Innovation in complex assembled electronic products: An analysis of the evolution of television components

Abstract

A complex assembled electronic product (CAEP), such as a modern television (TV), can be produced in a variety of design configurations using different combinations of software and hardware components that are arranged together in a hierarchy of technical subsystems within a defined product architecture. We examine the lifecycle of individual components that make up a CAEP to better understand why its dominant design configuration includes specific components from among the (often many) competing alternatives. The emergence of the dominant design configuration of a product has long-term implications on the operational efficiency of a firm's product assembly line and its component selection strategy. We test hypotheses that explain both the inclusion of a component in the dominant design configuration of a CAEP, and its longevity to remain in the product market over the lifecycle of the CAEP using three key factors: (a) pleiotropy, or the number of functions supported by the component, (b) the nature of standards used by the component (open vs. closed), and (c) the source of innovation of the component (exog-enous vs. endogenous to the industry). We empirically test our hypotheses using a longitudinal data set of 2830 TV models spanning 15 years (2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016). The results show that components that have higher pleiotropy and that are supported by open standards not only have a higher chance of being selected into the dominant design configuration of TV, but also remain in the TV market for a longer time. Specifically, every additional functionality associated with a component increases its likelihood of entering the dominant design configuration by approximately three times, and its longevity by about 2 years.Similarly, a component supported by an open standard is approximately four times more likely to be part of the dominant design configuration compared with a component supported by a closed standard, and it remains in the TV market for approximately an additional 2 years. In addition, components developed through endogenous innovation efforts were nearly five times more likely to enter the dominant design configuration of TV. Their longevity, however, was not significantly different from that of components sourced exogenously. Building on these results, we discuss the implications for product management of CAEP and for further research to examine innovation in CAEPs.

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