marketing, International Marketing Review, and International
Business Review and has been presented at numerous academic con-
ferences.
Dr. Janell D. Townsend is assistant professor of marketing and in-
ternational business in the School of Business Administration at
Oakland University. She earned her Ph.D. in marketing and inter-
national business from Michigan State University. Dr. Townsend’s
current research interests are broadly defined by strategic and in-
ternational marketing issues and fall within the nexus of branding,
innovation, and globalization. Her work has appeared in journals
such as the Journal of International Marketing, International Mar-
keting Review, Marketing Intelligence and Planning, and Thunder-
bird International Business Review. Dr. Townsend has professional
work experience in the global automotive industry and has spent
extended periods of time in Malaysia, Sweden, Australia, and the
United Kingdom.
Mehmet Berk Talay is Ph.D. candidate in marketing at Michigan
State University and has a master’s in business administration from
Sabanci University in Istanbul, Turkey. His research interests in-
clude new product development and launch and market entry and
alliances in an international context.
S. YENIYURT, J.D. TOWNSEND, AND M.B. TALAY
organizational learning, as well as its moderating
effects on psychic distance factors.

Experiential learning: This study also con-
tributes to the body of literature related to the
effects of market knowledge in market launch
decisions.

Multiple dimensions of psychic distance: Previous
studies typically include culture distance (e.g.,
Eriksson, Majkgard, and Sharma, 2000; Kogut
and Singh, 1988; Nordstrom and Vahlne, 1994) as
a proxy for psychic distance. This study investi-
gates the effects of multiple dimensions of psychic
distance on brand launch.

Longitudinal analysis: Global launch is essentially
a longitudinal endeavor that does not necessarily
occur simultaneously in multiple markets. It has
been noted that a vast majority of the previous
studies of internationalization have relied on
cross-sectional data (Coviello and Jones, 2004;
Rialp, Rialp, and Knight, 2005). This study spans
a broad time frame, which allows for the delinea-
tion of longitudinal effects.

Brand- and firm-level drivers: Data used in current
studies are almost exclusively at the firm level
(Coviello and Jones, 2004; Zhao, Luo, and Suh,
2004). This study is at the brand level and firm
level for a global industry and includes firm- and
industry-level drivers as control.

Multiple countries of origin: The number of coun-
tries of brand or firm origin have been limited in
previous studies, with the origins of only a few
brands or firms included and results varying
based on the sample considered (Ruigrok and
Wagner, 2003; Tihanyi, Griffith, and Russell,
2005; Zhao, Luo, and Suh, 2004). This study in-
cludes 22 countries of origin and 42 countries of
brand entry.
Substantial ground has been gained in understand-
ing the new product development process and factors
affecting the acceptance of new products and brands
in international markets. Contributions have been
made regarding the role of capabilities and organiza-
tional routines necessary for a successful global prod-
uct research and development process (Swan, Kotabe,
and Allred, 2005; Zou and Özsomer, 1999); the trade-
off between standardization and adaptation and
implications for new product development process
configuration (e.g., Townsend et al., 2004; Zou and
Özsomer, 1999); and cross-cultural comparisons of
the new product development process and factors
FACTORS INFLUENCING BRAND LAUNCH IN A GLOBAL MARKETPLACE
affecting performance (Song and Parry, 1997; Song,
Montoya-Weiss, and Schmidt, 1997; Souder and
Song, 1998). The differences in patterns of diffusion
of new products in global markets have also been an
important area of research (Kumar, Ganesh, and
Echambadi, 1998), with the effects of national culture
and timing of introduction (Helsen, Jedidi, and
DeSarbo, 1993; Takada and Jain, 1991) and econom-
ic factors (Gatignon, Eliashberg, and Robertson,
1989) on new product diffusion patterns across coun-
tries being considered. However, the factors influenc-
ing the launch of brands and associated products in a
global marketplace have yet to be explored in the new
product literature.
International launch, in and of itself, is an im-
portant innovation for the firm and, from a behav-
ioral perspective, is considered to be a gradual and
sequential process (Cavusgil, 1980; Johanson and
Vahlne, 1977). Managers evaluating global markets
when developing and launching new products run
into a broad set of issues that need to be addressed.
This requires an assessment of potential foreign
market attractiveness, along with an evaluation of
the capabilities the firm to deal with the inherent
uncertainty of the global marketplace. A significant
body of literature exists regarding international
market selection (e.g., Douglas and Craig, 1989;
Erramilli, 1991; Erramilli and Rao, 1993; Kogut and
Singh, 1988) and entry mode choice (e.g., Tihanyi,
Griffith, and Russell, 2005). Several studies have
addressed the international progression of companies
as a gradual and sequential process (Bilkey and
Tesar, 1977; Erramilli, 1991), the role of cultural
distance in market selection (Erramilli, 1991;
Erramilli and Rao, 1993; Kogut and Singh, 1988),
and the role of experiential knowledge in market
selection (Davidson, 1983). Yet the process of launch-
ing products and brands globally has received rela-
tively limited attention, comparatively speaking
(Subramaniam, Rosenthal, and Hatten, 1998; Wills,
Samli, and Jacobs, 1991).
The remainder of this study is framed in the
following manner. First, the literature is reviewed,
and specific research hypotheses are developed.
The study context, variable definitions, data set, and
the estimation method used to test the research
hypotheses are presented in the following section.
Then, the results of the empirical study, a discussion
of the findings, and managerial implications are
offered. Limitations and directions for future research
conclude.
J PROD INNOV MANAG 473
2007;24:471–485
Literature Review and Hypotheses
Development
Imperfect Information and Environmental
Uncertainty
Launching brands in a global marketplace requires an
understanding of the factors that influence managerial
decision making with respect to market selection. This
essentially necessitates a behavioral perspective of the
firm’s international operations. Since economic con-
siderations are also highly relevant, they are integrat-
ed into the conceptual framework. A behavioral view
posits the gradual acquisition, integration, and use of
knowledge about foreign markets and operations, and
an increasing commitment to foreign markets (Johan-
son and Vahlne, 1977). It provides a conceptual foun-
dation aimed at explaining market selection and entry
mode choice in international operations. Internation-
alization is considered to be a process where a series of
incremental adjustments are made in response to
changing conditions of the firm and is based on two
main assumptions: imperfect information and experi-
ential knowledge (ibid.). Hypotheses are developed
and tested for both assumptions, with the factors
related to imperfect information and environmental
uncertainty considered first.
Market attractiveness. International expansion is
considered to be risky due to the firm’s imperfect
knowledge about the context of the host country
(Johanson and Vahlne, 1977). Thus, learning about
the host country in terms of context and economic
variables is of significant concern. To mitigate the
effects of uncertainty, managers attempt to assess
the potential of a market from a perspective of
relative attractiveness. Further, location advantages
are considered to be one of the pillars of interna-
tional expansion efforts and include variables such as
economic stability and market potential to determine
the relative attractiveness of a country (Dunning,
1988).
Market attractiveness is defined as the market-
related factors that provide motivation for launching
a brand in a specific country. Relative market attrac-
tiveness is a significant factor considered in manage-
rial decision making for product introductions in new
markets. Before introducing a product to a market,
management has to make sure that the potential
demand conditions are satisfactory for meeting scale
and profitability goals (Guiltinan, 1999). It has been
474 J PROD INNOV MANAG
2007;24:471–485
suggested that prosperity, size, infrastructure, and
accessibility are appropriate indicators of market
attractiveness (Mitra and Golder, 2002). It is expect-
ed that under conditions of uncertainty, market size
will be a significant predictor of a brand’s propensity
to enter a new market.
H1: The greater the size of the host market, the higher
the likelihood of a brand’s launch in a market.
Psychic distance. According to Johanson and
Vahlne (1977), due to uncertainty about the market
environment, firms will enter markets that are similar
to their own first and then will gradually expand into
other markets. Psychic distance refers to the sum of
factors preventing the flow of information from and
to the market, impeding a firm’s ability to learn about
a foreign environment (Nordstrom and Vahlne,
1994). Factors of psychic distance include things
such as the differences in language, education, busi-
ness practices, culture, and industrial development.
These factors influence the cost of information ac-
quisition in international situations (Johanson and
Weidersheim-Paul, 1975) and become a component of
the decision-making process related to launching a
brand in a global marketplace. As such, psychic dis-
tance has been posited as among the most important
factors in the determination of a firm’s market entry
decisions (Nordstrom and Vahlne, 1994) and emerges
as a significant factor in market launch decisions in
the global marketplace.
One component of psychic distance is cultural dis-
tance, which has been indicated as an important fac-
tor when firms engage in foreign entry (Barkema, Bell,
and Pennings, 1996). This is because even with the
posited convergence of global markets, cultural differ-
ences remain an important consideration since cultur-
al beliefs are influential forces shaping manager’s
perceptions and ensuing actions (Markus and Kita-
yama, 1991; Triandis, 1989). When firms under-
take international operations, they are not only
more likely to enter markets that are culturally famil-
iar first (Johanson and Vahlne, 1977; Johanson and
Weidersheim-Paul, 1975) but that also will be more
aggressive in committing resources to culturally sim-
ilar markets (Erramilli and Rao, 1993; Kogut and
Singh, 1988). In the context of new product develop-
ment and launch, it has been shown that introductions
into unfamiliar markets have higher failure rates
(Souder and Song, 1998). Under conditions of uncer-
tainty, it can be expected that the relative attractive-
S. YENIYURT, J.D. TOWNSEND, AND M.B. TALAY
ness of a market will be a function of the psychic
distance from the home country of the brand.
H2: The greater the psychic distance between the host
market and the home market, the lower the likelihood
of a brand’s launch in a market.
The moderating effect of market attractiveness. The
internationalization literature suggests that whereas
potential profit opportunities are the facilitating fac-
tor of global expansion decisions, psychic distance is a
preventing factor (Johanson and Weidersheim-Paul,
1975). Executives have indicated that the relative
attractiveness of the market will supersede other
considerations. Essentially, if there is the potential
to make enough money, they will pay the additional
costs associated with information generation. There-
fore, it can be expected that market size, as a signal of
the profit potential associated with the potential host
country, has a moderating effect on the role that psy-
chic distance plays in global market expansion efforts.
H3: The larger the size of the host market, the weaker
the effect of psychic distance on the likelihood of a
brand’s launch in a market.
Experiential Learning in the Global Marketplace
The acquisition of knowledge is an important assump-
tion of the internationalization process, as it is con-
sidered that the understanding necessary to operate a
global environment can only be gained through actual
international market experience (Johanson and
Vahlne, 1977). Market knowledge relates to an un-
derstanding that can only be acquired through inter-
national experience in the global marketplace. It is
vested in the firm’s decision-making system and is
composed of (1) general knowledge, distinguished by
marketing methods and common characteristics that
are irrespective of geographic location; and (2) mar-
ket-specific knowledge, characterized by knowledge
about a specific national market (e.g., business cli-
mate, cultural patterns, structure of the market sys-
tem, and characteristics of individual customers). The
present study is concerned with the acquisition of
general knowledge launching brands in a global mar-
ketplace and market-specific knowledge related to
new brand launch in specific markets.
In a global marketplace, it is important to under-
stand the means through which an organization learns.
Experiential learning is posited to be fundamental
FACTORS INFLUENCING BRAND LAUNCH IN A GLOBAL MARKETPLACE
to a firm’s ability to accumulate knowledge (Huber,
1991; Sinkula, 1994) and to conduct international
operations (Cavusgil, 1980; Johanson and Vahlne,
1977). Conceptually, this can be explained through
the ideas found in organizational learning, or the
development of insights, knowledge, and associations
among past actions, the effectiveness of those actions,
and future actions (Fiol and Lyles, 1985). From this
perspective, experience is a pattern of recognition—
a repetition of activity that has been undertaken pre-
viously—whereas future actions become a function of
the accumulated memory of the firm (Sinkula, 1994;
Slater and Narver, 1995). Organizational memory is
the collective beliefs, behavioral routines, or physical
artifacts that vary in their content, level of dispersion
and accessibility (Moorman and Miner, 1997). Orga-
nizational routines, procedures, and structures are
vital components for controlling the behavior of the
organization and are accumulated over time, estab-
lishing conditions for subsequent firm actions and
activities (Cyert and March, 1963; March and Simon,
1958). Consequently, organizational learning is a
function of age and experience (Sinkula, 1994).
Learning and innovation are among the capabili-
ties firms must develop to achieve a sustainable com-
petitive advantage (Baker and Sinkula, 2005; Michael
and Palandjian, 2004) and are imperative in a global
market environment (Duarte and Snyder, 1997). The
present study incorporates multiple indicators of
activities that can contribute to experiential learning
relevant for launching brands in a global marketplace,
including global dispersion, global geographic scope,
near-market knowledge, and host-market knowledge.
Global dispersion. Global dispersion refers to the
number of markets a brand operates in at a given
point in time and is indicative of a brand’s experience
in the global marketplace. Past market entries are
expected to engender experiential knowledge accumu-
lation through organizational learning, facilitating
future market entries for a brand. Research findings
support the proposition that as firms globalize, the
geographic scope of international business operations
has a positive effect on the accumulation of experien-
tial knowledge (Eriksson, Majkgard, and Sharma,
2000). Empirical evidence suggests that this gradual
internationalization–knowledge accumulation process
drives internationalization (Ayal and Zif, 1979; Denis
and Depelteau, 1985; Eriksson et al., 2000) by effect-
ing the choice country market, as well as expansion
to other markets (Anderson and Gatignon, 1986;
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2007;24:471–485
Cavusgil, 1980; Chu and Anderson, 1992; Davidson,
1980; Erramilli and Rao, 1993; Franko, 1989; Gatig-
non and Anderson, 1988; Kogut and Singh, 1988). On
the other hand, considering that global expansion is
limited by the ceiling effect of the total number of
markets available for entry, the expectation would be
of a nonmonotonic effect. Hence, global expansion
experiences are expected to have a positive effect on
future launches through experiential learning for
brands with a lower degree of global dispersion,
whereas in the advanced stages a saturation effect is
anticipated.
H4: Past market launch efforts have a nonmonotonic
(inverse U-shape) effect on the likelihood of a brand’s
launch in a market.
Global geographic scope. The extent of global pres-
ence of a product or brand can be regarded not just in
terms of the mere number of country markets in which
it is offered but also in terms of the diversity and
spread of these locations. One perspective suggests that
truly global marketing would require offering products
and brands across multiple geographic regions around
the world (Rugman and Collinson, 2004). An estab-
lished market presence for a brand that incorporates
multiple regions and country markets ensures that the
company will derive substantial profits from its inno-
vation and will achieve a sustainable competitive ad-
vantage in the global environment. Further, it has been
shown that investors place a greater value on global
new product development and design for companies
that have a greater geographic scope than the ones that
do not (Ojah and Monplaisir, 2003).
Several advantages have been suggested with re-
spect to the globalization of brands. One position
proposes that marketing, product selection, and po-
sitioning will be more integrated the more global a
brand is, allowing for the transfer of knowledge across
markets (Kim, Park, and Prescott, 2003). It has also
been suggested that increased geographic scope speeds
up a brand’s new product introductions by minimiz-
ing the number of modifications necessary for indi-
vidual markets (Neff, 1999; Steenkamp, Batra, and
Alden, 2003). This has implications from the brand
level with respect to the acquisition and use of knowl-
edge across markets, where experiential learning
allows for the application of knowledge gained from
successive markets to other markets. It is expected
that the greater the global geographic scope of a
brand, the easier it will be for the company to launch
476 J PROD INNOV MANAG
2007;24:471–485
the brand in a new country market. Given the poten-
tial cost and advantages listed already, it is postulated
that a global geographic scope will act as a catalyst to
launching a brand into new markets.
H5: Global geographic scope has a positive effect on
the likelihood of a brand’s launch in a market.
The moderating effect of global market experi-
ence. Direct experience provides input for market
selection, supporting the notion that experiential
knowledge will allow firms to be driven by economic
opportunity selection as opposed to other consider-
ations (Davidson, 1983). Further, extant empirical
research indicates that experiential knowledge allows
companies to be driven by economic rents in their
internationalization efforts (Davidson, 1980). As
such, it can be expected that organizations with con-
siderable global market launch experience are more
likely to possess the necessary resources and capabil-
ities to overcome uncertainties associated with psychic
distance and to pursue the profit opportunities asso-
ciated with larger country markets.
H6a: The greater the past market launch efforts, the
stronger the effect of market size on the likelihood of a
brand’s launch in a market.
H6b: The greater the past market launch efforts, the
weaker the effect of psychic distance on the likelihood
of a brand’s launch in a market.
H7a: The broader the geographic scope, the stronger
the effect of market size on the likelihood of a brand’s
launch in a market.
H7b: The broader the geographic scope, the weaker the
effect of psychic distance on the likelihood of a brand’s
launch in a market.
Local experience. Although the literature generally
proposes cultural distance as a significant factor in the
internationalization process (Johanson and Vahlne,
1977; Johanson and Weidersheim-Paul, 1975; Kogut
and Singh, 1988), findings in previous studies are
mixed with respect to this proposition. Knowledge
of a market near a host country has been shown to be
a better measure than cultural distance in predicting
foreign market entry timing and has been associated
with a higher probability of market entry (Mitra and
Golder, 2002). In this study, near-market knowledge
is considered to be indicated by the presence of a
S. YENIYURT, J.D. TOWNSEND, AND M.B. TALAY
brand or the company on the same continent as the
target market. Hence, the presence on the continent is
expected to have a positive effect on market entry
though the accumulation of near-market knowledge,
easing the process of launching the brand in a new
country.
H8: Near-market presence has a positive effect on the
likelihood of a brand’s launch in a market.
Host-country experience. Internationalization the-
ory posits that some experiential learning is idiosyn-
cratic and therefore not easily transferable across
markets (Johanson and Vahlne, 1977). It can be ex-
pected that once a firm has a brand in a market,
it accumulates knowledge of this market, which can
then be employed to reenter the market (Guillen,
2003) with another brand in its portfolio. Similarly,
it has been indicated that firms tend to mimic earlier
entry mode choices they made in a country market in
their future reentries to the same market (Lu, 2002).
This literature suggests that once a company estab-
lishes a presence in a country market, subsequent
product or brand launches require only an incremen-
tal amount of resources and experiential learning.
As such, the following is expected:
H9: Host-market presence has a positive effect on the
likelihood of a brand’s launch in a market.
The moderating effect of local experience. It can
also be posited that local market knowledge would
enable the company to overcome the difficulties as-
sociated with psychic distance and to focus on the
potential economic benefits associated with a new
market launch. Therefore, it can be expected that
the effect market size on the likelihood of a brand to
be launched in a new country market is stronger for
brand with a near-market presence and for firms with
a local-market presence. Similarly, it can be expected
the effect of psychic distance on a brand’s propensity
to be launched in a country market would be weaker
for brands that have a near-market presence and firms
that have a host-market presence.
H10a: The effect of market size on the likelihood of a
brand’s launch in a market is stronger for the brands
with a near-market presence.
H10b: The effect of psychic distance on the likelihood
of a brand’s launch in a market is weaker for the brands
with a near-market presence.
FACTORS INFLUENCING BRAND LAUNCH IN A GLOBAL MARKETPLACE
H11a: The effect of market size on the likelihood of a
brand’s launch in a market is stronger for the brands
with a host-market presence.
H11b: The effect of psychic distance on the likelihood
of a brand’s launch in a market is weaker for the brands
with a host-market presence.
Method and Results
Study Context
The hypotheses are tested in the context of the global
automotive industry from 1981 to 2004. This is an
important time period to study because in the 1990s
companies started to engage in international op-
erations in a far broader set of countries than they
did in the 1980s (Tihanyi, Griffith, and Russell, 2005).
The automotive industry is particularly interesting to
research because of its economic importance and the
wide variety and complexity of issues presented by a
multifaceted industry. In the United States alone, the
automotive industry represents approximately 10% of
the economy with new vehicle sales generating more
than $240 billion in annual sales revenue and contrib-
uting 6.6 million jobs (Thuermer, 2004). According to
Automotive News 2005 Market Data Book, in 2004
more than 63 million cars and trucks were sold
around the world.
Markets have become more dynamic due to the
continued launches of brand into new markets, and
interesting paradoxes have emerged. The Toyota
Camry, a Japanese branded product, is now the top-
selling vehicle in the United States. Chery Automobile
Company, a Chinese manufacturer, plans to begin
exporting to the United States market in 2007, with
Geely Automotive Holding Company, another Chi-
nese company, planning to launch their brand in the
United States with two models in 2008 (Webb, 2006).
As economic development continues at a torrid pace,
the Chinese market is poised to overtake Japan as the
second largest automotive market in terms of volume
sales. General Motors sold 665,000 cars in China in
2005 and has the highest market share in this market
with its Buick brand (Reuters, 2006). Interestingly, the
Buick brand is floundering in its home market. This
turbulent industry environment clearly provides a
strong basis for understanding brand launch in the
global marketplace.
J PROD INNOV MANAG 477
2007;24:471–485
Variable Definitions
Dependent variable. The dependent variable is the
likelihood of a brand to be launched in a specific
country market at a given point in time. This study
focuses on the factors affecting the strategic decision
of a company to launch a brand in country at in a
given year. The global brand launch observations are
extracted from a data set containing the global dis-
persion of automotive brands. This proprietary data
set was provided by R. L. Polk Marketing Systems, a
division of Polk Automotive Intelligence, the world-
wide market leader in sourcing of independent data
on the global automotive market. The database
covers a time span from 1981 to 2004 and is struc-
tured in yearly observations. This allows the year in
which a specific brand was launched in a given coun-
try to be identified.
Independent variables. For the purposes of this in-
vestigation, market attractiveness is operationalized
in terms of the total size of the automotive market
under consideration for entry (i.e., the total passenger
car registrations in a country in a specific year). This
variable is extracted from the Euromonitor Database
and is transformed using the logarithmic function to
diminish the data skewness and to account for possi-
ble nonlinearities.
Psychic distance of a given country market is
captured via three separate variables: cultural dis-
tance, population distance, and economic distance.
Cultural distance is calculated by the method used by
Contractor and Lorange (1988), Kogut and Singh
(1988), and Nordstrom and Vahlne (1994). It is a
widely used approach in approximating the cultural
distance of a foreign market (Tihanyi, Griffith, and
Russell, 2005) and relies on computations using data
derived from Hofstede’s (1980, 1991) cultural dimen-
sion scores. Cultural distance is computed using the
Kogut and Singh (1988) approach of averaging the
deviations in Hofstede’s (1991) cultural scores, after
adjusting for the differences in variations of each of
the four dimensions. The equation employed is
X4
Cultural Distanceiu ¼ ½ðIki  Iku Þ2 =Vk =4
k¼1
where Iki denotes the k-th Hofstede cultural dimen-
sion score for the target market i, Iku denotes the k-th
Hofstede cultural dimension score for the country of
origin u, and Vk denotes the variance associated with
the specific cultural dimension.
478 J PROD INNOV MANAG
2007;24:471–485
Population and economic distance measures are
also considered to be an important component of
psychic distance. A widely consulted resource that
employs an index approach to measuring market
potential is Business International (Anonymous,
1992), which uses three indicators for world geo-
graphic regions and individual countries: market
size, market intensity, and market growth. A recent
example of significant factors of a market’s potential
include size as captured by population, economic
well-being as measured by gross domestic product
per capita (GDPPC), and market dynamism indicated
by the GDP growth rate (Cavusgil, Kiyak, and Yen-
iyurt, 2004). This study employs similar measures of
the market-based factors that contribute to psychic
distance. The population and economic distance di-
mensions are captured via the absolute differences
among the populations, GDP per capita figures, and
GDP growth rates of home country and each of the
target markets. All of these figures are extracted from
the World Development Indicators Database of
World Bank for the period of 1981–2004.
Global experience captures the experiential knowl-
edge accumulated from past market entries and
market-specific knowledge gained by a near-market
presence. Previous market entries of a brand are used
to measure previous international expansion experi-
ence at a given point in time. The squared term of this
variable enables a test of the nonmonotonic effect of
global experience and is also included in the analysis.
Further, global geographic presence is captured in
terms of the number of continents in which a specific
brand is offered at a given point in time.
Regarding local market experience, near-market
presence is captured via a dummy variable indicating
whether or not the brand is already offered in the
continent of the potential new market. Further, host-
market presence is captured via a dummy variable
indicating whether or not the company is already
present in the host market with different brands
than the focal brand.
Control variables. A series of factors that may have
an effect on market entry are also incorporated as
control variables. Since it has been shown that the
country of origin has a significant effect on the global
strategy a company follows (Yip, Johansson, and
Roos, 1997), this factor is accounted for in this anal-
ysis. The country of origin was coded as North Amer-
ica, Europe, or Asia, with North America designated
as the base case. Given that there are wide variations
S. YENIYURT, J.D. TOWNSEND, AND M.B. TALAY
in the number of brands a company owns in the au-
tomotive industry, this is also included as a control
variable. It is operationalized by the number of
brands a company owns at a given point in time. To
account for competitive considerations, the total
number of competitor brands offered in a country
market at a specific point in time is used as a control.
Finally, to account for historical effects, such as eco-
nomic cycles, world automotive production is also
included in the analysis.
Data
The original data set includes, on an annual basis, the
global position of 135 automotive companies with
brands operating in 55 countries. However, Hofstede’s
(1980, 1991) cultural dimension scores are only avail-
able for 42 countries on 6 continents, so data for 13
countries were excluded from the data set. This de-
creased the number of companies to 119, resulting in
229 brands with 22 different countries of origin. Con-
sidering that some of the covariates included in the
model are time varying, the data were divided into
yearly spells. As such, each time-varying independent
variable was updated yearly. As a specific brand enters
a specific market, the corresponding brand–country
combination is discontinued. A total of 115,691 spells
(brand–country–year combinations) and 1,934 market
entries were delineated. The inclusion of host-country-
related socioeconomic and control variables created
missing observations and decreased the sample size to
50,572 spells derived from 99 companies, 173 brands,
and 700 market entries. The descriptive statistics for
the variables included in the analysis and the correla-
tion coefficients are presented in Table 1.
Method
A discrete time event history analysis with time-vary-
ing independent variables is employed to estimate the
effects of the independent variables on the probability
of a brand being launched in a specific market. There-
fore, the selected unit of analysis is the brand–
country–year combination, and the following logit
model can be estimated:
expðb0 þ bAx;i;t Þ
lx;i;t ¼
1 þ expðb0 þ bAx;i;t Þ
where x denotes the brand, i is the potential host
country market, t is the year, A is the vector of inde-
pendent variables, and l stands for the likelihood of
FACTORS INFLUENCING BRAND LAUNCH IN A GLOBAL MARKETPLACE J PROD INNOV MANAG 479
2007;24:471–485

.009  .043
.068  .096 1.000
brand x to be launched in country i at time t. The
15
vector of independent variables has been lagged by
one year. Logistic transformation applied to this mod-

.658  .269  .215 1.000

14

el bounds the value of dependent variable by 0 and 1,

and the coefficient estimates of represent the change in

.048  .003  .045

.026  .020  .008  .655 1.000
log-odds ratio for one unit increase in the independent
13

variables. For the analysis, a separate record was cre-

ated for each year in which the brand had the hazard

.061  .034
.034  .145 1.000
12

of a new market launch. Hence, each brand–country

pair has multiple observations across the study peri-

.076 1.000
od. Both the dependent variable and the independent
11

variables were updated yearly for each brand–country

.298 1.000

.053
.272
.015
combination. When a brand launch was observed, the
10

brand–country combination was coded as a launch,

and it was discontinued for the following years. The
.231
 .033  .055

.291
 .239  .224
 .069  .097
.797 1.000

model was estimated using the maximum likelihood

9
Correlations

estimator for the traditional logit specification, which

.194
.161

 .020
.266
1.000

addresses right censoring and time-varying indepen-

8

dent variables (Henisz and Delios, 2001).

.930
.864
.223
.240
 .015
 .082
.365
 .274
 .072
1.000
7

Results
.045
.053
.060
 .116
 .058
 .102
.182
 .016
 .255
 .055
1.000

The effects of the independent variables on the like-

6

lihood of a brand to be launched in a country in a

.196
.212
.204
.172
 .185
 .046
 .238
.076
.182
 .343
 .187
1.000

specific year were estimated using a logistic regression.

5

Table 2 shows the estimated coefficients. The model

has a satisfactory fit to the data, with a chi-squared
.354
.181
 .033
.030
 .039
 .142
 .210
 .426
.470
 .007
 .091
 .081
1.000

fit statistic significant at .001 confidence level and a

4

pseudo R2 of .155.
 .022
 .085
.089
 .014
.256
.187
.026
.021
.056
 .055

 .008
 .103
 .022
1.000
3

Market attractiveness. The estimated coefficients

indicate that market size has a significant positive
1.000
 .218
.070
 .066
 .159
 .060
 .032
 .067
 .035
 .029
.017
.018
 .059
.203
.076

effect on the likelihood of a brand to be launched in a

2

country market (b 5 .0957, z 5 2.96, p 5 .003). There-

1.000
.011
 .017
 .037
 .028
 .022
.126
.111
.126
.075
.073
 .010
.010
.053
.015
.029

fore, H1 is supported.
1

All bold correlations are significant at .05 confidence level.

Table 1. Descriptive Statistics and Correlationsa

According to the estimation results, psychic dis-

tance has a negative effect on brand launch. The
Std. Dev.

.116

.499
.469
.495
.430

.172
1.355
1.308

7.822
2.826
8.489

1.211

5.387
22.186
351.466

299.328

effects of all psychic distance dimensions considered

in this analysis are in line with expectations, with cul-
tural distance having a negative and marginally insig-
.014

229.886

Global dispersion squared 111.473

.527
.326
.569
.245

.526
7.881
2.069

3.246
6.278

1.680

4.243
10.420

42.194
Mean

nificant effect at a .05 confidence level (b 5  .0606,

z 5  1.82), and population distance (b 5  .0012,
z 5  4.87), GDPPC distance (b 5  .0283, z 5
Gdp growth rate distance

Global geographic scope

 4.00), and GDP growth rate distance (b 5

Near market presence
Host market presence

Competitive intensity
Population distance

 .0540, z 5  3.15) having negative and significant

World production
Global dispersion
Cultural distance
Variables

effects at a .05 confidence level.

Gdppc distance

Brands owned
Coo Europe

The incorporation of Hofstede’s (1980, 1991) fifth

Market size

Coo Asia

dimension, long-term orientation in the cultural

Launch

distance computation (Shenkar, 2001), was also eval-

uated. A five-dimension-based cultural distance score
10
11
12
13
14
15
16
1
2
3
4
5
6
7
8
9

for the 19 countries for which this dimension score is

a
480 J PROD INNOV MANAG S. YENIYURT, J.D. TOWNSEND, AND M.B. TALAY
2007;24:471–485

Table 2. Logistic Regression Estimation Results

Variables b Std. Error z P4|z|

Market Attractiveness
Market Size .0957 .0323 2.96 .003
Psychic Distance
Cultural Distance  .0606 .0332  1.82 .068
Population Distance  .0012 .0002  4.87 o.001
GDPPC Distance  .0283 .0071  4.00 o.001
GDP Growth Rate Distance  .0540 .0171  3.15 .002
Global Experience
Global Dispersion .1520 .0146 10.39 o.001
Global Dispersion Squared  .0022 .0003  8.02 o.001
Global Geographic Scope .1003 .0534 1.88 .061
Local Experience
Near-Market Presence .9031 .1159 7.79 o.001
Host-Market Presence .2411 .1211 1.99 .046
Controls
Country of Origin Europe .4784 .1902 2.52 .012
Country of Origin Asia 1.2058 .2331 5.17 o.001
Brands Owned .0536 .0163 3.28 .001
Competitive Intensity .0111 .0026 4.30 o.001
World Production 1.6704 .1958 8.53 o.001
Constant  8.6395 .4339  19.91 o.001
Observations 50,572
Log Likelihood  3073.66
Chi2(15) 1,123.88
p-Value o.001
Pseudo R2 .155

available was computed. The empirical model was re-
estimated with this more accurately specified culture
distance metric but with a more limited data set. The
correlation between the cultural distance scores com-
puted using four and five dimensions is .91. Further,
despite the decrease in the number of observa-
tions from 50,572 to 17,894 in the five dimension
score model estimation, the effect of cultural distance
remains negative and statistically significant (b 5
 .1721, z 5  2.65, po.01). Therefore, H2 is sup-
ported in both estimations of the model.
Global experience. Global dispersion exhibits the
hypothesized non-monotonic effect on brand launch,
with a positive coefficient (b 5 .1520, z 5 10.39) sig-
nificant at a .001 confidence level for its linear
component and a negative coefficient (b 5  .0022,
z 5  8.02) significant at .001 confidence level for its
quadratic term. H4 is strongly supported. Global geo-
graphic scope has a marginally insignificant positive
effect at .05 confidence level (b 5 .1003, z 5 1.88, p 5
.061). Therefore, the results provide weak support
for H5.
Local experience. Near-market presence has a sig-
nificant positive effect on launch (b 5 .9031, z 5 7.79,
po.001), providing strong support for H8. Host-mar-
ket presence also has a positive coefficient, significant
at a .05 confidence level (b 5 .2411, z 5 1.99, p 5 .046).
Thus, the results support H9.
To test the hypotheses regarding the moderation
effects, interaction terms were added to the model.
Including all interaction terms at one time would
inflate the number of terms and potentially result
in inconsistent estimates due to multicollinearity.
Therefore, the interaction terms were added one at a
time to the main effects specification. The resulting
coefficients are presented in Table 3.
According to the logistic regression estimates, mar-
ket size significantly moderates the effect of cultural
distance on new market launch (b 5 .0507, z 5 1.97,
p 5 .048). The interactions of the market size and the
remaining psychic distance variables are not statisti-
cally significant. Therefore, H3 is supported for cul-
tural distance but not supported for economic
distance variables.
The interaction effects reveal a moderating effect
of global experience on the relationship between the
FACTORS INFLUENCING BRAND LAUNCH IN A GLOBAL MARKETPLACE J PROD INNOV MANAG 481
2007;24:471–485

Table 3. Interaction Effectsa

Moderator Moderated Effect b Std. Error z P4|z|

Market Attractiveness
Market Size  Cultural Distance .0507 .0257 1.97 .048
Population Distance .0000 .0002  0.08 .938
GDPPC Distance .0020 .0044 0.46 .644
GDP Growth Rate Distance .0193 .0130 1.48 .139
Global Experience
Global Dispersion  Market Size  .0047 .0025  1.90 .057
Cultural Distance .0024 .0026 0.89 .371
Population Distance .00003 .00002  1.67 .095
GDPPC Distance .0012 .0005 2.60 .009
GDP Growth Rate Distance .0029 .0013 2.26 .024
Global Geographic Scope  Market Size  .0204 .0177  1.15 .248
Cultural Distance .0166 .0182 0.91 .362
Population Distance  .0001 .0001  1.29 .198
GDPPC Distance .0067 .0033 2.04 .041
GDP Growth Rate Distance .0189 .0095 2.00 .046
Local Experience
Near-Market Presence  Market Size .1214 .0710 1.71 .087
Cultural Distance .0629 .0866 0.73 .467
Population Distance .0009 .0007 1.34 .180
GDPPC Distance  .0237 .0147  1.61 .106
GDP Growth Rate Distance .0060 .0437 0.14 .890
Host-Market Presence  Market Size  .0228 .0621  0.37 .714
Cultural Distance  .0769 .0650  1.18 .237
Population Distance  .0007 .0007  0.94 .348
GDPPC Distance  .0244 .0116  2.11 .035
GDP Growth Rate Distance  .0469 .0327  1.44 .151
a
Interaction terms added one at a time to the main effects specification. Main effects, control variables, and constants are omitted from the table.

economic distance and the propensity of a brand to be
launched in a new country. Specifically, the coeffi-
cients for the interaction terms of global dispersion
and GDPPC distance (b 5 .0012, z 5 2.60, p 5 .009)
and global dispersion and GDP growth rate distance
(b 5 .0029, z 5 2.26, p 5 .024) are positive and signifi-
cant at a .05 confidence level. Similarly, the coeffi-
cients for the interaction terms of global geographic
scope and GDPPC distance (b 5 .0067, z 5 2.04,
p 5 .041) and global geographic scope and GDP
growth rate distance (b 5 .0189, z 5 2.00, p 5 .046)
are positive and significant at a .05 confidence level.
The remaining interactions for the moderation of
global experience on the market attractiveness effects
on new market launch are not significant at .05 con-
fidence level. Interestingly, the coefficient of the inter-
action term of global dispersion and market size is
negative and marginally insignificant at a .05 confi-
dence level (b 5  .0047, z 5  1.90, p 5 .057). There-
fore, H6a and H7a are not supported, and H6b
and H7b are supported for the effects of economic
distance.
Regarding the moderation effect of local experi-
ence, the coefficient of the host-market presence
and GDPPC distance interaction is significant at .05
confidence level (b 5  .0244, z 5  2.11, p 5 .035).
Considering that the direction of this estimate is
contrary to expectations and that the remaining in-
teraction coefficients of local experience and market
attractiveness variables are statistically insignificant,
H10a, H10b, H11a, and H11b are not supported.
Discussion
The present study contributes to the new product lit-
erature in a variety of ways by exploring the factors
that influence the launch of brands in a global mar-
ketplace. The effects of uncertainty and experiential
learning are at the core of the issues investigated to
address the primary research question. Market attrac-
tiveness, psychic distance, and organizational learning
from global and local activities encompass the issues
investigated in the context of the global automotive
industry on a longitudinal basis.
482 J PROD INNOV MANAG
2007;24:471–485
Market attractiveness positively influences the pro-
pensity of a brand to be launched into new market.
This supports the idea that potential demand condi-
tions are an important managerial consideration in
product introduction decisions (Guiltinan, 1999). In
fact, in a recent interview, a senior executive from a
global automotive brand commented that the most
significant factor when the brand considers entering a
new market is the basic attractiveness of the market.
In line with expectations of the behavioral perspec-
tive of internationalization (Johanson and Vahlne,
1977; Johanson and Weidersheim-Paul, 1975; Nordst-
rom and Vahlne, 1994), psychic distance impedes the
launch of a brand into a new foreign market. While
introducing their brands and products in the global
markets, the managers prefer to target country
markets with cultural and economic conditions simi-
lar to their home market. Previous studies typically
include culture distance (e.g., Eriksson, Majkgard,
and Sharma, 2000; Kogut and Singh, 1988; Nordst-
rom and Vahlne, 1994) as a proxy for psychic dis-
tance. This study contributes to the literature by
investigating the effects of multiple dimensions of
psychic distance on brand launch. The results indi-
cate negative effects of economic distance variables on
market entry. This suggests that brands are less likely
to be launched into markets with population sizes and
economic conditions much different from company’s
home market. This could be because the majority of
successful automotive brands originate from devel-
oped countries and because new entries are more like-
ly to be into similar markets. These results are also in
line with previous findings that new product intro-
ductions in less familiar markets have a higher likeli-
hood of failure (Souder and Song, 1998). Hence, the
findings of this research adds to this body of knowl-
edge by revealing a reluctance to launch brands into
countries that are culturally and economically less
similar to the home market.
This study also contributes to the body of literature
related to the effects of market knowledge in market
launch decisions. In the context of the launch of au-
tomotive brands in the global marketplace, there is
strong evidence of experiential learning. This investi-
gation includes the role of the global dispersion of a
brand as a measure of organizational learning. In line
with the expectations of internationalization theory
(Johanson and Vahlne, 1977), knowledge acquired via
previous market launches facilitates future foreign
market introductions. A significant contribution of
this study is the revelation of a saturation effect from
S. YENIYURT, J.D. TOWNSEND, AND M.B. TALAY
previous market launches, engendered by the natural
ceiling imposed by the availability of a limited number
of potential country markets in which a company’s
brands can be launched.
Near-market knowledge (Mitra and Golder, 2002)
is also incorporated into this study. The presence of a
brand in the continent of the potential target market
increases the chances of further expansion on this
continent. Host-market knowledge also acts as a fa-
cilitator of brand launch and can be acquired via a
presence in the host market with other brands. Mar-
ket-specific knowledge accumulation is therefore sup-
ported in the context of launching brands in a global
marketplace, with the results of this study suggest-
ing that companies are more likely to introduce addi-
tional brands in markets where they already have a
presence.
This study also contributes to the extant literature
by explicating a series of moderations regarding the
effects of market attractiveness related variables on
launching brands globally. First, the results of this
study indicate that firms tend to place a lower degree
of emphasis on factors of cultural distance when
launching brands into larger markets. The implica-
tion is that firms are willing to absorb the increased
costs of transferring information to and from their
home market to potentially acquire the revenue
associated with successful entry into a larger market.
Second, global experience enables companies to over-
come the uncertainties associated with launching
brands into international markets that are economi-
cally distant. Although the majority of automotive
brands originate from developed countries, these
firms are not deterred from launching their brands
into markets that have dissimilar economic condi-
tions. However, when coupled with the direct effects,
the results of the moderation suggest that firms prefer
to launch their brands primarily into larger markets
first, leaving the smaller markets to the later stages of
global launch.
This study also contributes to the literature by ex-
amining internationalization from a longitudinal per-
spective. The majority of previous studies related to
the launch of products and brands internationally
have relied on cross-sectional data (Coviello and
Jones, 2004; Rialp, Rialp, and Knight, 2005). Since
this study spans a broad time frame, longitudinal
effects have been delineated, providing a meaningful
understanding of the globalization phenomenon as
indicated through the launch of brands into new mar-
kets. Also since this study includes 22 countries of
FACTORS INFLUENCING BRAND LAUNCH IN A GLOBAL MARKETPLACE
origin and 42 countries of brand entry, it provides
more rigorous test of the assumptions of internation-
alization theory than have been presented previously.
These study characteristics allow for a more rigorous
test of the contribution of market uncertainty and
experiential learning to market-entry decisions in a
global marketplace.
From a managerial perspective, the results of this
study suggest that companies should focus on acquir-
ing local experience while launching globally. This can
be achieved by having global dispersion and geo-
graphic scope, as well as a strong near-market and
host-market presence for brands. Also, the results im-
ply that it can be expected for a competitor brand to
be launched into markets similar to the competitor’s
home market. This has implications for the formula-
tion of strategy when operating in a global environ-
ment. Companies with a strong global presence have
an easier time overcoming the uncertainties of foreign
market launch. It could be expected that companies
with a presence in multiple countries and continents
will be more aggressive in launching their products
and brands globally. Companies are also more likely
to introduce new brands and products in markets
where they already have a presence. Experiential
learning benefits exist through the achievement of
both global market knowledge and local market pres-
ence. Thus, the findings of this study provide impor-
tant guidelines for formulating global expansion
strategies, and estimating competitive actions.
Limitations and Future Research Directions
Although this study contributes to the literature in a
number of ways, it is limited in a number of ways.
First, it is performed in a single industry, which may
hinder the generalization of the results to other in-
dustries. Focusing on a single industry enables a more
refined analysis by overcoming the detailed data re-
quirements for an adequate test of the research hy-
potheses. However, further research can elucidate the
role of uncertainty and experiential learning in global
product and brand launch in alternative industry set-
tings, such as services or business to business markets.
It has been shown that cultural and cognitive fac-
tors such as global orientation (Workman, Homburg,
and Gruner, 1998; Zou and Cavusgil, 2002) and glob-
al mindset (Kedia and Mukherji, 1999; Murtha, Len-
way, and Bagozzi, 1998) of the managerial team affect
the global strategy, structure, and processes of orga-
J PROD INNOV MANAG 483
2007;24:471–485
nizations. The effects of such organizational factors
on launching their products and brands globally re-
main to be explored. Future research should consider
the effects organizational resources, overall global-
ization strategy, and the culture of the organization
when launching brands in a global marketplace.
In this study, the unit of analysis is limited to the
brand and does not consider the launch of individual
products under the same brand umbrella. Yet the
branding literature indicates that consumer-based
brand equity facilitates new product introductions
and line extensions (Aaker and Keller, 1990). It has
also been shown that global brand positioning speeds
up a brand’s new product introductions by minimiz-
ing the number of modifications necessary for indi-
vidual markets (Steenkamp, Batra, and Alden, 2003).
Hence, it can be expected that the brand positioning
strategy and built-up brand equity may affect the
propensity to introduce brands to a new markets and
should be considered as a factor in future research of
the launch of brands in the global marketplace.
Future research should also incorporate additional
environmental and firm-level factors and should con-
sider a more granular perspective of the effects of
competition on the propensity to launch brands into
new global markets. Finally, measures of performance
should be incorporated into future studies.
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