Advanced Search
MyIDEAS: Login

Technology Selection and Commitment in New Product Development: The Role of Uncertainty and Design Flexibility

Contents:

Author Info

  • V. Krishnan

    ()
    (McCombs School of Business, The University of Texas at Austin, Austin, Texas 78712)

  • Shantanu Bhattacharya

    ()
    (INSEAD, Boulevard de Constance, Fontainebleau, 77305, France)

Registered author(s):

    Abstract

    Selecting the right technologies to incorporate in new products is a particularly challenging aspect of new product definition and development. While newer advanced technologies may offer improved performance, they also make the product development process more risky and challenging. In this paper, we focus on the problem of technology selection and commitment under uncertainty, a major challenge to firms in turbulent environments. We argue that the "pizza-bin" approach of rejecting prospective technologies outright may not serve firms well when the pressure to differentiate products is enormous. After motivating the challenges and decisions facing firms using a real-life application from Dell Computer Corporation, we formulate a mathematical model of a firm that must define its products in the presence of technology uncertainty. Specifically, the firm faces two options: (i) a proven technology that is known to be viable and (ii) a prospective technology that offers superior price to performance results but whose viability is not a fully certain outcome. To minimize the impact of technology uncertainty, we consider two approaches to design flexibility, termed parallel path and sufficient design, which allow the firm to concurrently develop its products while the technology is being validated. Our analysis helps understand appropriateness of the different flexible design approaches. We illustrate our model with the Dell portable computer example and note the managerial implications of our analysis.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://dx.doi.org/10.1287/mnsc.48.3.313.7728
    Download Restriction: no

    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 48 (2002)
    Issue (Month): 3 (March)
    Pages: 313-327

    as in new window
    Handle: RePEc:inm:ormnsc:v:48:y:2002:i:3:p:313-327

    Contact details of provider:
    Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA
    Phone: +1-443-757-3500
    Fax: 443-757-3515
    Email:
    Web page: http://www.informs.org/
    More information through EDIRC

    Related research

    Keywords: New product development; Design flexibility; Technology selection;

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Lau Antonio, K.W. & Yam, Richard C.M. & Tang, Esther, 2007. "The impacts of product modularity on competitive capabilities and performance: An empirical study," International Journal of Production Economics, Elsevier, vol. 105(1), pages 1-20, January.
    2. Lacourbe, Paul, 2012. "A model of product line design and introduction sequence with reservation utility," European Journal of Operational Research, Elsevier, vol. 220(2), pages 338-348.
    3. Kretschmer, Tobias & Rösner, Mariana, 2010. "Increasing Dominance - the Role of Advertising, Pricing and Product Design," Discussion Papers in Business Administration 11500, University of Munich, Munich School of Management.
    4. Wang, Juite & Yang, Chung-Yu, 2012. "Flexibility planning for managing R&D projects under risk," International Journal of Production Economics, Elsevier, vol. 135(2), pages 823-831.
    5. Ma, Daw & Chang, Chia-Chin & Hung, Shiu-Wan, 2013. "The selection of technology for late-starters: A case study of the energy-smart photovoltaic industry," Economic Modelling, Elsevier, vol. 35(C), pages 10-20.
    6. Gil, Nuno & Miozzo, Marcela & Massini, Silvia, 2012. "The innovation potential of new infrastructure development: An empirical study of Heathrow airport's T5 project," Research Policy, Elsevier, vol. 41(2), pages 452-466.
    7. Axarloglou, Kostas & Visvikis, Ilias & Zarkos, Stefanos, 2012. "The Time Dimension And Value Of Flexibility In Resource Allocation: The Case Of The Maritime Industry," DUTH Research Papers in Economics 2-2012, Democritus University of Thrace, Department of Economics.
    8. van Soest, Daan P., 2005. "The impact of environmental policy instruments on the timing of adoption of energy-saving technologies," Resource and Energy Economics, Elsevier, vol. 27(3), pages 235-247, October.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:48:y:2002:i:3:p:313-327. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.