Context-dependent preferences and innovation strategy

Chen, Yuxin and Ergin Turut, Özge (2013) Context-dependent preferences and innovation strategy. Management Science, 59 (12). pp. 2747-2765. ISSN 0025-1909 (Print) 1526-5501 (Online)

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Disruptive innovations introduce a new performance dimension into a product category, but often suffer from inferior performance on key performance dimensions of their existing substitutes. Hence, the followers of these innovations face an important decision to make: they would choose to improve the new technology either on the key performance dimension shared with the old technology or on the new performance dimension. This paper investigates which path firms should choose when they face such dilemma in the absence of any cost or capability issues. In doing so we integrate customer response into the theory of technological evolution and allow preferences on the product choices be context-dependent. We show that context-dependent preferences may encourage the follower to improve the new technology on the new performance dimension. Later, we extend our game to a dynamic one and show that the context-dependent preferences may cause the pioneer to innovate less.
Item Type: Article
Uncontrolled Keywords: context-dependent preferences; new product development; entry strategy
Subjects: H Social Sciences > H Social Sciences (General)
Divisions: Sabancı Business School
Sabancı Business School > Marketing
Depositing User: Özge Ergin Turut
Date Deposited: 08 Jan 2014 15:03
Last Modified: 26 Apr 2022 09:11

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