Two Sides of the Same Coin: How Do Different Dimensions of Product Program Innovativeness Affect Customer Loyalty?

Conventional wisdom holds that innovativeness has essentially positive performance implications. However, empirical research reveals mixed findings regarding customer‐related responses to innovation, as distinct dimensions—such as product newness and meaningfulness—may generate responses in different manners. This study introduces a multidimensional conceptualization of innovativeness at the program level, thereby enlarging the customary perspective by considering both positive and negative customer responses to innovativeness. Drawing on information economics, this study suggests that product program meaningfulness fosters customer loyalty, whereas product program newness undermines customer loyalty. In addition, the study examines mechanisms that might buffer the negative newness–loyalty relationship and explores enablers of the positive meaningfulness–loyalty effect by considering a brand's association with innovativeness and customer integration. Empirical support for the proposed effects comes from a multi‐industry sample with 180 triadic cases from business‐to‐business companies, which includes assessments from marketing, and research and development managers as well as customers. Moderated regression analysis was applied to test the hypotheses. The results indicate a negative effect of product program newness on customer loyalty and a positive effect of product program meaningfulness. Further, a brand's close association with innovativeness reduces the negative effect of product newness, and integrating customers into the value‐creating process fosters the loyalty effect of product meaningfulness. This study offers a potential explanation for the ambiguity created by equivocal empirical results regarding customer responses to innovativeness. The study also shows that offering more innovations does not necessarily make customers loyal. Instead, managers should mitigate the negative effects of product program newness.     

How to learn in R&D partnerships?

In this article a set of determinants of organisational learning and result appropriation are identified and then tested on a sample of Research and Development (R&D) consortia. The literature review and an exploratory case study highlight the main factors which favour learning and the appropriation of knowledge. The case study observes the organisational learning processes at work in three R&D partnerships entered into by a European high technology firm.
Six hypotheses are formulated. They pertain to the link between the firm's learning and exploitation capabilities. The hypotheses relate to (1) trust between partners, (2) R&D integration in the firm, (3) the access to adequate complementary assets, (4) the member's involvement and motivation in the cooperative process, (5) its own experience in R&D, and (6) the number of partners in the consortium. These hypotheses are tested on a sample of 317 R&D consortia in the European EUREKA initiative.
The results show that a firm's internal organisation and the level of trust between partners influence learning and result appropriation. However, the determinants vary according to the kind of outcome (tangible knowledge, new products/processes, improved products/processes, intangible knowledge). With the knowledge that alliances are increasingly becoming a necessity for firms involved in technology, a better understanding of how to benefit from R&D partnerships can only improve firms' competitiveness in the future.     

How Do Switching Costs Affect Market Concentration and Prices in Network Industries?

I investigate the effects of switching costs on the market outcome in network industries using a dynamic duopoly model of price competition in the presence of an outside option. I find that the role of switching costs depends on network effects and the outside option. Without a viable outside option, high switching costs can neutralize the tendency towards high market concentration associated with network effects, but with a viable outside option, switching costs increase market concentration. Furthermore, switching costs lower prices if network effects are modest and there exists a viable outside option, but generally raise prices otherwise.     

The needs of R&D professionals in their first and second managerial appointments: are they being met?

This study sets out to examine the practices of research professionals who are undertaking a research management role for the first or second time. Most of these managers are in their late twenties to middle thirties and are usually employed as team leaders.
R&D personnel early in their managerial career are served badly by the innovation literature. Much of this literature focuses on describing the behaviour of the participants rather than providing information with the potential to contribute to their managerial practice. A major objective of this study is to provide some messages for academics and others of how they may contribute better to the managerial function of first and second time R&D managers in the 21st century.     

How Does Mortgage Debt Affect Household Consumption? Micro Evidence from China

The high growth rate of mortgage debt in various emerging and developed economies has captured headlines following the financial crisis. In this article, we investigate how mortgage debt impacts household consumption behavior and various components of household consumption. Utilizing comprehensive household survey data from China, we show that households with a mortgage consume a higher portion of income than households without a mortgage. This is in line with the argument that having a mortgage reduces the uncertainty that the household faces regarding how much to save each month in order to be able to own a house, and this reduced uncertainty leads to lower monthly savings for the purpose of buying a house. We also find that among households with a mortgage, those who spend a larger share of their income on mortgage payments spend less on consumption, reflecting the crowding out effect of mortgage payments on household consumption. Furthermore, we show that a government policy of decreasing the maximum loan‐to‐value ratio has a significant impact on households’ consumption. The article offers the first evidence of the impact of growing mortgage debt on the consumption behavior of households, and will have implications for government policies that encourage mortgage borrowing.     

An empirical study of manufacturing flexibility of exporting firms in China: How do strategic and organizational contexts matter?

Using evidence from exporting firms in China, this research aims to determine the conditions that foster manufacturing flexibility and the way in which firms support it. The contingency perspective and the competence and capability theory are utilized to develop a framework to enhance the knowledge of internal competence, external flexibility, and manufacturing performance, and the understanding of the moderating roles of strategic and organizational choice on the competence-flexibility and flexibility-performance relationships. Empirical evidence from a sample of 222 export product/market ventures confirmed the main effect that manufacturing, assembly outsourcing, and marketing competencies support a firm's manufacturing flexibility and in turn enhance manufacturing performance. Several notable moderating effects were also identified. Although a strategic emphasis on low-cost manufacturing and long-term contracting weakens a firm's transformation of core competencies into flexible capabilities, specific organizational choices regarding private ownership and direct exporting strengthen the conversion of manufacturing flexibility to superior manufacturing performance.     

How Does Ranking Affect User Choice in Online Search?

This paper investigates whether a search engine’s ordering of algorithmic results has an important effect on website traffic. A website’s ranking on a search engine results page is positively correlated with the clicks that it receives. This could result from the search engine’s accurately predicting the websites relevance to users. Or it could result from users merely clicking on the highest ranked links, regardless of the website’s relevance. Using a unique dataset, we find that a website’s rank, not just its relevance, strongly and significantly affects the likelihood of a click. We also find evidence that rank influences CTRs partly by controlling access to the scarce attention of users, but primarily by substituting the reputational capital of the search engine for the reputation of individual websites.     

The Value of Crowdsourcing: Can Users Really Compete with Professionals in Generating New Product Ideas?

Generating ideas for new products used to be the exclusive domain of marketers, engineers, and/or designers. Users have only recently been recognized as an alternative source of new product ideas. Whereas some have attributed great potential to outsourcing idea generation to the “crowd” of users (“crowdsourcing”), others have clearly been more skeptical. The authors join this debate by presenting a real‐world comparison of ideas actually generated by a firm's professionals with those generated by users in the course of an idea generation contest. Both professionals and users provided ideas to solve an effective and relevant problem in the consumer goods market for baby products. Executives from the underlying company evaluated all ideas (blind to their source) in terms of key quality dimensions including novelty, customer benefit, and feasibility. The study reveals that the crowdsourcing process generated user ideas that score significantly higher in terms of novelty and customer benefit, and somewhat lower in terms of feasibility. However, the average values for feasibility—in sharp contrast to novelty and customer benefit—tended to be relatively high overall, meaning that feasibility did not constitute a narrow bottleneck in this study. Even more interestingly, it is found that user ideas are placed more frequently than expected among the very best in terms of novelty and customer benefit. These findings, which are quite counterintuitive from the perspective of classic new product development (NPD) literature, suggest that, at least under certain conditions, crowdsourcing might constitute a promising method to gather user ideas that can complement those of a firm's professionals at the idea generation stage in NPD.     

How to leverage the impact of R&D on product innovation? The moderating effect of management innovation

Although research and development (R&D) is a key indicator of (technological) innovation, scholars have found mixed results regarding its effect on product innovation and firm performance. In this paper, we claim that variations in R&D effectiveness can be explained by changes in a firm’s social system, in particular in its management innovation. It is still unclear how management innovation influences R&D effectiveness in terms of product innovation. In this study, we address this theoretical and empirical gap in the innovation literature. Our theoretical arguments and findings from a large-scale survey among Dutch firms show that R&D has a decreasingly positive relationship with product innovation, particularly for firms with low levels of management innovation. However, in firms with high levels of management innovation, this relationship becomes more J-shaped, especially in small and medium-sized firms. Our findings also appear to indicate that management innovation may be more important for competitive advantage than just R&D. Overall, our insights reveal that management innovation is a key moderator in explaining firms’ effectiveness in transforming R&D into successful product innovation.     

How Does Technological Regime Affect Performance of Technology Development Projects?

In this study, we examine how technological regime affects the performance of technology development projects (i.e., project quality, sales, and profit). Technological regime is defined as the set of attributes of a technological environment where the innovative activities of firms take place. Technological opportunity, appropriability of innovations, cumulativeness of knowledge and capabilities, and closeness of knowledge base to basic sciences (versus applied sciences) are attributes of technological regime. Using data from 381 firms across five industries, we show that high levels of technological opportunity, appropriability, and closeness of knowledge base to basic sciences are associated with higher project performance. Cumulativeness is associated with higher project quality, but not higher sales and profit. We also show that the effect of technological opportunity on project performance is moderated by two other determinants of technological regime: cumulativeness and nature of knowledge base. We find that cumulativeness has a negative moderating effect on the positive relationship between technological opportunity and project performance, while closeness of knowledge base to basic sciences positively moderates the effect of technological opportunity on project performance. We discuss the implications of our findings for new product development research and practice.     

Patenting Activities and Firm Performance: Does Firm Size Matter?

Whereas prior research has provided valuable insights into the willingness of small and medium‐sized enterprises (SMEs) and large firms to engage in patenting, a comparison of the performance implications of patenting activities across small and large firms is still lacking. This gap is important because SMEs and large firms, having different resources and capabilities, might benefit from patenting activities in different ways. In particular, SMEs can be expected to benefit less from patenting activities in terms of protection against imitators than large firms. On the other hand, the propensity and ability of SMEs to license out their patents and generate additional revenue streams might be relatively higher than that of their large counterparts. This paper studies the impact of patenting on licensing, innovation, and financial performance for both SMEs and large firms, using multiple‐group path analyses on a sample of 358 manufacturing firms. Contrary to expectations, this study demonstrates that not only large firms, but also SMEs benefit from patenting in terms of commercializing product innovations. Moreover, for both SMEs and large firms, such increased innovation performance in turn contributes to higher profit margins. Patenting activities also increase the ability of SMEs and large firms to license out knowledge to external parties, and this positive effect is significantly stronger for large firms. However, neither in SMEs nor in large firms, these outward licensing activities generate short‐term financial benefits. Finally, the study demonstrates that patenting activities do not trigger significant cost disadvantages for either SMEs or large firms. Jointly, these findings provide unique insights in the value‐generating and cost‐increasing effects of patenting, suggesting that not only large firms, but also SMEs should consider patenting as a viable strategy to fully reap commercial benefits from their innovation activities. At the same time, they temper open innovation scholars’ expectations regarding the financial benefits of licensing out knowledge. Overall, these findings point to opportunities for optimizing the intellectual property management of both SMEs and large firms.     

Are China’s regional agricultural productivities converging: How and why?

This article tests the hypotheses of convergence to a single level of total factor productivity (TFP), and a steady state of TFP growth rate in China’s agricultural sector. Based on multilateral TFP estimates we found that China’s agricultural sector has rebounded in recent years from a slower TFP growth in the 2005–2007 period. While convergence test results confirm a “catch-up” effect that provinces with lower TFP levels tend to grow faster than others, estimated rates of β convergence are conditional on how we capture the heterogeneity effect across regions. The rates of β convergence range from 0.016 to 0.039 under different model specifications. Estimates show that higher growth rates of educational attainment, R&D, and intermediate goods density (per unit of labor) can enhance TFP growth. Unfortunately, there is no evidence of an overall σ convergence, indicating that TFP levels are not converging except in the South region. It implies that to catch up with leading provinces, it would require extra efforts for those lagging behind by increasing their region-specific research investment, promoting rural educational attainment, and enhancing embodied technical change.     

Paths to Success: How Do Market Orientation and Entrepreneurship Orientation Produce New Product Success?

The purpose of this paper is to examine the relationship between strategic orientation and the performance of new products. In this paper, we develop a conceptual model that explores the roles of market orientation (MO) and entrepreneurship orientation (EO) on new product performance and seek to understand the mediating roles of process and product characteristics. Based on a survey of 471 small and medium‐sized enterprises in Korea, we found that MO and EO positively affect new product performance. The main impact of MO is through new product development proficiency and product meaningfulness and that of EO is through proficient intellectual property management and product novelty. Academic and managerial implications are also discussed.     

Lysine and Price Fixing: How Long? How Severe?

In October 1996 the Archer Daniels Midland Company(ADM) pleaded guilty to criminal price fixing withrespect to sales of lysine and agreed to pay a $70million fine. Earlier, in August 1996 two Japaneseproducers and a Korean producer of lysine had agreedto plead guilty to criminal price fixing charges. Andearlier still, in July 1996 ADM and the two Japanesecompanies settled the civil suits filed by some harmedbuyers by agreeing to pay a sum of $45 million.It is this last event that serves as the focus forthis paper. The adequacy of the settlement amount wasa major area of dispute. Connor (1996, 1997, 1998)has claimed that the trebled damages to lysinepurchasers were an order of magnitude larger. Crucialto Connor's conclusions are his assumptions as to thetime period during which the conspiracy had an effecton prices and the but for price that otherwise wouldhave prevailed in the absence of the conspiracy. Thispaper will argue that Connor substantiallyover-estimated the period of the conspiracy andunder-estimated the but-for price.     

Learning: What and How? An Empirical Study of Adjustments in Workplace Organization Structure

We seek to understand how firms learn about what adjustments they need to make in their organization structure at the workplace level. We define four organizational systems: traditional (the simplest system), high‐performance (the most complex system), decision‐making oriented, and financial‐incentives oriented (intermediate complexity). We analyze (1) learning‐by‐doing on adoption of more or less complex systems, (2) the performance–experience learning curves associated with different systems, (3) the match between perceived organizational capabilities and the choice of systems, the influence of (4) other firms’ systems and performance on a firm’s adjustment decisions, and of (5) a firm’s location on its decisions.     

Universal service in China and India: Legitimating the state?

This paper examines the contrast between China's and India's universal service policies as manifestations of the two states' differing self-conceptualizations and legitimation strategies. We examine the timeline of universal service policies in the two countries, differentiating between the territorial, demographic and layered dimensions of universal service. The analysis reveals many similarities between the two countries, as well as some differences primarily related to the mode of funding universal service programs and the lead China has taken in deploying informatization services. We identify some of the proximate causes that resulted in these policy decisions. But in addition, we also examine how universal service policies are related to contrasting models of state legitimation.     

Development and improvement: Status of Textile Machinery Manufacturing in China

The past over 20 years of reform & open-door practices has witnessed an amazingly rapid development in China's textile machinery manufacturing.1. The change in the production scale: the number oftextile machinery manufacturers grew from over 150 plants listed exceptionally in the category of textile industrial system in the old traditional planned economy to the over 500 plants that come from all sectors of industries engaged in textile machinery manufacturing in the new socialist market-driven economy. The production output value grew from 870 million RMB(Chinese Yuan) in 1987 to 14.7 billion RMB, 18     

Entrepreneurial orientation and SME performance in China’s changing environment: The moderating effects of strategies

Recent research has found an inverted U-shape relationship between entrepreneurial orientation (EO) and firm performance in the Chinese context. Building on Miles and Snow??s (1978) strategy framework and Scott??s (1995) country institutional profile, we propose that prospector and analyzer strategies align better with entrepreneurial orientation to allow firms to fully benefit from their risk-taking, proactiveness, and innovativeness. Data collected from 155 SMEs in China confirmed that prospector and analyzer strategies alleviated the curve significantly. The defender strategy enhanced the curvilinearity, yet this moderating effect was insignificant. Implications for policy-makers, international businesses, and entrepreneurial firms in China are discussed.     

Should Firms Consider Employee Input in Reward System Design? The Effect of Participation on Market Orientation and New Product Performance

Will increasing employee participation in reward decisions increase new product performance by first increasing a firm's level of market orientation? Literature offers limited insight to the effects of listening to employees regarding reward system design and whether this may influence market orientation implementation and new product performance. This paper provides research to fill the gap by examining the relationship between participation‐based reward systems, market orientation, and new product performance. Based on expectancy theory, a conceptual model was developed suggesting that participation‐based rewards will increase market orientation by considering employees' desires regarding performance rewards. To test the model, a mixed method was used to collect data. First, in‐depth interviews were conducted with managers from 11 different firms to verify the proposed model. Then a multi‐industry sample of managers from 290 firms was surveyed to maximize generalizability of the results. Data were analyzed using structural equation modeling techniques to simultaneously fit the measurement and structural models. The findings show that market orientation significantly impacts objective new product performance and mediates the relationship between participation‐based rewards and objective new product performance. Participation‐based rewards positively affect market orientation but surprisingly affect new product performance negatively, while positively moderating the relationship between market orientation and new product performance. The results suggest that managers should include employee input in designing reward systems. However, managers should also be careful of how much input they allow employees in determining their rewards and goals as more input will improve market orientation or responding to information collected by, and disseminated throughout the firm, and that, in turn, will improve some types of new product performance. However, the direct effect of employee input can decrease new product performance suggesting that there may be a trade‐off between various success measures of new products developed and introduced by the firm.