Market entry barriers and firm performance: higher-order quadratic interaction effects of capital requirements and firm competence

Barriers to entry prevent new market entrants from entering markets while protecting incumbent firms. Previous researches indicate that there is relationship between barriers and firm performance. Most of the previous studies are broad and explain barriers and firm performance relationship in generic terms. This research examines the interrelationships of barriers to market entry, capital requirements, business environment, competitive advantage of incumbent firms, and firm competence on firm performance. Interaction effects among barriers to entry on firm performance have not been studied before. The study utilises the 'resource based view' as a theoretical framework in support of hypotheses. The study supports the higher-order quadratic interaction effects of: 1) a strong positive effect of competitive advantage and capital requirements on firm performance; 2) a moderate negative effect of business environment and capital requirements on firm performance.