How Parent Firms' Entry Timing Fosters Child Firm Performance

How Parent Firms' Entry Timing Fosters Child Firm Performance | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article How Parent Firms' Entry Timing Fosters Child Firm Performance Mitsukuni Nishida This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-8436568/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract How does early entry by a parent firm foster the performance of its child firms, and where do entry-order effects originate? This paper examines how a parent firm’s early market entry cascades into the performance of its offspring that operate under a different retail industry but within the same geographic markets. Leveraging Japan's 1973 Large-Scale Retail Store Law as an exogenous shock that prompted six grocery hypermarket chains to establish six convenience-store chains, I assemble a 47-market panel spanning 1945--2012 and employ a mediation-analysis framework. Two findings emerge. First, parent firms' early entry improves child firms' market share through both a direct effect (early parent entry enhances child firm market share) and an indirect effect (early parent entry enables earlier market entry by the child firm, improving performance). Entering first rather than sixth lifts the child chain’s share by 8.9 percentage points, with two thirds of the gain coming from the direct effect. Second, early parent entry enhances the attractiveness of outlet locations for child firms, partially explaining the direct effect. These findings reveal how past entry decisions propagate across generations of formats, enriching our understanding of the determinants of performance persistence. JEL codes: L11; L22; L25; L81; M31; M38 Parent–child firms Firm performance Market share persistence Entry order Mediation analysis Retail chains Location strategy Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-8436568","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":588483648,"identity":"4685085b-dd80-4e04-837d-5a7d025a6293","order_by":0,"name":"Mitsukuni Nishida","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAAuUlEQVRIiWNgGAWjYDACZgY2hgQ2BjnGGSAeGwlajEnQAlbGxpDYIEGsFnN29mcPHpTZpTfP7jFg+FB2mLAWy2Yec4OEc8m5jXPOGDDOOEeEFoPDPGwSiW3MuY0zcgyYeduI0sL+DKilPp0RpOUvcVoYzIBaDieAtTASp4XHTCLh3HHDxhlpBQd7zqUToeX88WeSP8qq5Q1nJG988KPMmrAWODBsYGA4QIJ6IJAnTfkoGAWjYBSMJAAA6AY4KzTDfRwAAAAASUVORK5CYII=","orcid":"","institution":"Johns Hopkins University","correspondingAuthor":true,"prefix":"","firstName":"Mitsukuni","middleName":"","lastName":"Nishida","suffix":""}],"badges":[],"createdAt":"2025-12-23 18:53:08","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-8436568/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-8436568/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":104966719,"identity":"6b794543-a13c-45af-ae37-24e5993a73e7","added_by":"auto","created_at":"2026-03-19 09:58:03","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":1403866,"visible":true,"origin":"","legend":"","description":"","filename":"submissionv5.pdf","url":"https://assets-eu.researchsquare.com/files/rs-8436568/v1_covered_b6120211-3b68-4af5-b9bb-46144a1a5498.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"How Parent Firms' Entry Timing Fosters Child Firm Performance","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Parent–child firms, Firm performance, Market share persistence, Entry order, Mediation analysis, Retail chains, Location strategy","lastPublishedDoi":"10.21203/rs.3.rs-8436568/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-8436568/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eHow does early entry by a parent firm foster the performance of its child firms, and where do entry-order effects originate? This paper examines how a parent firm’s early market entry cascades into the performance of its offspring that operate under a different retail industry but within the same geographic markets. Leveraging Japan's 1973 Large-Scale Retail Store Law as an exogenous shock that prompted six grocery hypermarket chains to establish six convenience-store chains, I assemble a 47-market panel spanning 1945--2012 and employ a mediation-analysis framework. Two findings emerge. First, parent firms' early entry improves child firms' market share through both a direct effect (early parent entry enhances child firm market share) and an indirect effect (early parent entry enables earlier market entry by the child firm, improving performance). Entering first rather than sixth lifts the child chain’s share by 8.9 percentage points, with two thirds of the gain coming from the direct effect. Second, early parent entry enhances the attractiveness of outlet locations for child firms, partially explaining the direct effect. 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