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The Curse of Innovation: A Theory of Why Innovative New Products Fail in the Marketplace

John T. Gourville

Harvard Business School

June 2005

HBS Marketing Research Paper No. 05-06

Highly innovative products fail in the marketplace at significant rates. In this paper, we offer a behavioral framework to explain this failure. We begin with the behavior change inherent in most innovations. We then add reference dependence and loss aversion, arguing that the typical consumer is endowed with the entrenched alternative and the typical developer is entrenched with their innovation. As a direct result, consumers tend to undervalue and developers tend to overvalue such an innovation relative to the existing option. This is the "curse of innovation" and it systematically increases the likelihood of failure for a highly innovative new product.

Number of Pages in PDF File: 36

JEL Classification: M31, O31, O32, O33

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Date posted: August 5, 2005  

Suggested Citation

Gourville, John T., The Curse of Innovation: A Theory of Why Innovative New Products Fail in the Marketplace (June 2005). HBS Marketing Research Paper No. 05-06. Available at SSRN: http://ssrn.com/abstract=777644 or http://dx.doi.org/10.2139/ssrn.777644

Contact Information

John T. Gourville (Contact Author)
Harvard Business School ( email )
Soldiers Field
Boston, MA 02163
United States
617-495-6133 (Phone)
617-496-5637 (Fax)
Feedback to SSRN

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References:  73
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