مقاله انگلیسی رایگان در مورد استراتژی های سرمایه گذاری جاری و رهبری در نوآوری محصول – الزویر 2023

Abstract

     We study the inter-temporally optimal innovation strategies of incumbent manufacturing firms that compete in an established market and can extend their product line through product innovation. Firms invest in production capacity and R&D knowledge stock, where the R&D knowledge stock and the current R&D investment determine the hazard rate of innovation. Our findings show that the firms’ optimal R&D strategies are driven by a subtle interplay between the relative positions of their R&D knowledge stocks and their current relative positions on the established market. First, we find that under symmetric investment costs the knowledge leader should spend more on R&D than the knowledge laggard only if it has a substantially smaller market share on the established market. If the knowledge leader’s market share is sufficiently large, its optimal investment in R&D is so small that its innovation rate is lower than the knowledge laggard’s. Second, optimal investment in R&D knowledge is negatively affected by the opponent’s production capacity on the established market if the competitor has not innovated yet. However, we find that this effect is reversed after the competitor has successfully introduced the new product on the submarket. Third, the manufacturing firm with higher costs of adjusting production capacity for the established product has a higher incentive to engage in product innovation and might even achieve a higher total discounted profit than its more efficient competitor.

Introduction

     A considerable fraction of product innovations in related submarkets is accomplished by established incumbents (e.g. Buensdorf, 2016, Chandy, Tellis, 2000, Franco, Sarkar, Agarwal, Echambadi, 2009, King, Tucci, 2002, Sood, Tellis, 2011). This observation raises the question how an incumbent’s optimal strategy in an R&D race depends on its strength on its established market. To illustrate, in 2010 when Apple and Samsung introduced Tablet PCs and thus created a new submarket that coexisted with the established market of portable computers, they had relatively small market shares on the Laptop market (3.4% and 2.8% respectively) compared to Hewlett Packard and Dell (18% and 12% respectively). Interestingly, HP and Dell entered the Tablet market much later in 2013.1 In the market for smartphones, Nokia, as the clear market leader in the early 2000s (market share 2005: 32.5%), introduced its first touchscreen phone in 2011, while its initially smaller competitor Samsung (market share 2005: 12.7%) introduced its first smartphone with a touchscreen in 2008. As a result, Samsung achieved a higher market share in 2012 and also exhibited strongly positive dynamics of profit in the smartphone market compared to Nokia.

Conclusions

     In real-world markets, action-reaction or increasing dominance patterns of innovation can be observed. Under action-reaction, the smaller incumbent manufacturing firm in the established market becomes the innovation leader in the new market. Under increasing dominance, the dominant incumbent manufacturing firm in the established market also dominates the new market. In this paper, we develop a stochastic duopoly framework in order to highlight some of the drivers that endogenously lead to one of these patterns of innovation in equilibrium. In particular, we study the factors that determine the incentives of incumbent firms to invest in the development of a new product which extends their product range. Our dynamic setting particularly emphasizes the interplay between the firms’ relative positions in terms of their R&D knowledge stocks and their relative strengths on the market for the established product. We explicitly take into account that the adjustment of production capacities as well as the build-up of R&D knowledge are costly and take time.