An empirical study of the antecedents for radical product innovations and capabilities for transformation

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Abstract

Products of a completely new kind have the potential to seriously change the balance of power in existing markets or even to create new markets. But what factors favor radical product innovations? Working from an understanding of the discontinuities associated with radical innovations, an explanatory model emerges, which underlines the meaning of the transformation processes from the point of competencies available and markets addressed.

In this paper, we report on a quantitative, empirical study in some highly innovative industries. Our findings indicate that specific organizational and cultural characteristics work as antecedents for the required capabilities for transformation. These capabilities increase the propensity of an established company to introduce radical product innovations.

Introduction

Some highly innovative products have created completely new markets, which could not have been conceived prior to the introduction of these products. Other innovations have widely or completely displaced established products within existing markets. This applies, for example, to the semiconductor industry (Tushman and O‘Reilly, 1996) and to the computer industry (Christensen and Bower, 1996). Within the framework of these incisive innovations, a recurring pattern can be identified: very often, the companies that were dominant up to that point are displaced by other companies, which for their part, forfeit their dominance within the framework of the next innovation stage.

Obviously product innovations that could be considered as particularly incisive have the potential to both create new markets and completely change the balance of power within existing markets. The fate of individual companies is naturally always linked to the revolutionary changes described. Successful product innovations of this category henceforth referred to as “radical”, allow companies to establish themselves or to grow substantially. Missed or failed radical product innovations, however, can cause companies to decline or disappear from the market altogether.

Though some companies are completely displaced through missed radical product innovations, others can stake themselves as innovative companies in various markets despite some setbacks throughout the decades. This poses the question: what differentiates these two groups of companies? Why do some companies continue to succeed with highly innovative products, while others can never repeat their initial successes? The question what enables radical innovations is of central importance for companies, as it can be decisive for their long-term success or failure.

Section snippets

On the concept and nature of radical product innovations

When illustrating the potential of radical product innovations, we focused on the possible consequences in the market only, which is not yet sufficient for a definition. Researchers have defined radical product definitions in many different ways (for a review, see: Veryzer, 1998, Garcia and Calantone, 2002). Nevertheless, there are two elements that are used in most definitions: dimension and perspective. The dimensions used very consistently are technology and market (Chandy and Tellis, 1998,

What drives radical product innovation? Literature review and research hypotheses

The literature suggests a wide variety of attempts to provide an explanation to the question which organizational and cultural factors favor radical product innovations in established companies (for summaries, see: Chandy and Tellis, 1998, O’Connor and McDermott, 2004).

Since no unifying framework on this subject exists yet, we would like to use this paper to introduce a concept that might contribute to such a framework. This approach leads us to a hypothesized model, which will permit a

Sample

Our model on radical innovation focuses on intraorganizational forces. However, the industry environment (competitive intensity or environmental turbulence) can also affect innovation (Chandy and Tellis, 1998). Companies from the discrete manufacturing (35%), high-tech (22%), and pharmaceutical industries (40%) were included in the study.3 These industries are characterized by an environment where there is intensive competition, regular and dramatic technological

Evaluation of the measurement model

As described, methods of the first generation were used to check the scales and, if necessary, to purify them. The optimized scales were then checked in the second step with methods of the confirmatory factor analysis. In the result, it could be comprehensively evaluated whether the one-factor and one-dimensional structure presumed for each construct actually existed, and which indicators were suitable for measuring the constructs. Only these indicators were then used in the framework of the

Scholarly implications and directions for future research

We introduce with this paper a framework that provides an insight on how certain organizational and cultural factors can influence the propensity of an established company to introduce radical product innovations mediated by capabilities for transformation.

Due to the empirical support, an explanation model is now available that suggests that capabilities for transformation are crucial for the radical innovation activities of established companies. These capabilities mediate the influence of

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