The authors would like to thank Prof. Anthony Di Benedetto, the two JPIM anonymous reviewers, and the participants of the 17th International Product Development and Management Conference in Murcia for their comments on an early draft of the paper. We are in debt to Antonio Ghezzi, Filippo Renga, Marta Valsecchi, and Matteo Ferrari for their tireless help in data collection and analysis.
Launch Decisions and the Early Market Survival of Innovations: An Empirical Analysis of the Italian Mobile Value-Added Services (VAS) Industry†
Version of Record online: 1 SEP 2013
© 2013 Product Development & Management Association
Journal of Product Innovation Management
Volume 30, Issue Supplement S1, pages 174–187, December 2013
How to Cite
Frattini, F., Dell'Era, C. and Rangone, A. (2013), Launch Decisions and the Early Market Survival of Innovations: An Empirical Analysis of the Italian Mobile Value-Added Services (VAS) Industry. Journal of Product Innovation Management, 30: 174–187. doi: 10.1111/jpim.12070
- Issue online: 16 OCT 2013
- Version of Record online: 1 SEP 2013
There is a surprisingly high number of new products and services that fail to produce enough return on the firm's investments in development and launch activities. Literature has shown that these failures can be due to a poorly planned and executed launch. Although a vast stream of research has studied how strategic and tactical launch decisions affect the performance of new products and services, some issues still need theoretical and empirical investigation. This paper aims to extend new product launch research in two ways. First, it studies how tactical launch decisions (i.e., investments in advertising and involvement of external organizations in the launch process) interact with an important strategic choice (i.e., the degree of radicalness of the new product or service) to affect new product performance. Second, it focuses on a particular dimension of performance, that is, early market survival, which has been overlooked in launch strategy and tactics research so far. Using a data set comprising more than 9300 new mobile value-added services launched in Italy between 2003 and 2006, the paper finds that launch tactics interact with the radicalness of the innovation to affect early market survival. In particular, communicating the distinctive characteristics of the new product or service and partnering with external organizations during the launch process are tactics that work particularly well with radical innovations. This is possibly due to the fact that they help reduce customers’ uncertainty regarding expected benefits and transaction costs, and hence contribute to win their resistance to adopt the innovation soon after launch. Investments in corporate advertising lead instead to a tangible improvement of the probability of early market survival for both radical and incremental innovations. In other words, the positive impact on the probability of early survival of increasing investments in corporate advertising appears to be relevant for both radically and incrementally new services. One possible explanation is that this tactic helps increase the number of potential customers who come to know about the existence of the innovating firms and its offering soon after launch, but this is likely to be equally important to stimulate early diffusion of both incremental and radical innovations.