Development time and new product sales: A contingency analysis of product innovativeness and price

Abstract

Opposing theories and conflicting empirical results with regard to the effect of development time on new product sales suggest the need for a contingency analysis into factors affecting this relationship. This study uses a unique combination of accounting and perceptual data from 129 product development projects to test the combined contingency effect of product innovativeness and new product price on the relationship between development time and new product sales. The results show that for radically new products with short development times, price has no effect on new product sales. When the development time is long, price has a negative effect on the sales of radical new products. The findings additionally show that price has no effect on sales for incremental new products with short development times and a negative effect for incremental new products with long development times. Together, these findings shed new light on the relationship between development time and new product sales. Keywords Development time . Product innovativeness . New product priceMany studies posit that shortening the new product's development time brings about an increased level of cohesion among team members which results in fewer mistakes that might cause problems after product launch (see, e.g., Chen et al. 2005). Faster development has also been linked with improved coordination and subsequent reductions in costly work redundancy, errors, and recycling that will cause quality problems after adoption (Harter et al. 2000). Concentration on speed also forces a Market Lett

A Stage‐Wise Approach to Exploring Performance Effects of Cycle Time Reduction

“…The measure for new product performance was the cumulative sales of each product, which also was available in the division's database (Langerak, Rijsdijk, and Dittrich, ).…”

“…Boh, Slaughter, and Espinosa, ). Third, another variable controlled for the product's average selling price , as price is an important driver of new product sales (Langerak et al., ). In addition, to minimize concerns that the estimation results are affected by product line differences, the data were standardized by forcing the variables to have a mean of zero and an SD of one within each product line prior to analysis.…”

Business model innovation and third-party alliance on the survival of new firms

“…On the one hand, studies have shown that radical innovation reduces the chances of firm survival as a result of the increased level of uncertainty (see Buddelmeyer, Jensen and Webster, 2010;Christensen, 1997;Utterback, 1994). On the other hand, studies have shown that firms that adopt radical innovation are more likely to survive because of higher returns from adoption as a result of gaining a larger market share (see Langerak et al, 2009;Sinha and Noble, 2008;Srinivasan, Lilian and Rangaswamy, 2004). However, extant studies have examined the impact of the degree of product and process innovation, not business model, on firm performance.…”

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