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New Product Innovation with Multiple Features and Technology Constraints

Author

Listed:
  • Kathy A. Paulson Gjerde

    (College of Business Administration, Butler University, 4600 Sunset Avenue, Indianapolis, Indiana 46208-3485)

  • Susan A. Slotnick

    (School of Management, Arizona State University West, 4701 W. Thunderbird Road, Phoenix, Arizona 85069-7100)

  • Matthew J. Sobel

    (Weatherhead School of Management, Case Western Reserve University, 10900 Euclid Avenue, Cleveland, Ohio 44106-7235)

Abstract

We model a firm's decisions about product innovation, focusing on the extent to which features should be improved or changed in the succession of models that comprise a life cycle. We show that the structure of the internal and external environment in which a firm operates suggests when to innovate to the technology frontier. The criterion is maximization of the expected present value of profits during the life cycle. Computational studies complement the theoretical results and lead to insights about when to bundle innovations across features. The formalization was influenced by extensive interviews with managers in a high-technology firm that dominates its industry.

Suggested Citation

  • Kathy A. Paulson Gjerde & Susan A. Slotnick & Matthew J. Sobel, 2002. "New Product Innovation with Multiple Features and Technology Constraints," Management Science, INFORMS, vol. 48(10), pages 1268-1284, October.
    • Handle: RePEc:inm:ormnsc:v:48:y:2002:i:10:p:1268-1284
    DOI: 10.1287/mnsc.48.10.1268.270
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    References listed on IDEAS

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    Cited by:

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    3. Beschorner, Patrick Frank Ernst, 2008. "Do Shorter Product Cycles Induce Patent Thickets?," ZEW Discussion Papers 08-098, ZEW - Leibniz Centre for European Economic Research.
    4. Ilan Lobel & Jigar Patel & Gustavo Vulcano & Jiawei Zhang, 2016. "Optimizing Product Launches in the Presence of Strategic Consumers," Management Science, INFORMS, vol. 62(6), pages 1778-1799, June.
    5. 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.
    6. Caulkins, Jonathan P. & Hartl, Richard F. & Kort, Peter M. & Feichtinger, Gustav, 2007. "Explaining fashion cycles: Imitators chasing innovators in product space," Journal of Economic Dynamics and Control, Elsevier, vol. 31(5), pages 1535-1556, May.
    7. Michele Gorgoglione & Achille Claudio Garavelli & Umberto Panniello & Angelo Natalicchio, 2023. "Information Retrieval Technologies and Big Data Analytics to Analyze Product Innovation in the Music Industry," Sustainability, MDPI, vol. 15(1), pages 1-16, January.
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    9. Arruda-Filho, Emílio J.M. & Lennon, Mark M., 2011. "How iPhone innovators changed their consumption in iDay2: Hedonic post or brand devotion," International Journal of Information Management, Elsevier, vol. 31(6), pages 524-532.
    10. R. Mark Krankel & Izak Duenyas & Roman Kapuscinski, 2006. "Timing Successive Product Introductions with Demand Diffusion and Stochastic Technology Improvement," Manufacturing & Service Operations Management, INFORMS, vol. 8(2), pages 119-135, June.
    11. Narayan Ramasubbu & Chris F. Kemerer, 2016. "Technical Debt and the Reliability of Enterprise Software Systems: A Competing Risks Analysis," Management Science, INFORMS, vol. 62(5), pages 1487-1510, May.
    12. Liu, Heng & Özer, Özalp, 2009. "Managing a product family under stochastic technological changes," International Journal of Production Economics, Elsevier, vol. 122(2), pages 567-580, December.
    13. Kalcheva, Ivalina & McLemore, Ping & Pant, Shagun, 2018. "Innovation: The interplay between demand-side shock and supply-side environment," Research Policy, Elsevier, vol. 47(2), pages 440-461.
    14. Sumitro Banerjee & Miklos Sarvary, 2009. "How incumbent firms foster consumer expectations, delay launch but still win the markets for next generation products," Quantitative Marketing and Economics (QME), Springer, vol. 7(4), pages 445-481, December.
    15. Susan H. Xu & Zhaolin Li, 2007. "Managing a Single-Product Assemble-to-Order System with Technology Innovations," Management Science, INFORMS, vol. 53(9), pages 1467-1485, September.
    16. Claussen, Jörg & Essling, Christian & Kretschmer, Tobias, 2015. "When less can be more – Setting technology levels in complementary goods markets," Research Policy, Elsevier, vol. 44(2), pages 328-339.
    17. Zhe OuYang & Peng Cheng & Yang Liu, 2020. "The role of product line breadth, product pre-entry experience, and market uncertainty in explaining followers’ speed of feature entry," Review of Managerial Science, Springer, vol. 14(6), pages 1221-1249, December.
    18. Pietro De Giovanni, 2020. "Recursive Effects to Study Feature-Based Capabilities in Supply Chain Management," Logistics, MDPI, vol. 4(4), pages 1-17, November.
    19. Du, Jingshu & Leten, Bart & Vanhaverbeke, Wim, 2014. "Managing open innovation projects with science-based and market-based partners," Research Policy, Elsevier, vol. 43(5), pages 828-840.
    20. Soo-Haeng Cho & Kevin F. McCardle, 2009. "The Adoption of Multiple Dependent Technologies," Operations Research, INFORMS, vol. 57(1), pages 157-169, February.
    21. Sergey M. Aseev & Masakazu Katsumoto, 2020. "On Optimal Leader’s Investments Strategy in a Cyclic Model of Innovation Race with Random Inventions Times," Games, MDPI, vol. 11(4), pages 1-21, November.
    22. Viswanathan Vish Krishnan & Junghee Lee & Oleksiy Mnyshenko & Hyoduk Shin, 2019. "Inclusive Innovation: Product Innovation in Technology Supply Chains," Manufacturing & Service Operations Management, INFORMS, vol. 21(2), pages 327-345, April.
    23. Markus Plewa, 2017. "Long-Run Dynamics Between Product Life Cycle Length And Innovation Performance In Manufacturing," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 21(01), pages 1-20, January.

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