Management of Technology and Innovation in Japan

276 C. Nakata and S. Im
New Product Advantage
As discussed by Hult and Ketchen (2001), a positional advantage held by a firm
should be rewarded with market share and/or profitability exceeding competitors’.
The reasoning is that customers perceive the firm offers greater value in its products
and services, and consequently shift purchases away from rivals. Therefore,
in relation to innovation efforts, when advantages are built into new products, the
products should be more strongly received in the marketplace, or have higher new
product performance. Researchers have found evidence of this effect in the U.S.,
Canada, Europe, and Japan. One of the earliest studies was conducted by Cooper
and Kleinschmidt (1987), who identified product advantage as one of nine drivers
for new product success among Canadian firms. Similarly, the researchers conducted
a study of chemical businesses in four North American and European
countries, and isolated superior quality, value, uniqueness, and need fulfillment as
the strongest predictors of new product success (Cooper and Kleinschmidt 1993).
More recently, Li and Calantone (1998) determined that advantage is significantly
linked to new product performance for American software firms. Also, surveys of
Japanese manufacturers indicate new product advantage correlates positively with
new product performance (Song and Parry 1997a; Song and Montoya-Weiss
2001).
Although the advantage-performance link appears robust and uniform, does it
hold in both Japan and Korea? Researchers have proposed that the relationship
depends on market conditions (Song and Parry 1997b; Cooper 1979). In mature
economies like Japan, an advantage tends to be of shorter duration due to market
saturation, responsive competition, and demanding customers (Kodama 1995).
Companies face severe competition even domestically, and have learned to introduce
new products in rapid succession simply to survive. Buyers face a constant
barrage of new offerings, but their choices continue to be based on what they perceive
as preferable qualities in one product over all others. However, in developing
countries such as Korea, new products are not always met with fast and adroit
responses from local competitors. There are simply fewer firms that have developed
superb innovation capabilities, making new product advantages more salient
and persistent. Yet in both countries, despite a difference in the duration of advantages,
the underlying market response to new product advantage is consistent:
greater advantage is recognized and preferred, leading to greater sales and profits
for the products that are superior. Therefore, we posit Japan and Korea are similar
with respect to the advantage-performance relationship:
H4: Higher new product advantage is associated with greater new product performance
in both Japan and Korea.