New Product Exploration Under Environmental Turbulence

Authors:
Erwin Danneels;Rajesh Sethi
Affiliations:
Department of Management, University of Central Florida, Orlando, Florida 32816;Faculty of Consumer and Organizational Studies, Clarkson University, Potsdam, New York 13676
Venue:
Organization Science
Year:
2011

Citing 6
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Abstract

This study identifies two organizational factors that foster explorative products, willingness to cannibalize and future-oriented market scanning, and examines whether the relationships of these factors with exploration are contingent on environmental turbulence in customer, competitor, and technological sectors. The study analyzes data from 145 U.S. public manufacturing firms to examine the relationship between the two organizational factors and the degree to which the firms pursue explorative new products---new products that are meaningfully distinct from competing alternatives. Results suggest that both willingness to cannibalize and future-oriented market scanning promote explorative new products. The relationship of willingness to cannibalize with explorative products is stronger under customer turbulence. In contrast, the relationship of future-oriented market scanning with explorative products is weaker under customer and competitive turbulence and stronger under technological turbulence. The study concludes that the two organizational factors promote explorative new products, but their effectiveness is contingent on turbulence in different sectors of the firm's environment.