Three Essays on New Product Innovation and Innovation-Decision Process

Abstract

The development and management of a new product is considered the core engine of firm growth. The importance of this fact is even increasing, especially in high-tech industries, because of rapid technological developments, the shortening of product life cycle and intensified international competition. As the product life cycle becomes shorter and shorter, it becomes essential for firms to create and expand the market by developing new products. Though many researchers have studied how to successfully develop and manage high-tech new products over the last few decades, new product development is still considered as an uncertain area with high risks to firms. This fact reflects that there are still a lot of problems remaining to be solved. By reviewing the previous literatures from innovation and high-tech marketing, three major research problems are found that have not been fully addressed so far. Thus, this dissertation deals with these three main research problems by proposing three solutions respectively. The first essay shows the impact of integration of R&D and marketing on new product development success without any parametric assumptions on model specification. In the innovation management context, it has generally been accepted that close integration between R&D and marketing successfully influences the development of an innovative product by stimulating a mutual understanding between people from different departments. However, a few researchers also pointed out that a too close a relationship between R&D personnel and marketing personnel can cause important information to be overlooked, thus reducing likelihood of new product development success. In the first essay, empirical results based on the application of the nonparametric regression method MARS (Multivariate Adaptive Regression Splines) show an even more diverse effect of integrating R&D and marketing if different performance criteria are considered. Marginal response functions with respect to R&D and marketing integration demonstrate that the effect of integration between R&D and marketing is non-constant and nonlinear, a finding that could not be captured with parametric assumptions. Therefore, the first essay provides an overarching explanation for the opposing observations reported in earlier work. The second essay seeks to describe the dynamic effects of perceived innovation attributes, consumer innovativeness and message characteristics as conditioned by consumer decision-making in the high-tech product adoption. Unfortunately, innovation adoption studies have paid little attention to transition between each decision-making stage. In the second essay, with the proposed research framework based on the theories of innovation adoption and consumer behavior, the Bayesian multivariate probit model successfully identifies the bottlenecks and drivers influencing consumers transition between hierarchical decision-making stages. With our survey data set on E-book reader adoption, the empirical analysis shows that complexity is the main bottleneck blocking the adoption of dedicated E-book readers in every decision-making stage (cognitive-affective-behavioral response), whereas observability is the driver stimulating adoption in every stage. Moreover, the relative advantage of dedicated E-book readers is significant only in the affective stage, while compatibility is meaningful only in the behavioral stage. The main implication of the second essay is that this study provides a useful model and guidelines to help marketers implement effective marketing communication strategy depending upon consumers decision making stage. The third essay investigates the possible individual-specific transferal process in decision-making through cognitive, affective and conative stages. To this end, a general and flexible Bayesian multivariate regression model based on Gaussian mixture model is proposed and then fitted to a survey data set. As a result of application of the proposed model to survey data set on E-book reader, estimation results show that all paths are feasible transferal process except for the path conation → cognition → affection. In terms of the market share, the potential market size of standard learning models, the path cognition → affection → conation, is the biggest whereas the path affection → conation → cognition is the lowest. The third essay contributes to the innovation and hi-tech marketing literature along both academic and substantive dimension. Along the academic dimension, this research developed an estimable model for capturing transferal process in decision-making path. Accordingly, the analysis empirically shows that there exist heterogeneity in individual decision-making path. In substantive domain, marketers are able to obtain insights into the marketing communication strategy for high-tech product by applying the proposed model. Finally, this study demonstrates that the impact of perceived innovation characteristics in high-tech product adoption occasion can be varying according to the ones decision-making path. Overall, the dissertation has a couple of major contributions for academia and management. The academic contribution of the dissertation is that this proposes and empirically applies effective methodologies to solve major problems related to new product development and innovation adoption management. The managerial contribution of the dissertation is that this provides a strategic guideline for a successful new product development and market management including market segment and corresponding new product positioning strategy.