Product Innovativeness Dimensions and Their Relationships with Product Advantage,Product Financial Performance,and Project Protocol

A considerable body of research informs the relationship of product innovativeness with firm and environmental variables as well as the impact of product innovativeness on product financial success. While providing significant insight, the extant literature exhibits conflicting findings that raise questions as to how, specifically, product innovativeness contributes to product financial performance. This study ties together several streams of research related to the product innovativeness construct to enhance understanding of the product innovativeness—product financial performance relationship. The product innovativeness construct is deconstructed by conceptualizing the relationships among three dimensions of product innovativeness: technological discontinuity, marketing discontinuity, and customer discontinuity. Product innovativeness is distinguished from product advantage, and the relationships among product innovativeness dimensions, product advantage, and product financial performance are empirically tested. The results reveal that, indeed, product innovativeness consists of three separate dimensions that exhibit no or moderate correlations with product advantage. Furthermore, product advantage positively and marketing discontinuity negatively influence product financial performance. Finally, the study also examines how project protocols impact the product innovativeness dimensions. Project protocols, also known as product definitions, describe the general parameters a new product should exhibit (i.e., target segments, product functions and features, base technology, pricing, communication and distribution channels, and required resources) as well as the priorities of the general parameters. Because they guide product design and set priorities and have been found to be a dominant driver of product financial performance, project protocols are important. The present study enhances understanding of how project protocols influence the dimensions of product innovativeness, finding that project protocols positively impact product financial performance indirectly through product advantage and marketing discontinuity.     

The contingent value of marketing strategy innovativeness for product development performance in Chinese new technology ventures

This study extends research on entrepreneurial behavior by investigating the relationship between the marketing strategy innovativeness (MSI) and new product performance in technology-based new ventures in China. Specifically, premised on contingent resource-based view we argue that MSI is a firm capability that must be bundled with external managerial relationships and be deployed in the appropriate environment to ensure its success. We found that the team's extra industry relationships and market dynamism enhanced the impact of MSI on new product performance. In contrast, top management team's intraindustry relationships, financial relationships, and technology dynamism hindered the impact of MSI on new product performance.     

Measuring New Product Portfolio Innovativeness: How Differences in Scale Width and Evaluator Perspectives Affect its Relationship with Performance

Portfolio innovativeness is a central variable in innovation management. However, the impact of portfolio innovativeness on new product development (NPD) performance is unclear, which may partly be due to the construct's multifaceted nature. Different facets may reflect different degrees of innovativeness and may have different relationships with performance. In addition, firm members with different functional backgrounds may perceive and thus assess these facets differently, which again may influence the performance effect of portfolio innovativeness. Based on a sample of 746 CEOs and marketing as well as technology professionals from 117 firms and using Item Response Theory (IRT), a multifaceted scale of portfolio innovativeness, whose facets are able to cover the entire innovativeness spectrum, is developed. In addition, it is shown that the performance impact of portfolio innovativeness is dependent on the facets included in the scale, and on the specialization of the professional assessing the facets. Inverted U‐shaped performance effects are found when the scale covers the entire spectrum of innovativeness, and linear positive or zero effects with different types of more narrowly modeled scales. Inverted U‐shaped performance effects are also found when technology professionals assess the facets, while the assessments by marketing professionals lead to linear positive effects.     

Patterns of cooperation during new product development among marketing, operations and R&D: Implications for project performance

Successful new product development is fundamentally a multidisciplinary process. While this view has helped lead management to the wide‐spread adoption of cross‐functional new product development teams, in this study we question whether simply increasing the level of functional integration is truly a guarantee for enhancing the performance of new products. To assess this we examined patterns of cooperation between marketing, R&D, and operations at both early and late stages of the new product development process for 34 recently developed products whose level of innovativeness ranged from high to low. A unique feature of this study is that data were collected from four sources for each project. This included personal interviews with a project leader and written surveys from marketing, operations, and R&D personnel on each project. Findings from this study reveal that: (1) functional cooperation typically increases as the process moves from early to late stages; (2) cooperation between marketing and R&D is highest during early stages of the process, but for marketing and operations, and for R&D and operations, cooperation typically increases as the process moves from early to late stages; (3) higher project performance — irrespective of the level of project innovation — is demonstrated when cooperation between marketing and R&D, and cooperation between operations and R&D is high during early stages; (4) late stage cooperation between marketing and operations, and R&D and operations is a key determinant in project performance for innovative products but not for noninnovative products, and; (5) that early stage cooperation between marketing and operations is associated with superior performance for low innovation projects but is also associated with poor performance for innovative projects. Findings from this study demonstrate that the importance of cooperation between specific functional dyads (i.e., marketing — R&D; R&D — operations; operations ‐ marketing) indeed varies by time (i.e., early vs. late stages), and by the level of innovativeness (i.e., new‐to‐the‐world vs. modifications) associated with the new product being developed.     

It Won't Fit! For Innovative Products,Sometimes That's for the Best

The degree of overlap (i.e., fit) between product development organizations' resources and the product development projects pursued has powerful performance implications. Drawing on organizational learning theory and the resource‐based view, this research conceptualizes and empirically tests the interrelationships between the levels of fit, innovativeness, speed to market, and financial new product performance. After reviewing the research literature relevant to resource fit and new product performance, the level of innovativeness is posited to be an important moderating and mediating factor, which is validated by analysis of data gathered from 279 product developing firms. Technological fit has a negative direct effect on both technological and market innovativeness, while the use of existing marketing resources (i.e., a high degree of marketing fit) positively impacts technological innovativeness. This suggests, consistent with findings from market orientation research, that a deep, long‐held customer understanding can promote technological innovativeness. The moderating hypotheses proposed are also well supported: First, a high degree of marketing fit has a more positive impact on performance for market innovative products (e.g., products which address a new target market or use a nontraditional channel for the firm). Drawing on a deep customer understanding is more critical to performance for market innovative products. Conversely, the benefits of marketing fit are limited where market innovativeness is lacking. Interestingly, the counterpart moderating role of technological innovativeness on technological fit's performance effect is not significant; the level of technological innovativeness does not significantly impact the performance impact of technological fit. There are also significant moderating effects across dimensions. Our results show that the financial benefit of using existing marketing resources is lessened for technologically innovative products. Technological innovations necessitate drastic adaptation of marketing resources (i.e., channel and brand); firms drawing only on existing marketing resources for a technologically innovative new product will incur reduced profit. Similarly, the positive implications of using existing technological resources are limited for products which are highly market innovative. Generally, resource fit is seen to have an (oft‐overlooked) dark side in product development, though several of our findings suggest that marketing resources are more flexible than are technological resources.     

The Impact of Communication Strategy on Launching New Products: The Moderating Role of Product Innovativeness

Academic literature is filled with debate on whether product innovativeness positively impacts new product performance (NPP) because of increasing competitive advantage or negatively impacts performance due to consumers' fears of novel technology and resultant resistance to adopt. This study investigates this issue by modeling product innovativeness as a moderator that influences the relationship between communication strategy and new product performance. The authors emphasize that the impact of innovativeness to producers is different from that to consumers and that the differences have strategic impact when commercializing highly innovative products. Product innovativeness is conceptualized as multidimensional, and each dimension is tested separately. Four dimensions of innovativeness are explored—product newness to the firm, market newness to the firm, product superiority to the customer, and adoption difficulty for the customer.
In this study, communication strategy is comprised of preannouncement strategy and advertising strategy. First, the relationship between whether or not a preannouncement is offered and NPP is explored. Then three types of preannouncement messages (customer education, anticipation creation, and market preemption) are investigated. Advertising strategy is characterized by whether the advertisement campaign at the time of launch was based primarily on emotional or functional appeals.
Using empirical results from 284 surveys of product managers, the authors find that the relationship between communication strategy and NPP is moderated by innovativeness, and that the relationships differ not only by degree but also by type of innovativeness. Implications for research and practice are discussed.     

Product innovativeness from the firm's perspective: Its dimensions and their relation with project selection and performance

There has recently been tremendous interest in product innovativeness. However, it seems that we need a better understanding of exactly what product innovativeness means. This article presents a conceptual framework to clarify its meaning. The framework first distinguishes customer and firm perspectives on product innovativeness. From the customer's perspective, innovation attributes, adoption risks, and levels of change in established behavior patterns are regarded as forms of product newness. Within the firm's perspective, environmental familiarity and project-firm fit, and technological and marketing aspects are proposed as dimensions of product innovativeness.
Next, the article offers a tentative empirical test of the proposed dimensions of product innovativeness from the firm's perspective. A well-known dataset of 262 industrial new product projects is used to: I) clarify the product innovativeness construct and examine its underlying dimensions, 2) examine the relation of product innovativeness with the decision to pursue or kill the project, and 3) examine the relationship between product innovativeness and product performance. Five dimensions of product innovativeness are found which have distinct relations with the Go/No Go decision and product performance: market familiarity, technological familiarity, marketing fit, technological fit, and new marketing activities. Most strikingly, measures of fit are related to product performance, whereas measures of familiarity are not.
The article concludes that researchers need to be careful about which definitions and measures of product innovativeness they employ, because depending on their choice they may arrive at different findings. New product practitioners are encouraged to evaluate new product opportunities primarily in terms of their fit with their firm's resources and skills rather than the extent to which they are "close to home".     

Decomposing Product Innovativeness and Its Effects on New Product Success

Does product innovativeness affect new product success? The current research proposes that the ambiguity in findings may be due to an overly holistic conceptualization of product innovativeness that has erroneously included the concepts of product advantage and customer familiarity. This article illustrates how the same measures have often been used to assess product advantage with product innovativeness and product innovativeness with customer familiarity. These paired overlaps in measurement use are clarified in this research, which decomposes dimensions of product innovativeness along conceptual lines into distinct product innovativeness, product advantage, and customer familiarity constructs. To further support this decomposition, structural equation modeling is used to empirically test the distinctions. The measurement model supports the conceptual separation, and the path model reveals contingent effects of product innovativeness. Although product innovativeness enhances product advantage, a high level of innovativeness reduces customer familiarity, indicating that product innovativeness can be detrimental to new product success if customers are not sufficiently familiar with the nature of the new product and if innovativeness fails to improve product advantage. This exercise in metric development also reveals that after controlling for product advantage and customer familiarity, product innovativeness has no direct effect on new product profitability. This finding has strong implications for firms that mistakenly pursue innovation for its own sake. Consideration of both distribution and technical synergy as driving antecedents demonstrates how firms can still enhance new product success even if an inappropriate level of innovativeness is present. This leads to a simple but powerful two‐step approach to bringing highly innovative products to market. First, firms should only emphasize product innovativeness when it relates to the market relevant concepts of product advantage and customer familiarity. Second, existing technical and distribution abilities can be used to enhance product quality and customer understanding. Distribution channels in particular should be exploited to counter customer uncertainty toward newly introduced products.     

The Impact of Market Orientation, Product Advantage, and Launch Proficiency on New Product Performance and Organizational Performance

Some scholars have suggested recently that a market‐oriented culture leads to superior performance, at least in part, because of the new products that are developed and are brought to market. Others have reinforced this wisdom by revealing that a market‐oriented culture enhances organizational innovativeness and new product success, both of which in turn improve organizational performance. These scholars do not reveal, however, through which new product development (NPD) activities a market‐oriented culture is converted into superior performance. To determine how critical NPD activities are for a market‐oriented firm to achieve superior performance, our study uses data from 126 firms in The Netherlands to investigate the structural relationships among market orientation, new product advantage, the proficiency in new product launch activities, new product performance, and organizational performance. We focus on product advantage—because product benefits typically form the compelling reasons for customers to buy the new product—and on the launch proficiency—as the launch stage represents the most costly and risky part of the NPD process. Focusing on the launch stage also is relevant because it is only during the launch that it will become evident whether a market orientation has crystallized into a superior product in the eyes of the customer. The results provide evidence that a market orientation is related positively to product advantage and to the proficiency in market testing, launch budgeting, launch strategy, and launch tactics. Product advantage and the proficiency in launch tactics are related positively to new product performance, which itself is related positively to organizational performance. Market orientation has no direct relationship to new product performance and to organizational performance. An important implication of our study is that the impact of a market orientation on organizational performance is channeled through the effects of a market orientation on product advantage and launch proficiency; subsequently through the effects of product advantage and the proficiency in launch tactics on new product performance; and finally through the effect of new product performance on organizational performance. These channeling effects are much more subtle and complex than the direct relationship of market orientation on organizational performance previously assumed. Another implication of our study is that the impact of a market orientation on performance occurs through the launch activities rather than being pervasive to all organizational processes and activities. A reason for this finding may be that NPD is the one element of the marketing mix that predominantly is the responsibility of the firm, whereas promotion and distribution often are in control of organizations outside the firm (e.g., advertising agencies, major retailers) and whereas the channel or the market often dictates the price. Both implications provide ample opportunities for further research on market orientation and NPD.     

Innovativeness: Its antecedents and impact on business performance

In this study, we address three research questions: (1) Why are some industrial firms more innovative than others? (2) What effect does innovativeness has on business performance? (3) Does the linkage between innovativeness and business performance depend on the environmental context? Accordingly, we draw on various theoretical perspectives to develop hypotheses that propose market orientation, entrepreneurial orientation, and learning orientation as key antecedents to innovativeness, as well as a direct relationship between innovativeness and business performance. A model is devised and tested that examines these relationships in general and in the context of varying market turbulence. Findings confirm the validity of the model and afford various insights on the role of market turbulence in the proposed relationships. Lastly, implications are offered on the antecedents and consequences of organizational innovativeness.     

The Vital Role of Problem‐Solving Competence in New Product Success*

Problem solving, a process of seeking, defining, evaluating, and implementing the solutions, is considered a converter that can translate organizational inputs into valuable product and service outputs. A key challenge for the product innovation community is to answer questions about how knowledge competence and problem‐solving competence develop and sustain competitive advantage. The objective of this study is to theoretically examine and empirically test an existing assumption that problem‐solving competence is an important variable connecting market knowledge competence with new product performance. New product projects from 396 firms in the high‐technology zones in China were used to test the study's theoretical model. The results first indicate that problem‐solving speed and creativity matter in new product innovation performance by playing mediator roles between market knowledge competence and positional advantage, which in turn sustains superior performance. This new insight suggest that mere generation of market knowledge and having a marketing–research and development (R&D) interface will not affect new product performance unless project members have the ability to use the information and to interact to identify and solve complex problems speedily and creatively. Second, these results suggest that different market knowledge competences (customers, competitors, and interactions between marketing and R&D) have distinct impacts on problem‐solving speed and creativity (positive, negative, or none), which underscore the need to embrace a more fine‐grained notion of market knowledge competence. The results also reveal that the relative importance of some of these relationships depends on the perceived level of turbulence in the environment. First, competitor knowledge competence decreases problem‐solving speed when perceived environmental turbulence is low but enhances problem‐solving speed when perceived turbulence is high. Second, competitor knowledge competence has a positive relationship with new product performance when the environmental turbulence is high but no relationship when the environmental turbulence is low. Third, the positive relationship between problem‐solving speed and product advantage is stronger when the perceived environmental turbulence is high than when it is low, which implies that problem solving is more important for creating product advantage when environmental turbulence is high and change is fast and unpredictable. Fourth, the negative relationship between problem‐solving speed and new product performance is stronger when the perceived environmental turbulence is high than when it is low, which means that problem‐solving speed is more harmful for new product performance when change is fast and unpredictable. And fifth, the positive relationship between product quality and new product performance is stronger when perceived environmental turbulence is low than when it is high, which implies that product quality may more likely lead to new product performance when the environment is stable and changes are easy to predict, analyze, and comprehend.     

Interaction Orientation and Product Development Performance for Taiwanese Electronics Firms: The Mediating Role of Market‐Relating Capabilities

While academics and practitioners are increasingly aware of the value of including the customer in new product development (NPD), processes for doing so effectively remain unclear. Therefore, this study explores the process through which a firm's interaction orientation (the ability to effectively interact with customers) influences product development performance. Drawing on the resource‐based view, this study develops a research model in which two market‐relating capabilities—market‐linking and marketing capabilities—mediate the effect of interaction orientation on product development performance. The validity of this model is examined by analyzing primary data gathered from 167 Taiwanese electronics companies. The model results provide support for a process link between interaction orientation, market‐relating capabilities, and product development performance, such that a firm's capabilities enable the conversion of customer‐based resources into productive new product outcomes. More specifically, the interaction orientation–product development speed relationship is mediated by both marketing and market‐linking capabilities, while the interaction orientation–product innovativeness relationship is partially mediated by marketing capability. That is, interaction orientation has indirect effects on product innovativeness and product development speed by strengthening both marketing and market‐linking capabilities that in turn improve product development performance. In addition, the results suggest that a firm's interactive rationality moderates the relationship between interaction orientation and marketing capability. Overall, this study enhances our understanding of how firms achieve superior product development performance by developing effective customer interaction. The findings of this study provide important strategic insights into NPD.     

The effect of strategic alliance resource accumulation and process characteristics on new product success: Exploration of international high-tech strategic alliances in China

This paper examines two research questions: (1) how do strategic alliance resources influence new product outcomes, and (2) how do these effects differ under different NPD process characteristics. By integrating resource-based view and coordination literature, the authors argue that both marketing and technology resources demonstrate independent and interactive effects on new product innovativeness, speed to market, and market performance. Further, the individual effects of marketing and technology resources are moderated by the process characteristics of partner interdependence, while the interactive effect between marketing and technology resources is moderated by the development process characteristic of task interdependence. Using primary dyadic data collected from 142 international high-tech strategic alliances in China, we test and find general support for these arguments. The results provide significant theoretical implications for a variety of research streams, as well as managerial implications for strategic alliances with Chinese firms.     

The joint impact of quality and innovativeness on short-term new product performance

In the last decade a number of conceptualizations of product quality and innovativeness have been suggested, and academics as well as managers have begun to understand that the relationships between quality, innovativeness and new product performance are more complicated than they may initially seem to be. While an innovation-oriented strategy depends on the exploration of new possibilities through search, risk-taking and experimentation, a high quality strategy requires the exploitation of existing certainties through efficiency, standardization and control. In this research, we demonstrate that the interaction effects of quality (objective and subjective) and innovativeness (for the firm and for the customer) on new product performance are different than the isolated impact of these variables. In addition, by focusing on the main and joint impact of these variables on short-term new product performance, we provide valuable recommendations for new product launch decisions.“The pure and simple truth is rarely pure and never simple.”—Oscar Wilde     

The Form of Relationship between Firm‐Level Product Innovativeness and New Product Performance in Developed and Emerging Markets

This study compares the new product performance outcomes of firm‐level product innovativeness across a developed and emerging market context. In so doing, a model is constructed in which the relationship between firm‐level product innovativeness and new product performance is anticipated to be curvilinear, and in which the nature of this relationship is argued to be dependent on organizational and environmental factors. The model is tested using primary data obtained from chief executive officers and finance managers in 319 firms operating in the United Kingdom, an advanced Western market, and 221 firms from Ghana, an emerging Sub‐Saharan African market. The model is assessed using a structural equation model multigroup analysis approach with LISREL 8.5. In the United Kingdom and Ghana, the basic form of the relationship between firm‐level product innovativeness and business success is inverted U‐shaped, but the strength and/or form of this relationship changes under differing levels of market orientation, access to financial resources, and environmental dynamism. While commonalities are identified across the two countries (market orientation helps firms leverage their product innovativeness), differences are also observed across the samples. In Ghana, access to financial resources enhances the relationship between product innovativeness and new product performance, unlike in the United Kingdom where no moderation is observed. Furthermore, while U.K. firms leverage product innovativeness to their advantage in more dynamic environments, Ghanaian firms do not benefit in this way: here, high levels of innovation activity are less useful when markets are more dynamic. If the study's findings generalize, there are a number of implications for managers of both emerging and developed market businesses. First, managers in both developed and developing market firms should focus on determining and managing an optimal balance of novel and intensive product innovativeness within the context of their unique institutional environments. Second, for emerging market firms, a market orientation capability helps businesses leverage local market intelligence, enabling them to compete with multinational giants flocking to emerging markets, but typical developed market learning approaches may be insufficient for multinational firms when seeking to compete in emerging markets. Third, for emerging market firms, access to finances helps deliver product innovation success (although this is not the case for developed market firms, possibly due to strong financial institutions). Finally, unlike developed market firms, burdened by institutional voids at home, emerging market firms appear to be less capable of competing on an innovation front in more dynamic market conditions. Accordingly, policymakers in emerging markets should consider identifying ways to help businesses raise market orientation levels, and seek to create conditions that enhance access to financial capital (e.g., direct financing, matching grants, tax rebates, or rewarding firms that innovate creatively and intensely). Likewise, since environmental dynamism is likely to be a growing issue for emerging markets, efforts to help firms become more adept at keeping up with more agile developed market counterparts are needed.     

The Role of Product Originality,Usefulness and Motivated Consumer Innovativeness in New Product Adoption Intentions

Prior research has posited that product attributes are primary drivers of success that a firm must consider to develop a competitive advantage. Two product attributes, originality and usefulness, have been identified in the literature as significant dimensions of new product success. Customer demands differ, and more purchase intentions toward a new product depend on how consumers connect the product attributes to their own individual characteristics. Studying motivated consumer innovativeness as a personality trait may improve our understanding of the motivations for adopting innovations; however, questions remain regarding whether the effects of originality and usefulness on consumers' intentions to adopt are different when levels of these attributes are matching or dissimilar and what the relationship is between these effects and motivated consumer innovativeness. This study seeks to empirically investigate these effects and their relations by collecting data from 560 potential consumers in China. This paper uses hierarchical regression analysis to test hypotheses in four product domains as representative of higher or lower levels of usefulness and originality. The research shows that new product originality affects consumers' intentions to adopt new products only if it matches the level of new product usefulness. The results also reveal that motivated consumer innovativeness has a positive moderating role on the relationship between new product originality and consumers' new product adoption intentions when both attributes are at a lower level. The theoretical and practical implications for new product development and marketing communications are discussed.     

Supplier traits for better customer firm innovation performance

Previous research on embedded ties with suppliers in an innovation context has ignored the need for customer firms to assess and select suppliers on the basis of market orientation strategies and relationship marketing attributes. To address this void, this study investigates the effects of suppliers' downstream customer orientation and supplier-customer homophily (i.e., similarity of the supplier and the customer) on the customers' innovation performance. Data pertaining to new product development projects with contributions from supplier firms was collected on both sides of the supplier-customer dyad. The analysis shows that downstream customer orientation and supplier-customer homophily have a significant impact on the customer firms' new product efficiency (i.e., project cost and project speed) and new product effectiveness (i.e., innovativeness), which in turn positively influence new product performance in terms of profitability, market share, and growth.     

Influences of cross-functional collaboration and knowledge creation on technology commercialization: Evidence from high-tech industries

Technology commercialization (TC) contributes to maintaining the competitive advantage of high-tech firms, but although researchers have established that product innovation and new product development are enhanced by cross-functional collaboration and organizational knowledge activities, this may not be the case for TC. Drawing on the knowledge-based view and the influence of cross-functional collaboration, the main goal of this study is to unravel the relationships among cross-functional collaboration, knowledge creation and TC performance in the high-tech industry context. Empirical findings from our survey of 203 marketing and R&D managers and employees in Taiwanese high-tech companies indicate that cross-function collaboration reveals fresh opportunities for creating knowledge and commercializing technologies. Our results also suggest that knowledge creation plays an important role in TC performance by partially mediating the relationship between cross-functional collaboration and TC performance. The contributions of this study provide new insights into industrial marketing literature by proposing a cross-functional collaboration-enabled TC model that takes into account the effect of knowledge creation.     

New Product Success: Is It Really Controllable by Managers in Highly Turbulent Environments?

This research proposes and tests a model of direct and indirect effects linking four antecedents to new product success: (1) a proactive strategic orientation along with enabling (2) organic organizational structures should lead to more (3) innovativeness and (4) market intelligence. Innovativeness and market intelligence should in turn lead to greater new product success. The relationships among the four antecedents are not hypothesized to be moderated by environmental turbulence because their domain is intraorganizational. However, the relationships from intraorganizational constructs to new product success are hypothesized to be moderated by environmental turbulence because success depends in part on the environment in which the new product must compete. The model was tested using a sample composed of 202 small business units of manufacturers on the Fortune 500. The sample was heavily involved in new product development: Their average annual research and development budget was $360.4 million, and approximately 8.2% of sales came from products introduced in the last five years. A two-group structural equation model analysis supports the moderation model overall and reveals the pattern of direct, indirect, and total effects. The results show that innovativeness (but not market intelligence) directly predicts new product success when turbulence is high, whereas market intelligence (but not innovativeness) directly engenders new product success in low turbulence. Environmental turbulence also affects the total indirect impact of strategy proactiveness and organizational organicity on new product success. These indirect effects operate through innovativeness and market intelligence as complete mediators.     

What Makes a Family Firm Innovative? CEO Risk‐Taking Propensity and the Organizational Context of Family Firms

Investigating the new product portfolio innovativeness of family firms connects two important topics that have recently received considerable attention in innovation and family firm research. First, new product portfolio innovativeness has been identified as a critical determinant of firm performance. Second, research on family firms has focused on the questions of if and why family firms are more or less innovative than other organizational forms. Research investigating the innovativeness of family firms has often applied a risk‐oriented perspective by identifying socioemotional wealth (SEW) as the main reference that determines firm behavior. Thus, prior research has mainly focused on the organizational context to predict innovation‐related family firm behavior and neglected the impact of preferences and the behavior of the chief executive officer (CEO), which have both been shown to affect firm outcomes. Hence, this study aims to extend the previous research by introducing the CEO's disposition to organizational context variables to explain the new product portfolio innovativeness of small and medium‐sized family firms. Specifically, this study explores how the organizational context (i.e., ownership by top management team [TMT] family members and generation in charge of the family firm) of family firms interacts with CEO risk‐taking propensity to affect new product portfolio innovativeness. Using a sample of 114 German CEOs of small and medium‐sized family firms operating in manufacturing industries, the results show that CEO risk‐taking propensity has a positive effect on new product portfolio innovativeness. Moreover, the analyses show that the organizational context of family firms impacts the relationship between CEO risk‐taking propensity and new product portfolio innovativeness. Specifically, the relationship between CEO risk‐taking propensity and new product portfolio innovativeness is weaker if levels of ownership by TMT family members are high (high SEW). Additionally, the effect of CEO risk‐taking propensity on new product portfolio innovativeness is stronger in family firms at earlier generational stages (high SEW). This result suggests that if SEW is a strong reference, family firm‐specific characteristics can affect individual dispositions and, in turn, the behaviors of executives. Therefore, this study helps extend the knowledge on the determinants of new product portfolio innovativeness of family firms by considering an individual CEO preference and the organizational context variables of family firms simultaneously.