Does complexity deter customer-focus?
Article first published online: 22 JUL 2011
Copyright © 2011 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 33, Issue 2, pages 137–161, February 2012
How to Cite
Ethiraj, S. K., Ramasubbu, N. and Krishnan, M.S. (2012), Does complexity deter customer-focus?. Strat. Mgmt. J., 33: 137–161. doi: 10.1002/smj.947
- Issue published online: 8 DEC 2011
- Article first published online: 22 JUL 2011
- Accepted manuscript online: 5 JUL 2011 10:06AM EST
- Manuscript Revised: 13 JUN 2011
- Manuscript Received: 20 JAN 2010
- qualitative study;
- software industry
Economic models suggest that firms use a simple cost-benefit calculation to evaluate customer requests for new product features, but an extensive organizational literature shows the decision to implement innovation is more nuanced. We address this theoretical tension by studying how firms respond to customer requests for incremental product innovations, and how these responses change when the requested innovation is complex. Using large sample empirical analyses combined with detailed qualitative data drawn from interviews, we find considerable variance in the relationship between customer demands, complexity, and investments in incremental innovations. The qualitative study revealed the importance of organization structures, competitive pressures, and incentives for resource allocation processes. Copyright © 2011 John Wiley & Sons, Ltd.