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Selecting Product Development Projects: Pioneering versus Incremental Innovation Strategies

Author

Listed:
  • Abdul Ali

    (Department of Marketing, College of Business and Management, University of Maryland, College Park, Maryland 20742)

  • Manohar U. Kalwani

    (Krannert Graduate School of Management, Purdue University, West Lafayette, Indiana 47907)

  • Dan Kovenock

    (Krannert Graduate School of Management, Purdue University, West Lafayette, Indiana 47907)

Abstract

In this paper, we investigate project selection choices of duopolists facing two alternatives: undertaking a "pioneering" type project (Type A) aimed to develop a highly innovative product, or an "incremental innovation" type project (Type B) aimed to develop a less innovative product such as the modification of an existing product. A key objective of our research is to examine how firm characteristics such as their differential efficiencies in completing projects, differences in the degree of substitutability between Type A and B products, and first mover advantages affect product development strategies. We develop a game-theoretic model to obtain insights into the project selection problem taking into account competitive reactions to a firm's choice of project development strategies and technical uncertainties associated with project completion times. We report model findings on recommended project selection strategies for efficient and disadvantaged firms. Further, we examine how a firm's choice of a Type A project is affected by an increase in the variance of the project completion time of a Type A project relative to that of a Type B project, while the ratio of their mean completion times is held constant.

Suggested Citation

  • Abdul Ali & Manohar U. Kalwani & Dan Kovenock, 1993. "Selecting Product Development Projects: Pioneering versus Incremental Innovation Strategies," Management Science, INFORMS, vol. 39(3), pages 255-274, March.
    • Handle: RePEc:inm:ormnsc:v:39:y:1993:i:3:p:255-274
    DOI: 10.1287/mnsc.39.3.255
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    Cited by:

    1. Schicker, Günter & Strassl, Johann, 2019. "Produktportfolio-Management im Zeitalter der Digitalisierung," Weidener Diskussionspapiere 69, University of Applied Sciences Amberg-Weiden (OTH).
    2. V. Krishnan & Karl T. Ulrich, 2001. "Product Development Decisions: A Review of the Literature," Management Science, INFORMS, vol. 47(1), pages 1-21, January.
    3. Avlonitis, George J. & Salavou, Helen E., 2007. "Entrepreneurial orientation of SMEs, product innovativeness, and performance," Journal of Business Research, Elsevier, vol. 60(5), pages 566-575, May.
    4. Boaz Golany & Moshe Kress & Michal Penn & Uriel G. Rothblum, 2012. "Resource allocation in an asymmetric technology race with temporary advantages," Naval Research Logistics (NRL), John Wiley & Sons, vol. 59(2), pages 128-145, March.
    5. Zhili Tian & Haresh Gurnani & Yi Xu, 2021. "Collaboration in Development of New Drugs," Production and Operations Management, Production and Operations Management Society, vol. 30(11), pages 3943-3966, November.
    6. Zschocke, Mark S. & Mantin, Benny & Jewkes, Elizabeth M., 2013. "Mature or emerging markets: Competitive duopoly investment decisions," European Journal of Operational Research, Elsevier, vol. 228(3), pages 612-622.
    7. Ozge Turut & Elie Ofek, 2012. "Innovation Strategy and Entry Deterrence," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(3), pages 583-631, September.
    8. Weyant, John P., 2011. "Accelerating the development and diffusion of new energy technologies: Beyond the "valley of death"," Energy Economics, Elsevier, vol. 33(4), pages 674-682, July.
    9. Scott A. Shane & Karl T. Ulrich, 2004. "50th Anniversary Article: Technological Innovation, Product Development, and Entrepreneurship in Management Science," Management Science, INFORMS, vol. 50(2), pages 133-144, February.
    10. Ghodbane Adel & Affes Habib, 2018. "Mediating Role of Entrepreneurial Orientation on the Relationship Between Relational Network and Competitive Advantages of Tunisian Contractors," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(2), pages 665-679, June.
    11. Thakur-Wernz, Pooja & Bruyaka, Olga & Contractor, Farok, 2022. "Sourcing portfolio diversity in new product development: Antecedents and performance implications," Journal of Business Research, Elsevier, vol. 150(C), pages 179-193.
    12. Janez Prašnikar & Tanja Rajkovic & Maja Vehovec, 2008. "Competencies Driving Innovative Performance of Slovenian and Croatian Manufacturing Firms," Working Papers 0802, The Institute of Economics, Zagreb.
    13. Florian Kellner & Bernhard Lienland & Sebastian Utz, 2021. "A multi‐criteria decision‐making approach for assembling optimal powertrain technology portfolios in low GHG emission environments," Journal of Industrial Ecology, Yale University, vol. 25(6), pages 1412-1429, December.
    14. Cho, Keun-Tae & Kwon, Cheol-Shin, 2004. "Hierarchies with dependence of technological alternatives: A cross-impact hierarchy process," European Journal of Operational Research, Elsevier, vol. 156(2), pages 420-432, July.
    15. Christoph H. Loch & Stylianos Kavadias, 2002. "Dynamic Portfolio Selection of NPD Programs Using Marginal Returns," Management Science, INFORMS, vol. 48(10), pages 1227-1241, October.
    16. Sachon, Marc & Paté-Cornell, Elisabeth, 2002. "Managing technology development for safety-critical systems," IESE Research Papers D/465, IESE Business School.
    17. Henkel, Joachim & Rønde, Thomas & Wagner, Marcus, 2015. "And the winner is—Acquired. Entrepreneurship as a contest yielding radical innovations," Research Policy, Elsevier, vol. 44(2), pages 295-310.
    18. Christian Thies & Christoph Hüls & Karsten Kieckhäfer & Jörg Wansart & Thomas S. Spengler, 2022. "Project portfolio planning under CO2 fleet emission restrictions in the automotive industry," Journal of Industrial Ecology, Yale University, vol. 26(3), pages 937-951, June.
    19. Hao Zhao, 2003. "R&D Competition Between an Incumbent and an Entrant: An Integrated Model of R&D Investment, Performance Improvement, and Time-to-Market," Review of Marketing Science Working Papers 2-2-1023, Berkeley Electronic Press.
    20. Wang, Yanping & Gao, Jie & Wei, Zelong, 2022. "The double-edged sword of servitization in radical product innovation: The role of latent needs identification," Technovation, Elsevier, vol. 118(C).
    21. Rønde, Thomas & Henkel, Joachim & Wagner, Marcus, 2010. "And the Winner Is--Acquired: Entrepreneurship as a Contest with Acquisition as the Prize," CEPR Discussion Papers 8147, C.E.P.R. Discussion Papers.
    22. Wang, Xinyi & Zeng, Deming & Dai, Haiwen & Zhu, You, 2020. "Making the right business decision: Forecasting the binary NPD strategy in Chinese automotive industry with machine learning methods," Technological Forecasting and Social Change, Elsevier, vol. 155(C).
    23. Raul O. Chao & Stylianos Kavadias, 2008. "A Theoretical Framework for Managing the New Product Development Portfolio: When and How to Use Strategic Buckets," Management Science, INFORMS, vol. 54(5), pages 907-921, May.
    24. Schicker, Günter & Strassl, Johann, 2015. "A call for action - warum sich das professionelle Managementdes Service Portfolios in der Industrie auszahlt," Weidener Diskussionspapiere 53, University of Applied Sciences Amberg-Weiden (OTH).

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