*We acknowledge the funding received from the Education and Science Ministry (research project SEJ2006-08854/ECON), Fundacion Cajamurcia and the Seneca Foundation—Science and Technology Agency from the Region of Murcia (research project 03119/PHCS/05) to undertake this research. The authors are grateful to the editor of JPIM and anonymous reviewers for their help in improving this article.
Product Quality and New Product Performance: The Role of Network Externalities and Switching Costs*
Article first published online: 12 JUL 2011
© 2011 Product Development & Management Association
Journal of Product Innovation Management
Special Issue: Special Issue from the PDMA and EIASM International Research Conference on New Product Development, Murcia, Spain, June 2010
Volume 28, Issue 6, pages 915–929, November 2011
How to Cite
Molina-Castillo, F.-J., Munuera-Alemán, J.-L. and Calantone, R. J. (2011), Product Quality and New Product Performance: The Role of Network Externalities and Switching Costs. Journal of Product Innovation Management, 28: 915–929. doi: 10.1111/j.1540-5885.2011.00847.x
- Issue published online: 9 OCT 2011
- Article first published online: 12 JUL 2011
Research about the critical drivers of new product success is perhaps one of the thorniest issues confronting academic research in the field. Among them, product quality is considered a crucial element to obtain a competitive advantage. However, empirical evidence suggests low returns on product quality investments in new products, and consequent manager claims for an explanation of whether quality investments are fruitful for the firm. Recently, a new research stream has suggested that the role of other complementary products (indirect network externalities) and the critical mass of adopters (direct network externalities) lead to higher market returns than quality itself. Moreover, researchers disagree about the perverse or positive effects that the switching costs associated with the product have on the short- and long-term performance of the firm. In this paper, we propose that, as products and technologies become more interconnected, the associated network effects and switching costs will play an important role with regard to new product performance, both independently and in conjunction with its quality. We empirically test a model that relates product quality, network effects, and switching costs to short-term/long-term new product performance, using data collected from 255 innovative products. The data analysis indicates that network effects, and consumers' switching costs, can modify previous findings with regard to the isolated product quality consequences concerning new product performance. Overall, the results of this study may help firms manage the relationship between quality, network externalities, and switching costs more efficiently, both in the short term and in the long term.