Publication Type

Journal Article

Version

acceptedVersion

Publication Date

4-2022

Abstract

Research Summary: Strategy research advises firms to capture generative value by continually introducing generational improvements on their existing products. This article considers a potential dark side of such strategy. We argue that generational innovation can elicit a negative near-term response from customers, as it distorts their ingrained behavioral patterns and imposes learning costs. Further, we propose that this negative effect of generational innovation will diminish when the product has a leading market position; and it will be more severe as the product's technological legacy lengthens. Using a difference-in-differences research design based on mobile game apps that multihome on two platforms, we find supportive evidence for our hypotheses and discuss the corresponding implications for strategy and technology innovation literature. Managerial Summary: Firms are advised to capture the value in future innovations that are spawned from their existing innovation, and they can do so by releasing improved generations of current products. This article examines a potential dark side of such strategy-that generational innovation could alienate existing customers by unsettling their ingrained behavioral patterns. Utilizing a unique dataset of mobile game apps, we find evidence of this negative effect, which tends to be weaker for market leaders but more damaging for those having already experienced numerous generational changes.

Keywords

demand side perspective, generational product innovation, generative appropriability, product iteration, technology innovation

Discipline

Strategic Management Policy | Technology and Innovation

Research Areas

Strategy and Organisation

Publication

Strategic Management Journal

Volume

43

Issue

4

First Page

792

Last Page

821

ISSN

0143-2095

Identifier

10.1002/smj.3338

Publisher

Wiley

Copyright Owner and License

Authors

Creative Commons License

Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Additional URL

https://doi.org/10.1002/smj.3338

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