Barriers to entry: An empirical assessment of Portuguese firms’ perceptions

Abstract

This paper attempts to assess the variety and relevance of barriers to entry perceived by Portuguese firms. Based on a questionnaire, Portuguese firms’ perceptions were surveyed using a sample of 168 firms. The results suggest that sunk costs, capital requirements, capital costs, and cost disadvantages are the most important barriers to entry. Applying a factor analysis, six underlying dimensions of entry barriers – investment in R&D, strategic behaviour, investment risk, advertising, cost disadvantages, and capacity – were identified. These findings are quite consistent among industries and firms’ sizes. Still, micro firms have lower perceptions regarding entry barriers than SMEs and large firms. Portuguese firms’ perceptions on entry barriers suggest that both structural and strategic barriers are important and that the effectiveness of strategic barriers depends on the structural characteristics of the market.

Keywords

• Entry
• Barriers to entry
• Strategic behaviour
• Firms’ perceptions