Studying the Incubation of a New Product Market Through Realized and Alternative Histories

2020 ◽  
Vol 5 (3) ◽  
pp. 160-192 ◽  
Author(s):  
Daniel Engler ◽  
Gino Cattani ◽  
Joe Porac
Keyword(s):  
New Product ◽  
General Motors ◽  
Middle Ground ◽  
Firm Level ◽  
Managerial Decisions ◽  
Managerial Beliefs ◽  
Alternative Methodology ◽  
Environmental Shocks ◽  
Product Cannibalization ◽  
Respective Product

In this paper, we contribute to the literature on new market emergence by implementing a “history-friendly” simulation of the incubation period encompassing the decision processes that took place within General Motors (GM), Chrysler, and Ford during the design and development of the first U.S. minivan. Our work offers a “middle ground” alternative methodology for unpacking the “black box” of market incubation processes. Our middle ground approach is useful for exploring the complex interdependencies among four general mechanisms that shape market incubation: environmental shocks that open up new technological possibilities, firm-level capabilities that allow firms to differentially take advantage of these possibilities, various incentives (e.g., product cannibalization, rivalry) that influence a firm’s willingness to exploit new possibilities, and managerial beliefs about the viability of these possibilities. Complex nonlinear interdependencies exist among these mechanisms, and historical contingencies affect the way in which they interact. We identify important historical contingencies within and across GM, Ford, and Chrysler in their precommercialization managerial decisions prior to Chrysler’s introduction of the Voyager and Caravan in 1983. We use the historical details of actual market incubation to calibrate the simulation and develop plausible alternative (both near and hypothetical) histories of that incubation. Understanding why Chrysler, Ford, and General Motors made their respective product commercialization choices not only pertains to automotive history, but can also illuminate the complexities inherent in market incubation processes.

The Micro and Macro of Managerial Beliefs

2020 ◽  
Author(s):  
Jose Maria Barrero
Keyword(s):  
Rational Expectations ◽  
Asset Price ◽  
Heterogeneous Firms ◽  
Adjustment Costs ◽  
Consumer Welfare ◽  
Sales Growth ◽  
Firm Level ◽  
Managerial Decisions ◽  
Managerial Beliefs ◽  
Growth Volatility

This paper studies how biases in managerial beliefs affect managerial decisions, firm performance, and the macroeconomy. Using a new survey of US managers I establish three facts. (1) Managers are not over-optimistic: sales growth forecasts on average do not exceed realizations. (2) Managers are overprecise (overconfident): they underestimate future sales growth volatility. (3) Managers overextrapolate: their forecasts are too optimistic after positive shocks and too pessimistic after negative shocks. To quantify the implications of these facts, I estimate a dynamic general equilibrium model in which managers of heterogeneous firms use a subjective beliefs process to make forward-looking hiring decisions. Overprecision and overextrapolation lead managers to overreact to firm-level shocks and overspend on adjustment costs, destroying 2.1 percent of the typical firm’s value. Pervasive overreaction leads to excess volatility and reallocation, lowering consumer welfare by 0.5 to 2.3 percent relative to the rational expectations equilibrium. These findings suggest overreaction may amplify asset-price and business cycle fluctuations.

scholarly journals The Intensity of Knowledge Capital Investment in Kenya: Evidence from Manufacturing and Service Sectors

2017 ◽  
Vol 9 (10) ◽  
pp. 179
Author(s):  
Simon Ndicu ◽  
Lucy Wacuka
Keyword(s):  
Capital Investment ◽  
New Product ◽  
Knowledge Capital ◽  
Firm Level ◽  
Product Innovativeness ◽  
Service Sectors ◽  
Innovation Output ◽  
And Performance ◽  
Product Output ◽  
Combined Data

The study investigates the extent to which firms in Kenya manufacturing and service sectors invest in knowledge capital leading to innovations. 534 firms were included in the analysis. This was the combined data from the first Kenya innovation survey data of 2012, which covered 158 firms, (2008-2011) and the second Kenya innovation survey of 2015 which covered 376 firms (2012-2014). The Crépon, Duguet, and Mairessec (CDM) (1998) model, which considers a system of four equations: innovation propensity, innovation investment, innovation output and performance equations, was used as the estimation technique. The results revealed that, a firm’s decision to spend on R&D was significantly influenced by firm ownership, financial turnover and product innovativeness. A firm’s R&D intensity was significantly determined by its financial turnover and ownership. A firm’s activity and financial turnover were also significant in determining whether it introduced a new product in the market or not. The results of this paper suggest that a firm’s financial turnover was significant in R&D decisions but R&D intensity did not significantly matter to a firm’s product innovativeness. Further, a firm’s level of innovativeness was a significant determinant of its productivity. In addition, the results suggest that, innovations among the Kenyan firms in the manufacturing and service sectors were heavily reliant on financial capital and were struggling to convert knowledge inputs into product output. This study thus recommends a policy that incorporates the academia and firm level innovation with national innovation systems to enhance knowledge and skill intensive innovations that are new to the world.

Openness and Innovation

2017 ◽  
Vol 18 (1) ◽  
pp. 64-75 ◽  
Author(s):  
Ben Shepherd
Keyword(s):  
Economic Growth ◽  
New Products ◽  
New Product ◽  
Financial Resources ◽  
Innovation Activity ◽  
Economic Openness ◽  
Firm Level ◽  
Level Data ◽  
Firm Level Data ◽  
Openness To Trade

This article uses firm-level data for India to examine the determinants of innovation activity, focusing on variables related to economic openness. Firms that export and those that import are found to be significantly more likely to engage in innovation, defined sequentially as the introduction of new products, new processes, new systems, or devotion of financial resources or time to research and development. Concretely, exporters are 22 per cent more likely to introduce a new product than non-exporters, while the corresponding figure is 66 per cent for importers. Openness to trade is, therefore, a key determinant of firm-level innovation, which is a key component of economic growth.

scholarly journals E-CRM and Managerial Discretion

2011 ◽  
pp. 3090-3106
Author(s):  
Tim Coltman ◽  
Sara Dolnicar
Keyword(s):  
Managerial Discretion ◽  
Customer Relationship ◽  
Firm Level ◽  
Managerial Beliefs ◽  
Managerial Optimism ◽  
The Individual ◽  
The Right ◽  
Survey Responses ◽  
Performance Results ◽  
Crm Execution

Most sectors of industry, commerce, and government have reported variation in the performance payoff from electronic customer relationship management (e-CRM). In this paper we build on surprisingly sparse literature regarding the importance of managerial discretion to show that the heterogeneity of beliefs held by managers about e-CRM execution matter when explaining e-CRM success. Drawing on a data sample comprising 50 interviews and 293 survey responses we utilise segmentation techniques to identify significant differences in managerial beliefs and then associate these belief segments with e-CRM performance. Results indicate that (1) three distinct types of managers can be identified based on the heterogeneity of their e-CRM beliefs: mindfully optimistic, mindfully realistic, and mindfully pessimistic; (2) that there is far less homogeneity at the individual firm level than is normally assumed in the literature; (3) that het-erogeneity in managerial beliefs is systematically associated with organisational performance; and (4) these results serve to remind practitioners that e-CRM performance is dependent upon the right balance between managerial optimism and realism.

scholarly journals Do firm-level barriers to construction product innovation adoption vary according to position in the supply chain?

2019 ◽  
Vol 19 (2) ◽  
pp. 212-235 ◽  
Author(s):  
Timothy Rose ◽  
Karen Manley ◽  
Kristian Widen
Keyword(s):  
Supply Chain ◽  
Product Innovation ◽  
Large Scale ◽  
New Product ◽  
Policy Implications ◽  
Firm Level ◽  
Content Type ◽  
The Road ◽  
Contextual Determinants ◽  
Construction Product

PurposeThe purpose of this study is to examine product innovation as a means of addressing infrastructure shortages in developed economies and to improve the sustainability of infrastructure. The obstacles to product innovation in the road industry are compared between different types of participants in the supply chain to provide guidelines for interventions to improve innovation rates.Design/methodology/approachThis exploratory study uses descriptive data from a large scale survey of the Australian road industry. The three top-rated product innovation obstacles for the following four types of participants are examined: contractors, consultants, suppliers and clients.FindingsThe four groups were found to disagree about the relative importance of the obstacles. Contractors and suppliers ranked “restrictive price-only tender assessment” used by clients as their number one obstacle, while consultants thought there was too much emphasis by the clients on direct costs compared with whole-of-life costs. On the other hand, clients felt suppliers do not do enough thorough testing prior to proposing a new product and disagreed with suppliers about who should carry the risk of new product failure.Research limitations/implicationsThe conceptual framework was found to yield novel insights with significant policy implications. The construction-specific contextual determinants that were integrated by the authors into a broad innovation diffusion process proved useful in categorising road product innovation obstacles across the four surveyed supply chain groups – without overlap or omission. The new framework also proved useful in ordering the key obstacles across groups for interpretation and discussion. In disaggregating product obstacles according to groups, these contextual determinants were proven to be mutually exclusive and to represent important focal points in promoting the uptake of product innovation in construction. Although the current study has usefully provided quantitative data concerning construction innovation obstacles, there are limitations due to its reliance on descriptive statistics. Future work by the authors is proposed to analyse the relationships between innovation obstacles and supply chain partners using inferential statistics to further develop and validate these early findings. The current study is an interim step in this work and an important contribution in identifying and addressing firm-level barriers seen to be constraining construction product innovation.Practical implicationsResults suggest there is a need for government clients to carefully consider the differing perspectives across the supply chain when developing strategies to encourage the adoption of mutually-beneficial innovative products on their construction projects. Inclusive focus groups examining the drivers, configuration and benefits of collaborative procurement systems are recommended to reduce innovation obstacles.Social implicationsSociety relies on urban infrastructure for daily living and the current study contributes to stretching infrastructure investment dollars and reducing the environmental impact of infrastructure provision.Originality/valueNo previous study has compared the perception of product innovation obstacles across different road industry supply chain partners. This is a significant gap, as differences in opinions across the supply chain need to be understood to develop the shared expectations and the improved relationships required to improve product innovation rates. Product innovation is important because it has been shown to improve efficiency (potentially addressing the road investment gap) and reduce deleterious environmental impacts.

scholarly journals Enhancing Communication Practices in Virtual New Product Development Projects

2015 ◽  
Vol 6 (4) ◽  
pp. 16-36 ◽  
Author(s):  
Päivi Lohikoski ◽  
Jaakko Kujala ◽  
Janne Härkönen ◽  
Harri Haapasalo ◽  
Matti Muhos
Keyword(s):  
Product Development ◽  
New Product Development ◽  
New Product ◽  
Relevant Information ◽  
Organizational Level ◽  
Virtual Collaboration ◽  
Managerial Decisions ◽  
Global Projects ◽  
Communication Practices ◽  
Virtual Projects

Virtual new product development (NPD) teams integrated via information and communication technology (ICT), can offer effective solutions to higher quality, service, customer responsiveness and individualized productization. Experts in NPD teams usually collaborate across the globe and across time zones by e-mail, tele- and web-conferencing, as well as other ICT, sometimes with inadequate language skills and with various ways of communicating and sharing information. Therefore, finding a shared understanding, relevant information, common language, and personal contacts across different sites may be challenging. The aim of this research was to study how communication practices are organized in virtual NPD. In addition to this, the scope was to study what kinds of competences are needed to enhance the efficiency of virtual communication in cross-cultural NPD. The authors conducted a multi-method case study of a global telecommunication company. The main findings were that members in virtual projects have different kinds of communication practices based on personal competences, habits, and preferences rather than company-level recommendations. The main contribution of this study is that virtual collaboration competences on a personal and organizational level play a significant role in enhancing efficiency in communication and when designing and utilizing communication practices. The authors' results may be used to support managerial decisions concerning practices of organizing global teams and when coordinating communication practices in complex global projects.

The dark shadow of corruption on new product development

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Saikat Banerjee
Keyword(s):  
Product Development ◽  
New Product Development ◽  
New Products ◽  
Negative Relationship ◽  
New Product ◽  
Senior Managers ◽  
Firm Level ◽  
Theoretical Understanding ◽  
Market Strategy ◽  
Content Type

PurposeThe study examines the effects of corruption activities on new product development of firms. The roles of senior managers in the relationship between corruption activities and new product development are also studies.Design/methodology/approachThe data of Indian firms are collected from the Enterprise Survey conducted by World Bank in 2014. Variables on corruption, new product development, and other firm level factors are considered in the study. Logistic regression is used to examine the effect of firm's engagement in corruption activities on new product development.FindingsCorruption activities of firms is negatively related to new product development. Senior manager's industry experience and engagement in regulatory activities weaken the negative relationship between firm's engagement in corruption activities and new products development.Practical implicationsWith the increased focus on innovation, organizational managers have to work on the development of new products, and understanding of the negative relationship between engagement in corruption activities and new product development will help them to achieve the desired organizational goals.Originality/valueThe study contributes in three ways. Firstly, the paper extends the theoretical understanding of the implication of a non-market strategy, corruption on new product development. Secondly, the study contributes to the existing literature on the antecedents of new product development. Finally, the roles of senior managers helps to understand the importance of their industry and regulatory experience in the main relationship.

Efficiency-driven, comparative institutional analysis in international business

2015 ◽  
Vol 23 (3) ◽  
pp. 188-199 ◽  
Author(s):  
Jenny Hillemann ◽  
Alain Verbeke
Keyword(s):  
Public Goods ◽  
Multinational Enterprises ◽  
Internalization Theory ◽  
Firm Level ◽  
Value Capture ◽  
Content Type ◽  
Developed Economies ◽  
Managerial Decisions ◽  
Complementary Resources ◽  
Feasible Option

Purpose – This paper aims to apply internalization theory in the context of economic efficiency-driven institutions interacting with societal institutions that pursue broader goals. Design/methodology/approach – The analysis builds upon Buckley and Boddewyn’s (2015, this issue) recent work on the perceived need for multinational enterprises (MNEs) to supply public goods outside of their sphere of technical competences. This paper proposes a more restrictive approach: external markets will only be internalized if, on balance, the efficiency benefits of internalization outweigh its costs at the firm level, in line with orthodox internalization theory. Findings – MNEs replacing the activities of failing (or even absent) public sector institutions is a business phenomenon commonly observed in less developed economies. However, positive distributional effects and societal externalities without the required efficiency benefits at the firm level are insufficient for MNEs’ supply to occur. Practical implications – Managerial decisions in the internalization sphere will be guided by the transactional characteristics of the MNEs’ firm-specific advantages (FSAs) and the requisite complementary resources held by host country economic actors. Internalization theory thinking suggests applying various, specific principles to assess in a comparative institutional fashion whether “diversification” into supplying public goods will serve the MNEs’ efficiency goals, namely, the “cost of entry” test, the “better-off” test and the “value capture” test. Originality/value – Internalization theory provides a solid, efficiency-driven rationale to guide MNE choices on which activities the firm will conduct internally. The nature of the MNEs FSAs and the most efficient, feasible option to bundle firm-level resources and locally held resources in host environments are critical to these choices.

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