Sorescu et al. (2003): Sources and financial consequences of radical innovation: insights from pharmaceuticals
7 important questions on Sorescu et al. (2003): Sources and financial consequences of radical innovation: insights from pharmaceuticals
There are four types of product innovations. Which ones are those? And how are those positioned in the matrix?
- Incremental innovation
- Low newness of technology
- Low customer-need fulfillment
- Market breakthrough
- Low newness of technology
- High customer-need fulfillment
- Technological breakthrough
- High newness of technology
- Low customer-need fulfillment
- Radical innovation
- High newness of technology
- High customer-need fulfillment
Which four RQ's are researched in the paper by Sorescu et al. (2003)?
- Who introduces a greater number of radical innovations: dominant or non-dominant firms?
- How great are the financial rewards to radical innovations, and how do these rewards vary across dominant and non-dominant firms?
- Is it only a firms’ resources in the aggregate or also its focus and leverage of resources that make its innovations more financially valuable?
- Which are more valuable: innovations that incorporate a breakthrough technology or innovations that provide a substantial increase in customer benefits?
How is dominance defined? And what are its three dimensions?
This incorporates three dimensions:
- Market share
- Assets
- Profits
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How is financial value assessed in this study?
Result: Are radical innovations, technological breakthroughs and market breakthroughs valued more highly when introduced by firms with low or high product scope?
Result: Which type of product innovation (radical innovations, technological breakthroughs and market breakthroughs) is valued the highest?
- Radical innovations are valued the higher then technological and market breakthroughs
- No differneces in valuation between technological and market breakthrougs found
What are the 3 main conclusions of the paper by Sorescu et al. (2003)?
- The financial rewards of innovation vary dramatically across firms and are tied closely to firm’s resource base.
- Firms that provide higher per-product levels of marketing and technology support obtain much greater financial rewards from their radical innovations than do other firms.
- Firms that have greater depth and breadth in their product portfolio also gain more from their radical innovations.
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