Triggers for virtual customer integration in the development of medical equipment — From a manufacturer and a user's perspective

Virtual customer integration (VCI) involves customers throughout all stages of the new product development process. Firms across industries have started to experiment with virtual user integration and expect to utilize their knowledge, creativity, and judgment. However, little research exists that looks at the motivations of customers and managers to engage in virtual product development projects. In this paper we try to identify the triggers for virtual customer integration (VCI) from the manager's as well as from the customer's perspective. Using Ajzen's Theory of Planned Behavior we aim at explaining managers' motivation for the adoption of VCI based on a sample of 104 managers engaged in the product development process of manufacturing firms of medical technology. Drawing on motive research, we test six categories of customer motivations to engage in VCI projects on a sample of 105 users of medical technology. The results show that for mangers subjective norms and attitude predict the intention to use VCI. For customers, interest in innovation and product improvement are the most important drivers, whereas monetary compensation and prestige are not significant, and surprisingly the desire to help people even has a negative impact on the participation of VCI.     

Managing radical innovation: an overview of emergent strategy issues

Despite differences in definitions, researchers understand that radical innovation within an organization is very different from incremental innovation , and and that it is critical to the long-term success of firms. Unfortunately, research has also shown that it is often difficult to get support for radical projects in large firms [14], where internal cultures and pressures often push efforts toward more low risk, immediate reward, incremental projects. Interestingly, we know considerably less about the effective management of the product development process in the radical than in an incremental context. The purpose of this study is to explore the process of radical new product development from a strategic perspective, and to outline key observations and challenges that managers face as they move these projects to market. The findings presented here represent the results of a longitudinal (since 1995), multidisciplinary study of radical innovation projects. A multiple case study design was used to explore the similarities and differences in management practices applied to twelve radical innovation projects in ten large, established North American firms. The findings are grouped into three high-level strategic themes. The first theme, market scope, discusses the challenges associated with the pursuit of familiar versus unfamiliar markets for radical innovation. The second theme of competency management identifies and discusses strategic challenges that emerge as firms stretch themselves into new and unfamiliar territory. The final theme relates to the people issues that emerge as both individuals and the project teams themselves try to move radical projects forward in organizations that are not necessarily designed to support such uncertainty.A breadth of subtopics emerge within and across this framework relating to such ideas as risk management, product cannibalization, team composition, and the search for a divisional home. Taken together, our observations reinforce the emerging literature that shows that project teams engaging in radical innovation encounter a much different set of challenges than those typically faced by NPD teams engaged in incremental innovation.     

Managing seller-buyer new product development relationships for customized products: a contingency model based on transaction cost analysis and empirical test

Sellers often customize their product offerings in order to increase the value offered to individual buyers and gain a competitive advantage over the seller’s competitors. However, such customization has a downside—it usually requires considerable seller-buyer interactions aimed at matching the seller’s technological capabilities with the buyer’s needs, which can pose exchange risks such as the safeguarding and adaptation problems noted in the transaction cost analysis literature. In the present study, we develop a contingency model to investigate the impact of product customization on sellers’ perceived relationship satisfaction and subsequent expectations of relationship continuity. We draw on the logic of transaction cost analysis to hypothesize that product customization’s effect on satisfaction and continuity may be moderated by three activities that sellers may engage in during the new product development (NPD) process: education, product knowledge generation, and joint new product development.Our substantive hypotheses were tested with data from a national survey of 296 small to medium size firms in several high-tech industries using a series of hierarchical OLS regression models. Overall, we found mixed support for our hypotheses. The results indicated that joint new product development reduced the negative effect of product customization on seller satisfaction and enhanced customization’s positive effect on continuity, as expected. Contrary to our expectations, product knowledge generation activities increased the negative effect of customization on satisfaction; it also had no significant moderating impact on continuity. Buyer education activities were found to reduce the negative impact of customization on satisfaction, but showed no moderating effect on continuity.This study offers important theoretical and managerial implications. It is one of the first to rely on transaction cost analysis as a basis for examining how various relationship activities conducted during the new product development process moderate product customization’s effect on qualitative outcomes. Whereas traditional NPD processes have emphasized unilateral approaches to product development, our study provides evidence of how bilateral approaches to NPD can benefit sellers of innovations. We provide new insights for managers to consider when deciding whether to engage buyers early on and then continue interacting with them throughout the product development process when developing customized products.     

Risk management of real estate: The case of real estate swaps

Real estate swaps are a recent financial innovation based upon the principle of comparative advantage. A real estate swap is a useful tool for real estate risk management and for participating in real estate investment without the high costs associated with real estate. Potential economic benefits and costs associated with real estate swaps are considered and real estate swaps are compared to alternative tools for real estate risk management. The expected utility and effectiveness of risk management with a swap in a multiperiod framework are analyzed. The analysis finds that the subject property's return and its risk characteristics (as reflected in its correlation with interest rate and property index returns) delimit the risk management potential of a given swap position. Optimal swap positions are shown for various regions and property types based on historical return series, from the period between 1983 and 1992, and the parameters of the dynamic model developed.     

The dynamics of factors affecting the adoption of innovations

An abundance of IT innovations are constantly struggling for market acceptance. Various models have been proposed in the literature in order to aid understanding of the principles behind the adoption of IT innovations, but most of them implicitly assume that the factors explaining adoption decisions do not change over time. This study challenges that assumption and adds to the existing literature by investigating the dynamics of the factors influencing adoption. Our general proposition is that the driving factors in adopting innovations will change as the diffusion of the innovation in the market progresses. A large-scale empirical study was carried out among medium-sized companies in a variety of European countries and industries concerning the adoption of enterprise resource planning (ERP) software. The findings strongly indicate that the factors affecting late adoption of ERP differ significantly from the factors explaining early adoption. At early stages of the diffusion process adoption tends to be especially driven by a combination of internal strategic drives and attitudes of the firm together with external forces like industry competition and supplier activities. Later on, the mix of adoption stimulating factors seems to be focusing more on implementation issues such as the scalability of the system, the number of seats and the yearly available budget. The study leads to both new methodological insights and substantive conclusions that also have practical implications.     

The Credit Channel at Work: Lessons from the Financial Crisis in Korea

We demonstrate that the credit channel of transmission of monetary/financial shocks appears to have aggravated Korea's economic crisis. We use micro-data gathered at the individual bank level to identify this channel of transmission. Our major findings are as follows: i) consistent with banks' autonomous retrenchment in loan supply, monetary tightening broadens the spread between marginal bank lending rates and corporate commercial paper rates; ii) credit limits on overdrafts – arguably a proxy identifying shifts in loan supply – react negatively to the monetary squeeze; iii) large negative capital shocks induce banks to disproportionately slow-down both lending and deposit taking and to disproportionately raise their lending rates. Our findings lend unequivocal support to the hypothesis that banks' autonomous contraction restricted the availability of credit and magnified the increase in its cost. In turn, this compounded the Korean crisis by aggravating liquidity constraints for the vast majority of agents who rely only on bank credit as an external source of funds.     

Technology transfer in the IT industry: A Korean perspective

Recently Korean Government announced ambitious IT strategy to establish Korea as one of leaders in world IT market. To implement this strategy, technology transfer from research lab to market should be successfully performed. This study is to identify factors influencing technology transfer and to examine contribution of these factors on success of technology transfer in Korean IT industry. Survey results show that technology project leaders evaluated “Concreteness of Technology” as the most influential factor for technology transfer, followed by “Communication Channels,” “Collaboration among Participants,” “Management Support,” “Government Support,” and “Incentives for Transfer.” Out of 135 technology transfer projects, respondents rated 33 projects as sustaining (28.44%), 38 as promoting (28.15%), 26 as demonstrating (19.26%), 27 in incubating (20.00%), and the remaining 7 in imaging stage (8.15%). This statistics means that 28.15% of technology transfer projects did not reach production stage. Regression analysis identifies that “Communication Channels,” “Management Support,” “Concreteness of Technology” “Sense of Common Purpose,” and “Awareness of Technology Transfer” were statistically significant in explaining success of technology transfer.     

Equilibrium Contingent Compensation in Contests with Delegation

We consider two-player contests in which each player hires a delegate who expends his effort to win a prize on the player's behalf. Endogenizing delegation contracts, we focus on the equilibrium contracts between the players and their delegates. We first show that each player's equilibrium contract is a no-win-no-pay contract. Then, we examine the delegates' equilibrium compensation spreads, effort levels, probabilities of winning, expected payoffs, and the players' equilibrium expected payoffs. We show that economic rents for the delegates may exist.