Determinants of radical product innovations

Time and time again companies with leading positions in the market place lose their dominance when a radical change occurs in the technological basis. In some cases, the survival of companies is in jeopardy because old technology‐investments hinder managers from adopting new technologies. Following on from the resource‐based view, the purpose of this paper is to develop an approach which explains the ability of a company to generate radical product innovations through the willingness of managers and employees to put aside their existing knowledge and acquire new skills.

The paper uses a causal analytic model to demonstrate the key influences on radical product innovations. The model incorporates formative indicators and we use a partial least squares approach to fit it. Since the central termini of this approach embody hypothetical constructs, causal modeling is the best‐suited approach to capture complex theoretical phenomena.

The results show that the willingness to abandon investments strongly determines radical product innovations. There obviously are key elements for cutting off traditional‐style investments with respect to new ideas that in turn foster radical outcomes.

Since a causal analytic model is used, can be pictured a “real‐world” innovation making process only to a certain extent. Even though this paper covers only a partial view of reality, it cannot fundament an approach that is absolutely free of errors. As for any other model, retests are suggested.

This paper extends the 1998 findings of Tellis and Chandy by offering a more detailed analysis of radical innovation drivers. Results address researchers as well as practitioners, providing insights on coping with difficulties of abandoning traditional investments.