We investigate the role that strategic positioning choices and pre-entry endowments play in determining the post entry innovative performance of firms that enter new markets. We hypothesize that the flexibility enjoyed by small entrants allows them to position themselves aggressively in new markets and results in higher innovative performance. We also argue that not all small entrants suffer from a liability of newness and some possess pre-entry endowments that can help anticipate and introduce product offerings with dominant design elements.