Inclusive Innovation: Product Innovation in Technology Supply Chains

52 Pages Posted: 17 Mar 2018 Last revised: 23 May 2018

See all articles by Vish Krishnan

Vish Krishnan

University of California, San Diego (UCSD) - Rady School of Management

Junghee Lee

University of California, San Diego (UCSD) - Rady School of Management

Oleksiy Mnyshenko

University of California, San Diego (UCSD) - Department of Economics

Hyoduk Shin

University of California, San Diego (UCSD) - Rady School of Management

Date Written: March 15, 2018

Abstract

Managers introducing new products with advanced component technologies frequently face the dual task of managing both revenues and profits. This task is made challenging, in part, due to the tendency of new technologies to traverse a sequentially downward path of gradually lowering costs and prices, which limits their initial availability and affordability, crimping market coverage and revenues. In this paper, we focus on this product management challenge, show how it is amplified in a supply chain, and propose a new degree of freedom in a supply chain, namely innovation investment anchoring, that offers product managers and their firms the ability to expand market coverage and improve both revenues and profits. After motivating with a detailed industry field-study, we formally characterize the problem and show that deliberate choice of the innovation investment anchor leads to greater investments in innovation, revenues and profits. We compare and contrast product quality improvement and cost reduction investments in a product management setting. These findings have subtle, but important, implications for firms launching innovative products and aspiring to expand product sales and profits. Specifically, innovating firms in a supply chain should broaden the quest for an investment anchor, offer them incentives to invest, and finely tune the level of innovation investment with product qualities, prices, and quantities for increasing revenues and profits.

Keywords: Product Innovation, Investment Anchor, Technology Supply Chain

Suggested Citation

Krishnan, Vish and Lee, Junghee and Mnyshenko, Oleksiy and Shin, Hyoduk, Inclusive Innovation: Product Innovation in Technology Supply Chains (March 15, 2018). Available at SSRN: https://ssrn.com/abstract=3141564 or http://dx.doi.org/10.2139/ssrn.3141564

Vish Krishnan

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

Junghee Lee (Contact Author)

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

Oleksiy Mnyshenko

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States

Hyoduk Shin

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
94
rank
270,002
Abstract Views
414
PlumX Metrics