Types of Product Innovations and Small Business Performance in Hostile and Benign Environments

Authors

  • Robert E. Wright University of Illinois at Springfield
  • John C. Palmer University of Illinois at Springfield
  • Debra Perkins Customer Relationship Matrics

Abstract

The relationship between innovation and performance has been widely studied. In addition, many studies have examined moderating effects of types of competitive environments on this relationship. However, little work has been done to examine how specific types of product innovation strategies are related to performance in hostile and benign environments. Using results from a survey of a sample of small businesses, this paper used regression analysis to examine how degree of change in new product offerings and number of new product lines were related to satisfaction with financial performance. While neither type of innovation was related to satisfaction with performance in benign environments, the number of new lines developed was positively related to satisfaction with financial performance in hostile environments. The results from this sample indicate that the strategy of innovation through development of more new product lines may be preferable to developing dramatic innovations for small businesses in a hostile external environment.

References

Atuahene-Gima, K. (1995). An exploratory analysis of the impact of market orientation on new product performance. The Journal of Product Innovation Management, 12, 275-293.

Avlonitis, G. J., Papastathopolou, P. G., & Gounaris, S. P. (2001). An empirically-based typology of product innovativeness for new financial services: Success and failure scenarios. The Journal of Product Innovation Management, 18, 324-342.

Berthon, P. Mac Hulbert, J., and Pitt, L. (2004). Innovation or customer orientation? An empirical investigation. European Journal of Marketing, 38, 1065-1090.

Brown, R. (1992). Managing the "s" curves of innovation. The Journal of Consumer Marketing, 9,61-73.

Calanlone, R.. Schmidl, J.B., & DiBenedetto, C. A. (1997). New product activities and performance: The moderating role of environmental hostility. The Journal of Product Innovation Management, 14, 179-189.

Calantone, R., diBenedetto, C., & Bhoovaraghavan, S. (1994). Examining the relationship between degree of innovation and new product success. Journal of Business Research, 30, 143-148.

Carpenter, G.S. & Nakamolo, K. (1989). Consumer preference formation and pioneering advantage. Journal of Marketing Research, 26, 285-298.

Changhanti, R. & Changhanti, R. (1983). A profile of profitable and not-so-profitable small businesses. Journal of Small Business Management, 21,43-51.

Cooper, R.G. & deBrentani, U. (1991). New industrial financial services: What distinguishes the winners. The Journal of Product Innovation Management, 8, 75-90.

Covin, J. & Slevin, D. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10, 75-87.

deBrentani, U. (2001). Innovative versus incremental business services: different keys for achieving success. The Journal of Product Innovation Management, 18, 169-187.

Dess, G., Lumpkin, G., and Covin, J. (1997). Entrepreneurial strategy making and firm performance: Tests of contingency and configuration models. Strategic Management Journal, 18, 677-695.

Dhebar, A. (1996). Speeding high-tech producer, meet the balking consumer. Shan Management Review, 37, 37-49.

Figenbaum, A. & Karnani, A. (1991). Output flexibility-a competitive advantage for small firms. Strategic Management Journal, 12, 101-114.

Firth, R. W. & Narayanan, V. K. (1996). New product strategies of large, dominant product manufacturing firms: An exploratory analysis. The Journal of Product Innovation Management, 13, 334-347.

Flaherty, M. (1983). Market share, technology leadership, and competition in industrial semiconductor markets. In Technological Innovation, Management, and Policy. R. Rosenbloom (ed.), London: JAI Press.

Freel, M.S. & Robson, PJ.A. (2005). Small firm innovation, growth and performance. International Small Business Journal, 22, 561-575.

Friar, J. (1995). Competitive advantage through performance innovation in a competitive market. The Journal of Product Innovation Management, 12, 33-42.

Garcia, R. & Calantone, R. (2002). A critical look at technological innovation typology and innovativeness terminology: a literature review. The Journal of Product Innovation Management, 19, 110-132.

Goldenberg, J., Lehman, D.R., & Mazursky, D. (2001). The idea itself and the circumstances of its emergence as predictors of new product success. Management Science, 47, 69-84.

Gupta, A.K. & Govindarajan, V. (1984) Business unit strategy, managerial characteristics, and business unit effectiveness at strategy implementation. Academy of Management Journal, 27,25-41.

Hultink, E. J., Hart, S., Robben, H. S. J., & Griffin, A. (2000). Launch decisions and new product success: An empirical comparison of consumer and industrial products. The Journal of Product Innovation Management, 17, 5-23.

Hsueh, L. & Tu, Y. (2004). Innovation and the operational performance of newly established small and medium enterprises in Taiwan. Small Business Economics, 23, 99-113.

Kallenberg, A. (1986). Entrepreneurship in the 1980's: A study of small businesses in Indiana. Advances in the Study of Entrepreneurship, Innovation, and Economic Growth. G. Libecap (ed.), London: JAI press.

Karlsson. C. & Olsson, O. (1998). Product innovation in small and large enterprises. Small Business Economics. 10, 31-46.

Keller, R. T. (2004). A resource-based study of new product development: Predicting five-year later commercial success and speed to market, international Journal of Innovation Management, 8, 243-260.

Khandwalla, P.N. (1976/77). Some top management styles, their context and performance. Organization and Administrative Sciences, 7, 21 -51.

Lee, Y. & O'Connor, G.C. (2003). The impact of communication strategy on launching new products: The moderating role of product innovativeness. The Journal of Product Innovation Management, 20, 4-21.

Mascitelli, R. (2000). From experience: Harnessing tacit knowledge to achieve breakthrough innovation. The Journal of Product Innovation Management, 17, 179-193.

McDermott, C.M. & O'Connor, G.C. (2002). Managing radical innovation: an overview of emergent strategy issues. The Journal of Product Innovation Management, 19,424-437.

McMillan, G. S., Mauri, A., & Hamilton, III, R. D. (2003). The impact of publishing and patenting activities on new product development and firm performance: The case of the US pharmaceutical industry. International Journal of Innovation Management, 7, 213-221.

Meredith, J. (1987). The strategic advantages of new manufacturing technologies in small firms. Strategic Management Journal, 8, 249-258.

Mick, D. G. & Fournier, S. (1998). Paradoxes of technology: Consumer cognizance, emotions, and coping strategies. Journal of Consumer Research, 25, 123-143.

Miller, D. & Freisen, P. (1982). Innovation in conservative and entrepreneurial firms: Two models of strategic momentum. Strategic Management Journal, 3, 1-25.

Miller, D. & Toulouse, J. (1986). Strategy, structure, CEO personality, and performance in small firms. American Journal of Small Business, 10, 47-62.

Misra, S., Kim, D. & Lee, D.H. (1996). Factors affecting new product success: Cross country comparisons. The Journal of Product Innovation Management, 13, 530-550.

Redmond, W. H. (1995). An ecological perspective on new product failure: The effects of competitive overcrowding. The Journal of Product Innovation Management, 12, 200-213.

Robinson, R. B., Jr., & Pearce, J. A. (1988). Planned patterns of strategic behavior and their relationship to business-unit performance. Strategic Management Journal, 9, 43-60.

Robinson, W. T. (1990). Product innovation and start-up business market share performance. Management Science, 36^1279-1289.

Salavou, H., Baltas, G., Lioukas, S. (2004). Organisational innovation in SMEs: the importance ? strategic orientation and competitive structure. European Journal of Marketing, 38, 1091-1112.

Scarborough, N. & Zimmerer, T. (2000). Effective Small Business Management, 6th Edition. Upper Saddle River, New Jersey: Prentice-Hall.

Souder, W. E. & Song, X. M. (1997). Contingent product design and marketing strategies influencing new product success and failure in U.S. and Japanese electronics firms. The Journal of Product Innovation Management, 14, 21-34.

Tellis, GJ. & Colder, P.N. (1996). First to market, first to fail? Real causes of enduring market leadership. Sloan Management Review, 37, 65-75.

Tether, B. (1998). Small and large firms: Sources of unequal innovations. Research Policy, 27, 727-745.

Verbees, F. J. H. M., & Meulenberg, M.T.G., (2004). Market orientation, innovativeness, product innovation, and performance in small firms. Journal of Small Business Management, 42, 134-154.

Yap, C. M. & Souder, W. E. (1994). Factors influencing new product success and failure in small entrepreneurial high-technology electronics firms. The Journal of Product Innovation Management. 11,418-432.

Zahra, S. (1993). Environment, corporate entrepreneurship, and financial performance: A taxonomic approach. Journal of Business Venturing, 8, 319-340.

Downloads

Published

2004-05-20

Issue

Vol. 15 No. 2 (2004)

Section

Articles

License

The Journal of Small Business Strategy (the “Publisher”) and the Author(s) agree as follows:
 
1.Author(s) hereby grant to Publisher all right, title, and interest in and to the Work, including copyright to all means of expression by any method now known or hereafter developed, including electronic format. If Publisher does not publish the Work within two (2) years of the Effective Date, copyright shall revert back to the Author. Publisher agrees to always credit Author(s) as the author(s) of the Work.
 
2.Publisher hereby grants Author a royalty-free, limited license for the following purposes, provided the Work is always identified as having first been published by Publisher.
    •The right to make and distribute copies of all or part of the Work for use in teaching;
    •The right to use all or part of the material contained in the Work in a book by the Author(s), or in a collection of the Author(s)’s work;
    •The right to use and distribute the Work internally at the Author(s)’s place of employment, and for promotion and any other non-commercial purposes;
    •The right to use figures and tables from the Work for any purpose;
    •The right to make presentations of material from the Work;
    •The right to use and distribute the Work on the Author(s)’s Web site and on the Author(s)’s university’s institute repository;
Such license shall be effective when the Work is first published in the Journal of Small Business Strategy.
 
3.The Author(s) represents and warrants that the Work: (a) is the Author(s)’s original work and that Author(s) has full power to enter into this agreement; (b) does not infringe the copyright or property right of another; (c) contains no materials which is obscene, libelous, defamatory or violates another’s civil right, right of privacy, or is otherwise unlawful; and (d) has not been previously published, in whole or in part. Author(s) shall indemnify and hold Publisher harmless against loss or expenses arising from breach of any such warranties.

How to Cite

Types of Product Innovations and Small Business Performance in Hostile and Benign Environments. (2004). Journal of Small Business Strategy (archive Only), 15(2), 33-44. https://libjournals.mtsu.edu/index.php/jsbs/article/view/33