Unfortunately The Introduction Of Our New Product Will Be Delayed: An Exploratory Examination Of Factors That Influence A Firm To Announce Changes In Its New Product Plans

<p class="MsoBodyTextIndent" style="text-align: justify; line-height: normal; text-indent: 0in; margin: 0in 0in 0pt;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">New product preannouncement research investigates formal and deliberate communications by a firm regarding its future new product introductions (e.g., types of new products, new product attributes, plans for distribution, planned launch date). However, previous studies have primarily focused on communication related to the firm&rsquo;s intent to introduce a new product and largely ignored communications regarding changes in their status, such as launch delays as well as cancellation of the new product introduction. The goal of this study is to address this shortfall by examining antecedents factors<span style="mso-spacerun: yes;">&nbsp; </span>influencing a preannouncing firm (i.e., one that preannounces its new products) to also announce changes in to its new product introduction plans (NPCs); specifically, delays in the introduction of a new product or its cancellation. This topic is particularly relevant given the importance that recent studies have placed on the investigation of false new product preannouncements or bluffs, especially in the software industry where they are termed vaporware.<span style="mso-spacerun: yes;">&nbsp; </span>Furthermore, in the wake of the many recent high-profile corporate scandals (e.g., Enron and Tyco), a growing emphasis on corporate disclosure, particularly regarding performance shortfalls (e.g., new product delays and cancellations), also highlights the need for further research on corporate communication regarding changes to new product introduction plans.<span style="mso-spacerun: yes;">&nbsp; </span>Additionally, unlike most extant preannouncement research that attempts to examine differences between preannouncers and non-preannouncers, our study only examines firms that preannounce their new product introductions and then, goes further, by examining post-preannouncement behavior. In developing our framework, we propose five antecedents that motivate a preannouncing firm&rsquo;s propensity, when the situation arises, to issue announcements regarding delays in a new product introduction or its cancellation. Additionally, we highlight the use of NPCs as strategic marketing communication tools that can continually inform and influence a wide range of target audiences (e.g., buyers, employees, supply chain participants, investors, and business media). The hypotheses are tested via factor score regression with a sample of 221 U.S. &ndash; based manufacturers. Our findings indicate that it is not the firm&rsquo;s desire to communicate in a general sense through information sharing nor its concerns regarding competitors that motivates preannouncing firms to issue NPCs. Instead, the preannouncing firm&rsquo;s desire to build its reputation, the innovativeness of its industry, and the degree to which buyers must make substantial pre-purchase investments are the main drivers of communication regarding changes to its new product introduction plans. As a set, these findings are particularly interesting as they indicate that the preannouncing firm&rsquo;s desire to reduce uncertainty, often in its own favor, underlies its decision to issue NPCs. </span></span></p>

New Product Preannouncements and Shareholder Value: Don't Make Promises you Can't Keep

New product preannouncements are strategic signals that firms direct at their customers, competitors, channel members, and investors. They have been touted as effective means of deterring competitor entry, informing potential customers, and even tipping the balance of technological standard battles in favor of the preannouncing firms. However, preannouncements also carry the risks of unwanted competitive reaction and the negative consequences of undelivered promises. From a shareholder value standpoint, do the benefits outweigh the risks of preannouncing? To address this question, the authors build on agency and signaling theories to develop hypotheses about the effects of preannouncements on shareholder value, and they empirically test these hypotheses on a sample of software and hardware new product preannouncements. The findings indicate that the financial returns from preannouncements are significantly positive in the long run. The authors show that preannouncements generate positive short-term abnormal returns only for firms that offer specific information about the preannounced product. They also show that firms earn positive long-term abnormal returns after a preannouncement if they continue to update the market on the progress of the new product. Both the short-term and the long-term returns are further magnified if the reliability of the preannouncement (i.e., the credibility of the preannouncing firm) is high. The findings offer executives of preannouncing firms clear guidelines on how to manage communications in the market to extract financial value from new product preannouncements.