Tài liệu Competitive Response to Radical Product Innovations - Khaled Aboulnasr, Om Narasimhan, Edward Blair,

Competitive Response to Radical Product Innovations - Khaled Aboulnasr, Om Narasimhan, Edward Blair, & Rajesh Chandy
(From page 97 to 110)

Competitive Response to Radical
Product Innovations
Radical product innovations are often agents of creative destruction. They threaten to destroy existing market
positions, and yet they often yield vast new market opportunities. This article examines how competitors respond
to the introduction of radical product innovations. The authors argue that competitive response to radical product
innovations is inherently different from response to the incremental innovations that are typically studied in existing
research. They introduce the dual concepts of market expansion and entry thresholds to develop new hypotheses
about competitive response. Some of these hypotheses contradict prior literature. Using objective data from the
U.S. pharmaceutical industry between 1997 and 2001, they estimate a shared-frailty hazard model to explain the
competitive response to radical product innovations. The results show that the likelihood of competitive response is
substantially higher when the introducing firm is large or market dependent. Moreover, the response is highest
when the innovation is introduced in a small market by a large firm. These results contradict those from much prior
research on competitive response to product innovation.
Keywords: innovation, competition, market expansion, entry thresholds