Technological and Design Innovation Effects in Regional New Product Rollouts: A European Illustration

Firms are increasingly recognizing the importance of understanding regional dynamics and their effects on competitiveness. One such area that is gaining increased importance due to intra‐regional trade is the factors contributing to the successful rollouts of new products within a region. New product rollouts are complicated by nature but are further compounded by intricacies in the type of innovation (i.e., technological or design) being introduced into a region. Unfortunately, limited research has investigated this area. This study works to address this limitation by examining the per country performance effects of regional new product rollouts of technological and design innovations. The study examines the introduction of 14 technological innovations and 12 design innovations across 17 unique firms operating in eight European countries from 2000 to 2007. Specifically, this study attempts to show (1) an important role of the type of innovation on a firm's regional new product rollout strategy; (2) a relationship between national culture and the effectiveness of regional rollout strategies; and (3) an influence of economic openness on the type of innovation for regional new product rollout strategies. The results indicate that a longer regional new product rollout strategy is a more effective strategy for technological innovations, while a shorter regional new product rollout strategy is a more effective strategy for design innovations. The study also presents significant interaction effects in relation to the cultural dimensions of uncertainty avoidance and power distance as well as a significant effect of economic openness. Implications for practitioners and academics are presented.     

Going Public and the Enrichment of a Supportive Network

Past research on initial public offerings suggests that the reputation of a company positively affects the success of the offering. Success is usually measured in financial terms as if the essence of the operation lay only in the short-term inflow of money. In this paper, we investigate important albeit often neglected implications of going public by combining evidence from a series of preliminary case studies taken from the results of a survey of 57 Italian initial public offerings. Evidence from our research suggests that, besides providing an important inflow of capital, going public may actually improve the reputational and social capital of a company, by increasing its visibility, prestige and perceived trustworthiness. Therefore, going public may be an important way to support entrepreneurial activity, as it may expand and reinforce the network of relationships that offer access to external resources, complementary skills and investment opportunities.     

Migrant Networks and the Spread of Information

Diaspora networks provide information to future migrants, which affects their success in the host country. While the existing literature explains the effect of networks on the outcomes of migrants through the size of the migrant community, we show that the quality of the network is an equally important determinant. We argue that networks that are more integrated in the society of the host country can provide more accurate information to future migrants about job prospects. In a decision model with imperfect signalling, we show that migrants with access to a better network are more likely to make the right decision, that is, they migrate only if they gain. We test these predictions empirically using data on recent Mexican migrants to the United States. To instrument for the quality of networks, we exploit the settlement of immigrants who came during the Bracero program in the 1950s. The results are consistent with the model predictions, providing evidence that connections to a better integrated network lead to better outcomes after migration.     

When Should RD&E and Marketing Collaborate? The Moderating Role of Exploration–Exploitation and Environmental Uncertainty

Collaboration between research, development, and engineering (RD&E) and marketing has traditionally been regarded as beneficial for new product performance (NPP). However, some studies have pointed out the drawbacks of excessive collaboration. Because collaboration simultaneously presents costs and benefits that vary with conditions, a contingent view of managerial practices suggests that the optimal level of integration should vary according to some factors that indicate when high levels of collaboration are preferable to lower levels. Although the literature on the many different factors that may impact the desirable level of collaboration is abundant, only a few studies have investigated the role of the peculiar characteristics of the new products being developed. This is at odds with several calls for future research on the role of the characteristics of the new product. This paper investigates the moderating role of an explorative versus an exploitive innovation program. It also controls for the moderating role of environmental uncertainty, which has been traditionally considered a moderator of the relationship between RD&E–marketing collaboration and new product program performance. The paper also investigates how a firm's innovation posture—a cultural trait—influences both directly and indirectly, via marketing's technical knowledge, RD&E–marketing collaboration. Indeed, several scholars have recognized that cultural differences create the main barrier between RD&E and marketing. Hence, a firm's culture should have an impact on the cultural barriers between the two departments. Further, the firm's innovation posture affects the extent to which the departments have to share resources and exchange information. In their seminal work, Gupta, Raj, and Wilemon argue that resource dependency is the main factor affecting the integration achieved between RD&E and marketing. Hence, an analysis of a firm's innovation posture is required to gain a deeper understanding of the antecedents of the collaboration between the two departments. The antecedents and effects of RD&E–marketing collaboration are tested in a sample of 80 companies operating in the U.S. auto industry through partial least squares. The paper shows that the extent to which a company develops explorative rather than exploitative innovations is a better moderator than environmental uncertainty in the relationship between RD&E–marketing collaboration and new product program performance. This contradicts much previous literature and sheds light on a partially neglected construct in the new product development literature. Second, the paper demonstrates that firms with a more aggressive innovation posture tend to develop greater collaboration between RD&E and marketing. Also, the marketing department tends to have a better understanding of the RD&E processes and capabilities in companies with an aggressive innovation posture than in companies with a defensive one.     

Whether to Integrate R&D and Marketing: The Effect of Firm Competence

Integration of research and development (R&D) with marketing remains a frequent topic in the new product development (NPD) literature, largely because it represents a critical antecedent of new product performance (NPP). Two divergent opinions about this integration exist, such that those who contend that firms should pursue high levels of integration in every case provoke criticisms from those who propose that various NPD processes require different levels of integration. This paper proposes that the two perspectives can be reconciled by taking into account the fact that R&D and marketing are integrated mainly to combine critical knowledge (technological and market) that otherwise would be separate to achieve market success. Following Danneels's approach, we investigate how the effect of R&D–marketing integration on performance change across four types of NPD processes: pure exploitation, pure exploration, technological competence exploitation, and market competence exploitation. Data derived from a deep study of 11 NPD projects by five firms, analyzed through qualitative methods, highlight the necessity to vary the level of integration according to the type of competence to be developed during the NPD process. Our analysis suggests two main conclusions. First, the effect of integration depends strictly on the type of competence that the firm uses to develop and launch a new product. Second, integration does not have a unique effect on performance, but it is necessary to distinguish between market performance (e.g., sales and market share) and process performance (e.g., meeting the planned budget and time to market). In some projects, the effect of integration on the two types of performance is diametrically opposite. In particular, we propose that (1) higher performance will be associated with lower integration in pure exploitative projects; (2) in projects that exploit existing market knowledge, higher market performance will be associated with a higher integration, although these projects tend to offer poor process performance regardless of integration level; (3) in projects that exploit technical knowledge, higher performance will be associated with higher integration; and (4) higher integration will be associated with higher market performance but poorer process performance in pure explorative projects.     

Costly State Verification with Varying Risk Preferences and Liability

Abstract.  In the scenario of loan contracts with costly state verification, we examine how the properties of the set of states, different risk preferences of debtors and varying liability of lenders affect the structure of optimal repayments. In particular, we show that with risk‐averse debtors, a general set of states, a constant observation cost and both unlimited and limited lender liability, the debtor is strictly better off revealing the true state of nature when his realized revenue is low, which implies that optimal debtor consumption has a downward jump around the single switch from observed to unobserved states. If the debtor can destroy revenue or if the debtor is risk neutral, this non‐monotonicity of consumption disappears. Moreover, given the loan size, there is more monitoring under debtor‐risk aversion than risk neutrality. We present simulations showing that a contract with unlimited lender liability and debtor‐risk aversion has a higher expected observation cost but a lower variance of consumption than a contract with limited lender liability. Finally, we discuss the problems of commitment to verification and contract renegotiation in this framework.     

Mortgages and Financial Expectations: A Household-Level Analysis

We contribute to the literature on household mortgage debt by exploring one particular influence on mortgage debt at the household level, namely the financial expectations of the individuals within the household. Our theoretical model predicts a positive association between the quantity of mortgage debt and optimistic financial expectations. Our empirical findings based on household level data provide convincing support for our theoretical priors in that optimistic financial expectations are positively associated with the level of outstanding mortgage debt.