Investigating the Impact of Pace, Rhythm, and Scope of New Product Introduction (NPI) Process on Firm Performance

• Main Author: Sharma, Amalesh
• Format: Others
• Published: ScholarWorks @ Georgia State University 2017
• Subjects: new product introduction process; pace; rhythm; scope; event study; firm performance; endogeneity; unobserved heterogeneity
• Online Access: http://scholarworks.gsu.edu/marketing_diss/40; http://scholarworks.gsu.edu/cgi/viewcontent.cgi?article=1043&context=marketing_diss

Many potential benefits of new product introductions (NPI) have been identified in existing literature, yet there are empirical and theoretical evidence that suggests that such benefits are not assured. Building on the concepts of time compression diseconomies, absorptive capacity, and time diversification, we argue that benefits that a firm derives from introducing new products depend on the process of NPI, which we conceptualize as how and what products are introduced by the firm. We propose that pace, rhythm, and the scope are three important characteristics of the process of NPI that affect firm value. Further, we argue that this effect is moderated by organizational marketing and technological intensities. We use an unbalanced panel dataset of the products introduced by public firms between 1991 and 2015 to investigate the proposed framework in the bio-pharmaceutical industry. We estimate the proposed model using a multilevel modeling framework, accounting for endogeneity, unobserved heterogeneity, and heteroscedasticity. The proposed framework and modeling approach provide empirical support for the role of pace, rhythm and scope of NPI on firm performance, and guide managers on choosing the right growth strategy to improve new product performance.