The Role of Defaults in Preventing Innovation Rejection

International Journal of Innovation Management, Forthcoming

36 Pages Posted: 14 Oct 2014 Last revised: 15 Oct 2014

See all articles by Sabine Kuester

Sabine Kuester

University of Mannheim, Department of Marketing & Innovation

Silke Hess

Independent

Andreas Herrmann

University of St. Gallen - MCM Institute

Date Written: January 1, 2014

Abstract

Innovation rejection remains a serious problem for companies introducing new products, as customers may overvalue products they already own and underestimate the innovation’s advantage. Choice data from two experiments demonstrate that innovation rejection is determined by (dis)satisfaction with the status quo and that defaults are powerful instruments to overcome the status quo effect in innovation decision making. Innovation rejection decreases significantly if the innovation is implemented as a default, an option customers select unless they actively opt out. Furthermore, it is observed that implementing the innovation as the default significantly increases the perceived value and decreases the perceived risk of the innovation. Taking into account customer expertise, the authors detect that defaults are more effective in reducing innovation rejection for novices. The study derives managerial implications for new product launch management that aims at preventing innovation rejection.

Keywords: Innovation rejection, Status quo bias, Defaults, Customer expertise

JEL Classification: M31

Suggested Citation

Kuester, Sabine and Hess, Silke and Herrmann, Andreas, The Role of Defaults in Preventing Innovation Rejection (January 1, 2014). International Journal of Innovation Management, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2508155

Sabine Kuester (Contact Author)

University of Mannheim, Department of Marketing & Innovation ( email )

Germany

Silke Hess

Independent ( email )

Andreas Herrmann

University of St. Gallen - MCM Institute ( email )

Blumenbergplatz 9
CH-9000 St. Gallen
Switzerland
+41-71-224-3026 (Phone)

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