Dmitri G. Markovitch

Beyond Invention: The Additive Impact of Incubation Capabilities to Firm Value

Incubation is a process whereby the firm nurtures breakthrough discoveries and inventions to test their potential as new business platforms. The recent emergence of organizational roles associated with innovation incubation shows that internal incubation is becoming recognized as an important organizational capability. This development also suggests that firms that invest in discovery for competitive advantage recognize a need to leverage that investment more fully. While case studies describe incubation activities and note their importance, empirical research linking this capability to firm performance is limited. The current study represents an initial attempt at exploring the relationship empirically. Our main finding is that financial markets have difficulty valuing a firms exploratory discovery investments and that the presence of an incubation capability positively moderates the impact of such investments on firm market valuation. The implication of this result is that investments in certain types of R&D may be suboptimized if there is not a parallel investment in a capability to incubate the opportunities that arise from potentially breakthrough inventions.

Social learning and network externalities in decision making

Purpose This paper aims to identify the effects of social learning and network externalities by conditioning on product quality and early sales momentum. This approach is demonstrated using film sales data. Design/methodology/approach This study used econometric modeling approach. Findings It was found that both social learning and network externalities have significant and comparable impacts on film choice. We show that the relative effects of network externalities and social learning in the film market are robust to different momentum and quality definitions and to alternative estimation methods. Originality/value Scholars have long argued that social learning plays a key role in new product diffusion. In some product categories, consumer choice may also be influenced by network externalities, meaning that purchasing popular products may provide the consumer utility above and beyond that derived from product usage directly. We propose a novel identification approach to help quantify the relative magnitude of these two effects on new product sales.

Escalation of commitment in entrepreneurship-minded groups

Purpose – The purpose of this paper is to investigate commitment escalation tendencies and magnitude in groups of entrepreneurship-minded decision makers. Design/methodology/approach – The paper uses a software-based management simulation to expose 447 graduate business students in the USA and India to research stimuli under conditions that resemble important aspects of entrepreneurs’ business environment, such as a focus on overall firm performance. Unlike most previous escalation research that studied individuals, the primary unit of analysis is a three-person group. Findings – The paper demonstrates a positive relationship between the groups’ entrepreneurial intentions and escalation magnitude. The paper also finds a direct relationship between sunk costs and subsequent investment amounts, suggesting an additional route through which sunk costs may impact escalation behavior – anchoring and insufficient adjustment. Practical implications – The authors hope that the findings will stimulate further resea...

High or low season?: Contrasting launch timing considerations for big-budget and low-budget entertainment products

Purpose This paper aims to investigate the moderating impacts of seasonality on the effectiveness of new product commercialization strategies in short-lifecycle markets. The authors contextualize their theory in the vast and culturally significant entertainment industry sector and contrast the effects between independent films and big budget movies. Design/methodology/approach This study uses an econometric modeling approach. Findings This study finds that unlike new films by well-resourced studios, which must launch in a high season for best performance, independents can generate more revenue in low seasons under certain conditions. The study shows how seasonality moderates the effectiveness of new films’ commercialization strategies and how new product outcomes are different for small independent products than for big-budget productions with regards to distribution duration, advertising expenditure and product characteristics. Research limitations/implications This research extends the literature on launch timing, which examines various strategic tradeoffs. In contrast with the few extant studies whose concern is sensitizing to the effects of seasonality (Siqueiraet al., 2016), this research treats seasonality as an exploitable opportunity that can be strategically factored into business planning for small producers. Accordingly, this is the first study to theoretically and empirically investigate the moderating relationship between seasonality, marketing decisions, product characteristics and performance. Practical implications To achieve useful specificity, the study constructs its discussion around the highly seasonal entertainment industry sector. The study shows that seasonality moderates the effectiveness of new films’ commercialization decisions and that the strategic outcomes are different for small independent products than for major studio productions in particular. Originality/value In contrast with extant research whose concern is sensitizing to the effects of seasonality, our research treats seasonality as an exploitable opportunity that can be strategically factored into business planning. Accordingly, ours is the first study to theoretically and empirically investigate the moderating relationship between seasonality, marketing decisions, product characteristics and performance.

How to Advertise Radical Product Designs

Abstract New product designs can be radical in terms of new technology or new external form. Forms that are too radical, however, are often rejected by consumers because they represent new meanings to target buyers. We suggest that including designers’ beliefs, feelings, or intentions in advertising for products characterized by radical designs may help audiences contextualize and understand the new meanings embodied in the novel designs. This, in turn, can make such products more appealing to the average consumer. This paper presents an experimental study of viewer attitudes towards four radical new product designs when they are accompanied by designer philosophies. For all designs, the designer philosophies had positive impacts on viewer attitudes.