Advantages of Time-Based New Product Development in a Fast-Cycle Industry

Abstract

The authors study the impact of time-based product development on sustainable market share gains in a high-technology computer component industry. Three dominant firms, with international new product development and manufacturing facilities, have introduced more than 200 new products into this fast-cycle market in a five-year period. The authors systematically examine the leads and lags at critical stages of the product development process: concept generation, prototype completion, and volume production. Their main finding is that lead-time advantage affects market share positively, albeit differentially, at each stage. The benefit of lead-time gain is greatest at the volume production stage, followed by the concept generation stage. The authors also develop a new notion of lead-time threshold—a time period in which if a competitor catches up, no market share gain is achieved by the firm that introduces the product first. They endogenously estimate the magnitude of the threshold for each stage of the product development process, observing that a significant threshold is present at both the concept generation and volume production stages. Finally, the structure of the development process, which differs across the firms in the market, affords significant differential ability to catch up with competitors.

Capabilities and competitive tactics influences on performance: Implications of the moment of entry

“…In these sectors, the early followers that can quickly detect and imitate pioneers efficiently may take advantage of some situations of pioneer weakness. This is possible when pioneers are not yet capable of consolidating the advantages of entering first into the market (Datar and Jordan, 1997). In this sense, these companies need to possess certain managerial capabilities that allow them to compensate, through their structural advantages in the managerial process, for the advantages obtained by the pioneer.…”

Salesforce Compensation: An Analytical and Empirical Examination of the Agency Theoretic Approach

“…(See Datar et al, 1997 for a marketing application of the GMM approach to estimating the Double Limit Tobit based on equation (1) above).…”

Organizational coordination, development proficiency, and on-time completion of development and international rollout: A contingency analysis of external environments

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