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Performance expectations of small firms considering radical product innovation

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Author Info

  • Verhees, Frans J.H.M.
  • Meulenberg, Matthew T.G.
  • Pennings, Joost M.E.

Abstract

Performance expectations influence business decisions such as investment decisions and demand for supplies, particularly in small firms with limited strategic planning. Despite widespread use of performance expectations by firms and governments when making sales forecasts and economic outlooks, surprisingly little research exists about how small firms form performance expectations. This paper contributes to reduce this knowledge gap by analyzing performance expectations of small firm managers operating in markets with radical product innovations. This paper proposes a model and hypotheses, which explain performance expectations of small firm managers based on firms' current success, radical product innovation, and variables that indicate firms' ability to respond to customer needs for radical product innovation. Data from 200 decision-makers in a real decision-making context support the model. The results show that performance expectations in small firms are only to a limited extent a naïve extrapolation of current success: radical product innovation and small firm's ability to respond to customer needs for radical product innovation influence performance expectations.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Business Research.

Volume (Year): 63 (2010)
Issue (Month): 7 (July)
Pages: 772-777

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Handle: RePEc:eee:jbrese:v:63:y:2010:i:7:p:772-777

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Web page: http://www.elsevier.com/locate/jbusres

Related research

Keywords: Performance expectations Small firms Radical product innovation Market orientation Entrepreneurial orientation;

References

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  8. Bhuian, Shahid N. & Menguc, Bulent & Bell, Simon J., 2005. "Just entrepreneurial enough: the moderating effect of entrepreneurship on the relationship between market orientation and performance," Journal of Business Research, Elsevier, vol. 58(1), pages 9-17, January.
  9. Harris, Lloyd C. & Ogbonna, Emmanuel, 2006. "Initiating strategic planning," Journal of Business Research, Elsevier, vol. 59(1), pages 100-111, January.
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