Heli Koski

Innovation and Dominant Design in Mobile Telephony

We document the evolution of product innovation and features in the mobile telephone handset market. We distinguish between two types of product innovation: vertical and horizontal innovation. Using data on mobile telephone handsets from 1990 to 2003, we study the emergence of a dominant design in vertical and horizontal innovations and find that, while vertical product characteristics converged to some extent, no dominant design emerged. For horizontal product characteristics, some horizontal innovations remained differentiated, whereas others were adopted in all new handset models, thus forming a dominant design in horizontal product features. We explain this pattern using the concept of dominant design and results from the theoretical literature on the incentives for horizontal and vertical differentiation.

Firm size, managerial practices and innovativeness: some evidence from Finnish manufacturing

In this study, we use a survey data on 398 Finnish manufacturing firms for the years 2002 and 2005 to empirically explore whether and which organisational factors explain why certain firms produce larger innovative research output than others, and whether the incentives to innovate that certain organisational practices generate differ between small and large firms, and between those firms that are operating in low-tech and high-tech industries. Our study indicates that there are vast differences in the organisational practices leading to more innovation both between small and large firms, and between the firms that operate in high- and low-tech industries. While innovation in small firms benefits from the practices that enhance employee participation in decision-making, large firms that have more decentralised decision-making patterns do not seem to innovate more than those with a more bureaucratic decision-making structure. The most efficient incentive for innovation among the sampled companies seems to be the ownership of a firm’s stocks by employees and/or managers. Performance-based wages also relates positively to innovation, but only when it is combined with a systematic monitoring of the firm’s performance.

New product development and firm value in mobile handset production

We study the effect of new product introduction on firm value. Using a unique sample on mobile phone handset introduction by the 16 largest major handset manufacturers from 1992 to 2002, we distinguish between truly innovative product introduction and imitative product introduction. We find that while most product introduction is imitative, both types of innovation increase firm value. However, truly innovative innovation is found to increase firm value by more than imitative introductions.