New Product Innovation with Multiple Features and Technology Constraints

Kathy A. Paulson Gjerde (), Susan A. Slotnick () and Matthew J. Sobel ()
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Kathy A. Paulson Gjerde: College of Business Administration, Butler University, 4600 Sunset Avenue, Indianapolis, Indiana 46208-3485
Susan A. Slotnick: School of Management, Arizona State University West, 4701 W. Thunderbird Road, Phoenix, Arizona 85069-7100
Matthew J. Sobel: Weatherhead School of Management, Case Western Reserve University, 10900 Euclid Avenue, Cleveland, Ohio 44106-7235

Management Science, 2002, vol. 48, issue 10, 1268-1284

Abstract: We model a firm's decisions about product innovation, focusing on the extent to which features should be improved or changed in the succession of models that comprise a life cycle. We show that the structure of the internal and external environment in which a firm operates suggests when to innovate to the technology frontier. The criterion is maximization of the expected present value of profits during the life cycle. Computational studies complement the theoretical results and lead to insights about when to bundle innovations across features. The formalization was influenced by extensive interviews with managers in a high-technology firm that dominates its industry.

Keywords: product development; innovation; technology management (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (25)

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