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First to market: Is technological innovation in new product development profitable in health care industries?

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  • Xin, Jenny Y.
  • Yeung, Andy C.L.
  • Cheng, T.C.E.

Abstract

Do innovative products incorporated advanced technologies help firms improve operating performance? In this study we traced the operating performance of 168 publicly traded manufacturing firms in the USA that announced technologically innovative products in two major industries from the health care domain, namely pharmaceuticals and medical instruments. We employed the event-study methodology and collected objective financial data from Compustat. We found that technologically innovative products have a statistically significant positive effect on operating performance. The median abnormal increase in return-on-assets ranged from 2.20% to 7.07% over a four-year period. The median abnormal increase in return-on-sales ranged from 4.16% to 4.70% and the median abnormal increase in sales-over-assets ranged from 5.85% to 7.38%.

Suggested Citation

  • Xin, Jenny Y. & Yeung, Andy C.L. & Cheng, T.C.E., 2010. "First to market: Is technological innovation in new product development profitable in health care industries?," International Journal of Production Economics, Elsevier, vol. 127(1), pages 129-135, September.
    • Handle: RePEc:eee:proeco:v:127:y:2010:i:1:p:129-135
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    2. Su, Meng & Rao, Vithala R., 2011. "Timing decisions of new product preannouncement and launch with competition," International Journal of Production Economics, Elsevier, vol. 129(1), pages 51-64, January.
    3. Tohru Yoshioka-Kobayashi & Tomofumi Miyanoshita & Daisuke Kanama, 2020. "Revisiting incremental product innovations in the food-manufacturing industry: an empirical study on the effect of intellectual property rights," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-19, December.
    4. Latan, Hengky & Chiappetta Jabbour, Charbel Jose & Lopes de Sousa Jabbour, Ana Beatriz & de Camargo Fiorini, Paula & Foropon, Cyril, 2020. "Innovative efforts of ISO 9001-certified manufacturing firms: Evidence of links between determinants of innovation, continuous innovation and firm performance," International Journal of Production Economics, Elsevier, vol. 223(C).
    5. Danny Samson & Marianne Gloet & Prakash Singh, 2017. "Systematic Innovation Capability: Evidence From Case Studies And A Large Survey," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 21(07), pages 1-43, October.
    6. Wang, Qiang & Zhao, Xiande & Voss, Chris, 2016. "Customer orientation and innovation: A comparative study of manufacturing and service firms," International Journal of Production Economics, Elsevier, vol. 171(P2), pages 221-230.
    7. Ni, John Z. & Flynn, Barbara B. & Jacobs, F. Robert, 2014. "Impact of product recall announcements on retailers׳ financial value," International Journal of Production Economics, Elsevier, vol. 153(C), pages 309-322.
    8. Roper, Stephen & Love, James H. & Bonner, Karen, 2017. "Firms’ knowledge search and local knowledge externalities in innovation performance," Research Policy, Elsevier, vol. 46(1), pages 43-56.
    9. Gunday, Gurhan & Ulusoy, Gunduz & Kilic, Kemal & Alpkan, Lutfihak, 2011. "Effects of innovation types on firm performance," International Journal of Production Economics, Elsevier, vol. 133(2), pages 662-676, October.
    10. Liu, Jianwei & Zhang, Xiaofei & Meng, Fanbo & Lai, Kee-hung, 2020. "Deploying gamification to engage physicians in an online health community: An operational paradox," International Journal of Production Economics, Elsevier, vol. 228(C).
    11. Hewitt-Dundas, Nola & Gkypali, Areti & Roper, Stephen, 2019. "Does learning from prior collaboration help firms to overcome the ‘two-worlds’ paradox in university-business collaboration?," Research Policy, Elsevier, vol. 48(5), pages 1310-1322.
    12. Prajogo, Daniel I., 2016. "The strategic fit between innovation strategies and business environment in delivering business performance," International Journal of Production Economics, Elsevier, vol. 171(P2), pages 241-249.
    13. Changhee Kim & Hyun Jung Kim, 2019. "A study on healthcare supply chain management efficiency: using bootstrap data envelopment analysis," Health Care Management Science, Springer, vol. 22(3), pages 534-548, September.
    14. Ahmed, Muhammad Usman & Kristal, Mehmet Murat & Pagell, Mark, 2014. "Impact of operational and marketing capabilities on firm performance: Evidence from economic growth and downturns," International Journal of Production Economics, Elsevier, vol. 154(C), pages 59-71.
    15. Ma, Li & Zhai, Xin & Zhong, Weiguo & Zhang, Zhi-Xue, 2019. "Deploying human capital for innovation: A study of multi-country manufacturing firms," International Journal of Production Economics, Elsevier, vol. 208(C), pages 241-253.

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