No abstract

A common perception in the field of innovation is that large, incumbent firms rarely introduce radical product innovations. Such firms tend to solidify their market positions with relatively incremental innovations. They may even turn away entrepreneurs who come up with radical innovations, though they themselves had such entrepreneurial roots. As a result, radical innovations tend to come from small firms, the outsiders. This thesis, which we term the “incumbent's curse,” is commonly accepted in academic and popular accounts of radical innovation. This topic is important, because radical product innovation is an engine of economic growth that has created entire industries and brought down giants while catapulting small firms to market leadership. Yet a review of the literature suggests that the evidence for the incumbent's curse is based on anecdotes and scattered case studies of highly specialized innovations. It is not clear if it applies widely across several product categories. The authors reexamine the incumbent's curse using a historical analysis of a relatively large number of radical innovations in the consumer durables and office products categories. In particular, the authors seek to answer the following questions: (1) How prevalent is this phenomenon? What percentage of radical innovations do incumbents versus nonincumbents introduce? What percentage of radical innovations do small firms versus large firms introduce? (2) Is the phenomenon a curse that invariably afflicts large incumbents in current industries? Is it driven by incumbency or size? and (3) How consistent is the phenomenon? Has the increasing size and complexity of firms over time accentuated it? Does it vary across national boundaries? Results from the study suggest that conventional wisdom about the incumbent's curse may not always be valid.

I nnovation is one of the most important issues in business research today. It has been studied in many independent research traditions. Our understanding and study of innovation can benefit from an integrative review of these research traditions. In so doing, we identify 16 topics relevant to marketing science, which we classify under five research fields: • Consumer response to innovation, including attempts to measure consumer innovativeness, models of new product growth, and recent ideas on network externalities; • Organizations and innovation, which are increasingly important as product development becomes more complex and tools more effective but demanding; • Market entry strategies, which includes recent research on technology revolution, extensive marketing science research on strategies for entry, and issues of portfolio management; • Prescriptive techniques for product development processes, which have been transformed through global pressures, increasingly accurate customer input, Web-based communication for dispersed and global product design, and new tools for dealing with complexity over time and across product lines; • Defending against market entry and capturing the rewards of innovating, which includes extensive marketing science research on strategies of defense, managing through metrics, and rewards to entrants. For each topic, we summarize key concepts and highlight research challenges. For prescriptive research topics, we also review current thinking and applications. For descriptive topics, we review key findings.

Radical innovation is an important driver of the growth, success, and wealth of firms and nations. Because of its importance, authors across various disciplines have proposed many theories about the drivers of such innovation, including government policy and labor, capital, and culture at the national level. The authors contrast these theories with one based on the corporate culture of the firm. They test their theory using survey and archival data from 759 firms across 17 major economies of the world. The results suggest the following: First, among the factors studied, corporate culture is the strongest driver of radical innovation across nations; culture consists of three attitudes and three practices. Second, the commercialization of radical innovations translates into a firm's financial performance; it is a stronger predictor of financial performance than other popular measures, such as patents. The authors discuss the implications of these findings for research and practice.