A common perception in the field of innovation is that large, incumbent firms rarely introduce radical product innovations. Such firms tend to solidify their market positions with relatively incremental innovations. They may even turn away entrepreneurs who come up with radical innovations, though they themselves had such entrepreneurial roots. As a result, radical innovations tend to come from small firms, the outsiders. This thesis, which we term the “incumbent's curse,” is commonly accepted in academic and popular accounts of radical innovation. This topic is important, because radical product innovation is an engine of economic growth that has created entire industries and brought down giants while catapulting small firms to market leadership. Yet a review of the literature suggests that the evidence for the incumbent's curse is based on anecdotes and scattered case studies of highly specialized innovations. It is not clear if it applies widely across several product categories. The authors reexamine the incumbent's curse using a historical analysis of a relatively large number of radical innovations in the consumer durables and office products categories. In particular, the authors seek to answer the following questions: (1) How prevalent is this phenomenon? What percentage of radical innovations do incumbents versus nonincumbents introduce? What percentage of radical innovations do small firms versus large firms introduce? (2) Is the phenomenon a curse that invariably afflicts large incumbents in current industries? Is it driven by incumbency or size? and (3) How consistent is the phenomenon? Has the increasing size and complexity of firms over time accentuated it? Does it vary across national boundaries? Results from the study suggest that conventional wisdom about the incumbent's curse may not always be valid.
I nnovation is one of the most important issues in business research today. It has been studied in many independent research traditions. Our understanding and study of innovation can benefit from an integrative review of these research traditions. In so doing, we identify 16 topics relevant to marketing science, which we classify under five research fields: • Consumer response to innovation, including attempts to measure consumer innovativeness, models of new product growth, and recent ideas on network externalities; • Organizations and innovation, which are increasingly important as product development becomes more complex and tools more effective but demanding; • Market entry strategies, which includes recent research on technology revolution, extensive marketing science research on strategies for entry, and issues of portfolio management; • Prescriptive techniques for product development processes, which have been transformed through global pressures, increasingly accurate customer input, Web-based communication for dispersed and global product design, and new tools for dealing with complexity over time and across product lines; • Defending against market entry and capturing the rewards of innovating, which includes extensive marketing science research on strategies of defense, managing through metrics, and rewards to entrants. For each topic, we summarize key concepts and highlight research challenges. For prescriptive research topics, we also review current thinking and applications. For descriptive topics, we review key findings.
Radical innovation is an important driver of the growth, success, and wealth of firms and nations. Because of its importance, authors across various disciplines have proposed many theories about the drivers of such innovation, including government policy and labor, capital, and culture at the national level. The authors contrast these theories with one based on the corporate culture of the firm. They test their theory using survey and archival data from 759 firms across 17 major economies of the world. The results suggest the following: First, among the factors studied, corporate culture is the strongest driver of radical innovation across nations; culture consists of three attitudes and three practices. Second, the commercialization of radical innovations translates into a firm's financial performance; it is a stronger predictor of financial performance than other popular measures, such as patents. The authors discuss the implications of these findings for research and practice.
Sales takeoff is vitally important for the management of new products. Limited prior research on this phenomenon covers only the United States. This study addresses the following questions about takeoff in Europe: 1) Does takeoff occur as distinctly in other countries, as it does in the United States? 2) Do different categories and countries have consistently different times-to-takeoff? 3) What economic and cultural factors explain the intercountry differences? 4) Should managers use a sprinkler or waterfall strategy for the introduction of new products across countries? We gathered data on 137 new products across 10 categories and 16 European countries. We adapted the threshold rule for identifying takeoff (Golder and Tellis 1997) to this multinational context. We specify a parametric hazard model to answer the questions above. The major results are as follows: 1) Sales of most new products display a distinct takeoff in various European countries, at an average of six years after introduction. 2) The time-to-takeoff varies substantially across countries and categories. It is four times shorter for entertainment products than for kitchen and laundry appliances. It is almost half as long in Scandinavian countries as in Mediterranean countries. 3) While culture partially explains intercountry differences in time-to-takeoff, economic factors are neither strong nor robust explanatory factors. 4) These results suggest distinct advantages to a waterfall strategy for introducing products in international markets.International New Product Growth, New Product Takeoff, New Product Growth, International Diffusion, Diffusion of Innovations
Several studies have shown that pioneers have long-lived market share advantages and are likely to be market leaders in their product categories. However, that research has potential limitations: the reliance on a few established databases, the exclusion of nonsurvivors, and the use of single-informant self-reports for data collection. The authors of this study use an alternate method, historical analysis, to avoid these limitations. Approximately 500 brands in 50 product categories are analyzed. The results show that almost half of market pioneers fail and their mean market share is much lower than that found in other studies. Also, early market leaders have much greater long-term success and enter an average of 13 years after pioneers.
Bundling is pervasive in today's markets. However, the bundling literature contains inconsistencies in the use of temis and ambiguity about basic principles underlying the phenomenon. The literature aiso iacits an encompassing dassification of the various strategies, dear ruies to evaiuate the legaiity of each strategy, and a unifying framework to indicate when each is optimal. Based on a review of the marketing, economics, and iaw iiterature, this artide deveiops a new synthesis of the fieki of bundiing, which provides three important benefits. First, the articie clearly and consistentiy defines bundiing terms and identifies two key dimensions that enabie a comprehensive ciassification of bundiing strategies. Second, it fbrmuiates ciear ruies for evaiuating the legaiity of each of these strategies. Third, it proposes a framework of 12 propositions that suggest whk:h bundiing strategy is optimai in various contexts. The synthesis provides managers with a framework with which to understand and choose bundiing strategies, it aiso provides researchers with promising avenues for further research.
Online chatter, or user-generated content, constitutes an excellent emerging source for marketers to mine meaning at a high temporal frequency. This article posits that this meaning consists of extracting the key latent dimensions of consumer satisfaction with quality and ascertaining the valence, labels, validity, importance, dynamics, and heterogeneity of those dimensions. The authors propose a unified framework for this purpose using unsupervised latent Dirichlet allocation. The sample of user-generated content consists of rich data on product reviews across 15 firms in five markets over four years. The results suggest that a few dimensions with good face validity and external validity are enough to capture quality. Dynamic analysis enables marketers to track dimensions’ importance over time and allows for dynamic mapping of competitive brand positions on those dimensions over time. For vertically differentiated markets (e.g., mobile phones, computers), objective dimensions dominate and are similar across markets, heterogeneity is low across dimensions, and stability is high over time. For horizontally differentiated markets (e.g., shoes, toys), subjective dimensions dominate but vary across markets, heterogeneity is high across dimensions, and stability is low over time.
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