dc.description.abstract | Innovation generates new products and services, introduces new ways of conducting
business, and ultimately increases business profits, national income, and consumer
wellbeing. Therefore, being innovative is key for any business, because it provides
competitive advantages, enables product differentiation, reduces production costs,
improves dynamic capabilities, and strengthens absorptive capacities. Moreover,
innovation is vital if entrepreneurial new and small firms are to survive and to compete
with larger and established firms. Consequently, there is great academic and practical
interest in defining and measuring innovation. However, to date, measures of innovation
have lacked reliability and consistency across products, across industries, and across time.
In this thesis, a new way of measuring innovativeness through a direct and
objective assessment of product innovation is proposed that can be applied to any product
in any market. It is especially useful for entrepreneurial new and small firms, because
most current measures of product innovativeness have been developed in the context of
larger firms and do not apply well to new and small businesses that do not have an explicit
R&D department or budget, and few if any patent applications in the early stages of their
existence. In any case, firm-level measures tend to focus on antecedent and consequential
measures that do not correlate well with innovativeness at the product level, which is of
prime importance to entrepreneurs and their investors. Some measures do focus on the
product level, but these tend to be subjective (reliant on opinions); may be simplistically
categorical (e.g. radical vs. incremental); and may be ordinal (e.g. Likert scales) rather
than cardinal objective measures.
To rectify these measurement, reliability, and consistency problems, an authentic
measure of product innovativeness is developed that is direct (i.e. measured at the product
level); assesses observable innovations in the product (i.e. output driven); objective (i.e. independent of manager or customer opinion); contemporaneous (i.e. reflective of the
specific timing of the innovation) and results in a continuous cardinal measure that can
indicate absolute values of product innovativeness.
This new measure ensures validity, as it focuses directly on the product’s
innovations, and consistency across observations, as it systematically measures
observable novel aspects of the product, such that the measure can be verified externally
by a third party. For researchers, this new measure will facilitate reliable inter-firm
comparisons and enable longitudinal studies of product innovativeness, its causal
antecedents, and its consequences. The new measure will also prove useful for
entrepreneurs and their investors, as it will provide more reliable and comparative
information on the innovativeness of new products relative to others. It is equally
applicable to product innovation by larger firms, and in that context could be tested for
efficacy against the established measures.
The new measure of product innovativeness integrates multiple gradations of
both technical novelty and market novelty using complex algorithms that nonetheless
reduce to a simple spreadsheet calculation (or an “app”) that computes the “compound
product innovativeness score” effortlessly. Application of the new measure is
demonstrated, both cross-sectional and longitudinal studies, in the context of the U.S. smartphone industry. | |