Major Innovation as a Dynamic Capability: A Systems Approach*

Major innovation (MI), composed of both radical and really new innovation, is an important mechanism for enabling the growth and renewal of an enterprise. Yet it is poorly managed in most established firms, and success stories are rare. This conceptual article draws on systems theory, recent advances in dynamic capabilities theory, and the management of innovation literature to offer a framework for building an MI dynamic capability. The framework is composed of seven elements that together form a management system rather than a process‐based approach to nurturing radical innovation. These system elements are (1) an identifiable organization structure; (2) interface mechanisms with the mainstream organization, some of which are tightly coupled and others of which are loose; (3) exploratory processes; (4) requisite skills and talent development, given that entrepreneurial talent is not present in most organizations; (5) governance and decision‐making mechanisms at the project, MI portfolio, and MI system levels; (6) appropriate performance metrics; and (7) an appropriate culture and leadership context. It is argued that dynamic capabilities for phenomena as complex as MI must be considered in a systems fashion rather than as operating routines and repeatable processes as the literature currently suggests. A set of propositions is offered regarding how each element should play out in this parallel management system. Finally, each element's role in the major innovation system is justified in terms of four criteria required by systems theory: (1) The system is identifiable, and its elements are interdependent; (2) the effect of the whole is greater than the sum of the parts; (3) homeostasis is achieved through interaction and networking with the larger organization; and (4) there is a clear purpose in the larger system in which the MI management system is embedded. Examples are given to demonstrate these criteria. Systems theory offers a new way of thinking about dynamic capability development and management.     

Perspective: The Emergence of Product Design as a Field of Marketing Inquiry*

The authors present findings from an analysis of articles related to product design published in eight leading journals important to marketing thought. Based on this analysis, which covers the fourteen‐year period 1995–2008, the authors propose a conceptual model of product design and offer definitions for (a) product design and (b) the product design process. In addition, the authors provide insights into the nature of product design research during this time period, including analyses of publication trends and the relationship of product design research to related marketing topics. The essay concludes with suggestions for future research on product design.     

Inward Technology Licensing as an Alternative to Internal R&D in New Product Development: A Conceptual Framework

Many marketing practitioners and authors already accept that inward technology licensing (ITL) can be a viable alternative source of new products to internal R&D. Yet, new product development research focuses mainly on internal development with little attention to external methods. Kwaku Atuahene-Gima reviews the small body of literature on ITL and examines the factors that may influence a firm to adopt ITL as an alternative to internal R&D. Using a conceptual framework to provide additional insights, he argues that the ITL adoption decision is an organizational behavioral response to internal and external environmental stimuli.     

Loan Subsidy Valuation: An Alternative Approach

In a recent paper, Jennergren analyzed four loan subsidy valuation methods suggested in authoritative textbooks. He showed that the first three can be derived from a unique formula whose value depends on the nonsubsidized loan amount that is assumed to be replaced by the subsidized loan. When the WACC method is used, this debt replacement must implicitly take into account the target debt-to-value ratio set by the firm. In this article, we suggest an alternative approach that allows us to clearly incorporate the corresponding debt constraint and to determine the resulting adjustment to be made. This adjustment appears to be different from that recommended by Jennergren. More generally, we suggest an alternative view of the consistency of the methods.     

New Product Preannouncement as a Signaling Strategy: An Audience‐Specific Review and Analysis*

Firms in various industries with highly competitive environments use new product preannouncement (NPP) as one of the most effective and popular signaling tools. Preannouncements can bring both benefits and costs to firms. Extant research has studied NPP from different perspectives and tackled the questions, “Should a new product be preannounced and when?” and “What information should be preannounced and why?” However, the benefits and costs of preannouncements from an audience‐specific perspective are less well understood. It is important to notice that benefits and costs of a preannouncement vary among different audiences and firms need to apply group‐specific weights in assessing the overall benefits and costs prior to making new product preannouncements. The purpose of this article is to review the existing literature on new product preannouncements for commonly observed marketing problems and to develop a general approach focusing on the target audiences and the incentives in sending signals to each audience and the impacts of these signals. This paper first reviews the literature on marketing‐related NPP issues as well as the determinants and effects of various factors on NPP decisions. Then, it discusses the phenomenon of new product preannouncements linked to other marketing and economics problems: (1) product development and positioning; (2) product diffusion and adoption; (3) firm value; (4) vaporware and antitrust litigations; and (5) consumer welfare. In addition, this paper divides the target audience of the new product preannouncement into four groups: customers, competitors, investors, and distributors. Based on current signaling theory, it proposes an audience‐specific framework to analyze the determinants, incentives, and impact of new product preannouncements. The proposed approach may provide more comprehensive insights on NPP strategies to managers and industrial decision makers. Finally, the paper suggests a number of future research directions from four different perspectives (i.e., customer, firm, government/industry, and methodology).     

Strategic Orientation and Product Innovation: Exploring a Decompositional Approach

While a considerable body of research examines the strategic orientation–innovation relationship, findings in that literature have been mixed. This article calls attention to an underinvestigated problem: the composite, multidimensional conceptualization and measurement of most strategic orientations, which likely contribute to the mixed findings in the literature. To address this issue, the researchers explore a decompositional approach to the strategic orientation–product innovation relationship. The authors utilize the stimulus‐organism‐response framework to select, decompose, and recast a set of strategic orientation components previously identified to be essential to product innovation. To produce more nuanced insights, the authors also decompose product innovation outcomes into breakthrough versus incremental. Furthermore, the sample is decomposed by product type to assess the generalizability of the conceptual model across manufactured goods and services firms. The authors test the conceptual model with a sample of 222 executives of services and manufacturing firms in Germany and Switzerland using partial least squares. By decomposing the strategic orientation effects into direct, indirect, total, and specific components, the detailed empirical analysis yields several new insights. Overall, the results suggest that the relationship between strategic orientation and product innovation is more complex than previously identified in the literature. For example, the results demonstrate that technology orientation works to augment innovation differently in services versus manufacturing firms. More specifically, a focus on technology boosts only breakthrough innovation in manufacturing firms, and only indirectly by enhancing an organization's open‐mindedness. In contrast, services firms extract additional benefits from investing in technology directly (and for both incremental and breakthrough innovation), as well as indirectly by increasing open‐mindedness. The authors also identify complementary as well as suppressing effects on product innovation outcomes from different strategic orientation components. Based on the findings in this study, future research avenues are identified, and managers are advised to consider each component of alternative strategic orientations individually and evaluate the capabilities aligned with components to assess their interdependencies.     

以高新技术强化使用质量是提高产品可靠性的有效途径

用实例说明生产厂家重视生产质量，并通过努力可使产品的制造质量达到相当高的水准，但是在使用质量方面存在着的影响产品可靠性的巨大空间却尚未引起充分的认识．在分析了当前普遍采用的定期维修体制的成18及存在弊端的基础上．提出应用状态监测与故障诊断(CMFD)技术的最新研究成果，可以实现从定期维修向状态维修的转变，并探讨了基于柴油机CMFD技术研究成果的实用策略。     

Neo‐Rawlsian Fringes: A New Approach to Market Segmentation and New Product Development*

Prior research into the link between new product development and market segmentation has focused on two main approaches: (1) design, segment, and do limited competitive evaluation; and (2) segment first, design second. This paper proposes a third approach, which is to simultaneously design, perform segmentation according to benefit and to evaluate against competitive designs. This research uses a benefit segmentation technique based on conjoint analysis (or other techniques that relate product attributes to consumer utility) in which the segments emerge simultaneously with the design based on certain design principles or “strategies.” Herein a method is proposed to narrow down the many possible feasible designs (combinations of attributes) to a finite set and to examine the appeal of each design. Five distinct design strategies are proposed for modeling and studying competitive reaction. These include “traditional” ones such as differentiation and new ones whose fringe customers have high utility. The paper shows that these five strategies are adequate for modeling competitive reaction using simulation. Another contribution of the paper is the way competitive reaction is modeled. In generating and evaluating a design the desire herein is also to assess the defensibility of the design and include it in the evaluation criteria. These issues are addressed by decomposing the solution procedure into two phases. In the first phase, different optimal designs are created based on predefined product development strategies. In the second, these optimal designs are compared against one another with regard to market share and potential to secure market leadership. This work shows that the nature of competition as well as the variability of customer preferences are critical to how a strategy performs. This process uncovers a surprisingly robust design strategy—developing attributes such that a “lower fringe” is most satisfied—that even achieves market dominance under certain conditions. This methodology is also applied to partworth data on refrigerators, which provides a concrete example of the concepts and demonstrates results consistent with the propositions developed earlier in the paper.     

Interorganizational Collaboration and Innovation: Toward a Portfolio Approach*

In the literature on innovation, interorganizational collaboration has been advanced as beneficial for the innovative performance of firms. At the same time, large‐scale empirical evidence for such a relationship is scarce. This article examines whether evidence can be found for the idea that interorganizational collaboration supports the effectiveness of innovation strategies. This article empirically addresses this research question by analyzing data on Belgian manufacturing firms (n=221) collected in the Community Innovation Survey, a biannual survey organized by Eurostat and the European Commission aimed at obtaining insights into the innovation practices and performance of companies within the various European Union (EU) member states. Tobit analyses reveal a positive relationship between interorganizational collaboration and innovative performance. At the same time, the impact on innovative performance differs depending on the nature of the partner(s) involved. These findings strongly suggest the relevance of adopting a portfolio approach to interorganizational collaboration within the context of innovation strategies.     

Geographical Agglomeration as an Alternative to Vertical Integration

This paper provides empirical evidence of the relationship between agglomeration and vertical integration decisions. It contributes to the existing literature by first developing a conceptual framework that focuses on both opportunism risk and communication problems to explain how physical proximity among firms can be an alternative to internal organization. Second, this study tests this relationship through the use of firm-level data from 10,955 establishments in the Spanish meat industry. Results confirm that establishments located in agglomerated areas internally undertake fewer stages of the value chain. We also find that this relationship is weaker than expected and fades at distances greater than 2.5 km, which may be explained by the particular characteristics of this industry.     

Licensing as an Alternative to Foreign Direct Investment

This article addresses issues linked to the sales of manufacturing technology and know-how through licensing by British companies to unaffilated firms located overseas. It identifies a number of characteristics that make these companies more likely to license abroad. The authors test a model of foreign licensing on data gathered from 145 firms based in the United Kingdom. Many companies do evaluate licensing to unaffilated firms as an alternative to foreign direct investment when they consider manufacturing in foreign markets. These firms tend to be relatively large in their industry, highly diversified, spend a relatively higher proportion of their value-added on research and development, and have less foreign experience.     

The Effect of Information Salience on Product Quality: Louisville Restaurant Hygiene and Yelp.com*

In June, 2013, Louisville, Kentucky, announced plans to provide restaurant health inspection scores—already available on the city’s website—for publication on Yelp.com. I find that this increased salience caused substantial hygiene improvements among independent Louisville restaurants across three different counterfactual models. Among independent Louisville restaurants, estimates suggest the partnership caused anywhere from a 9-14% relative decrease in inspection score point deductions, with the effect being entirely evident in restaurants’ first inspections following the partnership’s announcement. Relative to the rest of Kentucky, I find that the partnership significantly reduced rates of severe food poisoning in Louisville.     

标准问题是产品质量检测工作中的一个瓶颈

技术标准是检测所有产品质量的根本依据 ,长期以来 ,技术标准中存在的问题一直是制约产品质量检测工作正常进行的一个核心问题。笔者自从事这项工作以来 ,始终被此类问题所困扰 ,下面就把笔者近几年遇到的这方面的一些问题提出来 ,与大家探讨。标准管理方面的问题90年代后期以来 ,我国各行各业在标准的管理方面都有了明显的改善 ,特别是石油行业 ,在标准的制定和审批工作中做出了很大的努力 ,也取得了明显的成绩。但不可否认 ,尽管如此 ,有些错误和问题还是客观存在而不能轻易忽略的。比如 ,对标准进行等级排列时 ,国家标准—行业标准—地方…     

Motivating a Supplier to Test Product Quality

This paper considers a supplier that offers a buyer a new product of unknown quality. The supplier can run a test that partially reveals unverifiable information concerning the quality, and the buyer can learn the actual quality after agreeing to buy the new product. I identify two main features of a contract for motivating the supplier to run the test. First, the contract may specify an upward or downward quantity distortion. Second, the contract may include slotting allowances, which may be welfare reducing when they discriminate against financially constrained suppliers.     

An Approach for Determining Optimal Product Sampling for the Diffusion of a New Product

Free samples are an effective means for introducing and promoting a new product. However, product sampling is also expensive. As a result, careful consideration must be given to the question of how many samples should be distributed. To encourage product adoption in any target market, a company needs to determine the “right” amount of sampling. In other words, a firm needs to determine the optimal number of samples that must be available for trial by the innovators, early adopters, and other key consumers who influence the adoption rate of the new product. With too few samples, the product might not reach enough of these key consumers to generate the word-of-mouth recommendations necessary for market success. On the other hand, offering too many free samples is a waste of a company's resources. Dipak Jain, Vijay Mahajan, and Eitan Muller propose a framework for determining the optimal levels of product sampling. In addition to identifying the upper bounds for the sampling levels of both durable and nondurable products, their model identifies the optimal size of product sampling based on such parameters as the coefficients of innovation and imitation, market potential, discount rate, and gross margin. Several observations are made regarding the relationships between the optimal sampling level and the various parameters used in the model. For example, a high sampling level is not appropriate for a product with a high coefficient of innovation. On the other hand, if a product has a high coefficient of imitation, the sampling level should be high because a significant number of trials are necessary for word of mouth to be effective. High sampling levels are also indicated by a high discount rate or gross margin. For durable goods, the optimal level of neutral sampling (i.e., sampling that does not specifically target innovators and early adopters) rarely exceeds 5%, and the maximum level is 7%. The optimal target sampling level is always higher than the corresponding neutral case, but, in most cases, only marginally so. For the parameter ranges chosen in this article, the maximum level for target sampling is approximately 9%. However, it is important to note that the theoretical upper bounds are no more than benchmarks for the maximum possible level of sampling. In practical situations, the optimal level may be considerably lower than these upper bounds. In such cases, the actual values will depend on the values for the various parameters used in the model.     

Embodied Cognition and New Product Design: Changing Product Form to Influence Brand Categorization*

This article explains how embodied cognition and perceptual symbol systems enable product designers to influence consumers by communicating key perceptual features through subtle changes in product design elements. In this way, managers can change perceptual design elements to support line extension strategies. More specifically, design changes can be used as a tool to help evolve consumer perceptions of a product's uses and brand category membership. The role of perceptual symbols in product design is illustrated by a well‐known off‐road motorbike brand that planned to extend into the street motorbike segment. In order to facilitate consumer acceptance of a street motorbike from this off‐road brand, the firm gradually introduced models containing an increasing number of elements of street motorbikes over a period of several years. The authors use this example to show how typical design elements of the target product category can be effectively integrated with design elements of the current product category by simply modifying key characteristics of product‐shape attributes. This process is further tested in an experiment, where motorbike models differing slightly in key product features (e.g., product shape) were rated on their resemblance to street or off‐road motorbikes. The results show a strong effect of these design changes on brand‐category membership. Managerial implications of this approach and future research directions are discussed.     

Reputation for Product Innovation: Its Impact on Consumers*

Just as firms compete for customers, they also vie for reputational status across their relevant constituent groups. To many firms, a reputation as an innovative company is something that is both prized and actively sought after. Despite an abundance of anecdotal evidence pointing to several firms' active pursuit of an innovative reputation, there is little empirical evidence to evaluate the soundness of this pursuit. On a general level, this research recognizes that firms compete for competitive advantage via their tangible and intangible resources. Much of the innovation literature centers on the tangible impact that new product development initiatives have on outcomes of innovation. Yet research investigations of the less tangible facets of innovation, such as a reputation, remain relatively uninvestigated despite their promise as a source of sustainable competitive advantage. This study investigates the effects of a corporate reputation for product innovation (RPI) and its impact on consumers. Consumer involvement levels are proposed to mediate the relationship between RPI and consumer outcomes. Empirical results indicate that a high consumer perceived RPI, via the involvement construct, leads to excitement toward and heightened loyalty to the innovative firm. A more positive overall corporate image and tolerance for occasional product failures are also positive outcomes noted in the results. Contrary to expectations, a high perceived RPI does not lead to a consumer propensity to pay price premiums.     

Team Product Reviews: A Means of Improving Product Quality and Acceptance

Characteristics of both the life cycles and development processes of products and "systems" are surprisingly similar. These similarities offer a unique opportunity for the transfer of successful approaches from one discipline to the other. In this article, Kenneth Kozar describes a technique called team product reviews that he has used successfully in improving the quality and organizational acceptance of emerging systems. The article links the technique to new products development practices, identifies a variety of factors critical to the approach's success, and argues that the team review process helps to assure quality and user acceptance. In addition, the article provides guidelines for proper review behavior and includes examples of both successful and unsuccessful implementations of the technique. This cross-disciplinary sharing represents an attempt to avoid missed deadlines, overrun budgets, and destructive human behavior during the new products development process.     

Understanding a Two‐Sided Coin: Antecedents and Consequences of a Decomposed Product Advantage*

This paper investigates the antecedents and consequences of two product advantage components: product meaningfulness and product superiority. Product meaningfulness concerns the benefits that users receive from buying and using a new product, whereas product superiority concerns the extent to which a new product outperforms competing products. The present paper argues that scholars and managers should make a deliberate distinction between the two components because they are theoretically distinct and also have different antecedents and consequences. Data were collected through an online survey on 141 new products from high‐tech companies located in The Netherlands. The results reveal that new products need to be meaningful as well as superior to competing products to be successful. This finding is consistent with the prevailing aggregate view on product advantage in the literature. However, the results also show that the effects of the two components on new product performance are moderated by market turbulence. Although each component is important in that it forms a necessary precondition for the other to affect new product performance under circumstances of moderate market turbulence, meaningfulness is most important for new product performance in turbulent markets where preferences have not yet taken shape. In contrast, when markets become more stable, the uniqueness of meaningful attributes decreases, and new products that provide advantage by fulfilling their functions in a way that is superior to competing products are more likely to perform well. In addition, the study shows that the firm's customer and competitor knowledge processes independently lead to product meaningfulness and superiority, respectively. The findings also reveal that under conditions of high technological turbulence the customer and competitor knowledge processes complement each other in creating product meaningfulness and superiority. This implies that the level of technological turbulence puts requirements on the breadth of firms' market knowledge processes to create a new product with sufficient advantage to become successful. The paper concludes that neglecting the distinction between product meaningfulness and superiority when assessing a new product's advantage may lead to an incomplete insight on how firms can improve the performance of their new products.     

Formal Rules in Product Development: Sensemaking of Structured Approaches*

Many scholars consider the use of formal structured approaches to manage product development as very significant for successful product innovation. Others consider them a predictor of the likely outcome of the processes. Structured approaches can be considered management technologies for product development. Prior research has addressed the design of structured approaches and has measured how different types or generations of these are related to different processes and outcomes in different ways. However, only limited research has addressed how managers and employees actually understand and makes sense of these methods. This paper investigates how structured approaches are translated through a number of interpretations into daily practices. The research draws on research in sociology and management accounting to analyze structured approaches for product development as a managerial technology that consists of rules that individuals must understand (i.e., make sense of). The paper presents arguments for building a model of factors that influence the sensemaking of structured approaches for product development based on Scandinavian cases. First, structured approaches are presented as a type of managerial technology that consists of rules. Second, a framework to classify structured approaches for product development according to their degree of elaborateness and exhaustiveness is derived. This helps to identify the types of rule systems in companies—and how these influence everyday practices. The sensemaking from rules to practice is implemented through a number of translations, based on the context, the history, and the authorized statements and feedback processes. Empirical findings show that structured approaches differ both with respect to their degree of elaborateness and exhaustiveness. Additionally, firms differ greatly in terms of how rigorously they enforce the rules. Furthermore, the importance assigned to them by functional managers and project managers differ greatly. Even companies with extensive and elaborate rule regimes enforce the rules in a flexible manner, and rules are often applied at the discretion of project managers. Practices are influenced by the interpretation, use, and feedback from senior managers. Observations make it possible to develop a model for the sensemaking processes that influences how a specific structured approach through sensemaking is altered, modified, and sometimes even cut off from influencing innovation processes. The sensemaking of rules might reverse elaborate and exhaustive rules into quite flexible systems in practice. One implication of this is that individual sensemaking of structured approaches for product development thus needs to be analyzed to understand managerial practices. Another implication is that it cannot be assumed, a priori that formal approaches are the same as exercised practices.