Experience base, strategy-by-doing and new product performance

• Main Authors: CHEN, Liang, WANG, Mengmeng, CUI, Lin, LI, Sali
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2021
• Subjects: digital innovation; innovation performance; product development; product portfolio; strategy-by-doing; Strategic Management Policy; Technology and Innovation
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/7219; https://ink.library.smu.edu.sg/context/lkcsb_research/article/8218/viewcontent/Strategic_Management_Journal___2020___Chen___Experience_base__strategy_by_doing_and_new_product_performance.pdf
• Institution: Singapore Management University

Research Summary Strategy research views firms' diverse experience base as critical to new product success. It also champions strategy-by-doing in entrepreneurial settings. This study juxtaposes and bridges these two perspectives to better understand product development. We propose that while a firm's product portfolio diversity contributes to new product success only to a certain degree, design iteration-a postlaunch strategy-by-doing approach-is positively associated with new product performance. Our core contribution points to a complementary relationship: strategy-by-doing helps mitigate the capacity constraints problem that prevents firms from successfully adapting product development capabilities to a dynamic market. Our analysis of a sample of 2,182 nascent mobile apps from 564 top producers in the U.S. market supports our hypotheses. We discuss implications for product development, strategy-by-doing, and technology innovation literature.Managerial Summary Successful product development establishes firms' competitive advantage. The burgeoning digital economy increasingly prompts product development to depend on strategy-by-doing and requires firms to adapt a product's design over its lifecycle. Through analyzing a sample of newly launched mobile apps in the U.S. market, we find that while a firm's product portfolio diversity improves new product success to a certain degree, design iteration, a distinct approach to strategy-by-doing, underpins a new product's continual attractiveness to users. Moreover, frequent design iterations can overcome the barriers that innovator firms face when applying a diverse repertoire of experiences to product development.