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An Aspiration Adaptation Based Model of the Timing of Product Innovation

Author

Listed:
  • Pittnauer, Sabine
  • Hohnisch, Martin
  • Stauffer, Dietrich

Abstract

This paper applies the theory of aspiration adaptation to industrial economics. It is motivated by the question, frequently raised in the context of theoretical and empirical research on industrial innovation, of what triggers a firm's innovative activity. We develop a model of the management's decision-making relating a firm's competitive behavior, in particular the decision to start the development of a new product generation, to the current and past values of the firm's growth rate and profitability. This linkage offers an alternative perspective on the incentives for innovation. Furthermore, we explore the relationship between firm size and innovativeness resulting from our model.

Suggested Citation

  • Pittnauer, Sabine & Hohnisch, Martin & Stauffer, Dietrich, 2003. "An Aspiration Adaptation Based Model of the Timing of Product Innovation," Bonn Econ Discussion Papers 11/2003, University of Bonn, Bonn Graduate School of Economics (BGSE).
    • Handle: RePEc:zbw:bonedp:112003
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    More about this item

    Keywords

    Aspiration Adaption; Bounded Rationality; Product Innovation;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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