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Does complexity deter customer‐focus?

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  • Sendil K Ethiraj
  • Narayan Ramasubbu
  • M.S. Krishnan

Abstract

Economic models suggest that firms use a simple cost‐benefit calculation to evaluate customer requests for new product features, but an extensive organizational literature shows the decision to implement innovation is more nuanced. We address this theoretical tension by studying how firms respond to customer requests for incremental product innovations, and how these responses change when the requested innovation is complex. Using large sample empirical analyses combined with detailed qualitative data drawn from interviews, we find considerable variance in the relationship between customer demands, complexity, and investments in incremental innovations. The qualitative study revealed the importance of organization structures, competitive pressures, and incentives for resource allocation processes. Copyright © 2011 John Wiley & Sons, Ltd.

Suggested Citation

  • Sendil K Ethiraj & Narayan Ramasubbu & M.S. Krishnan, 2012. "Does complexity deter customer‐focus?," Strategic Management Journal, Wiley Blackwell, vol. 33(2), pages 137-161, February.
    • Handle: RePEc:bla:stratm:v:33:y:2012:i:2:p:137-161
    DOI: 10.1002/smj.947
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    Cited by:

    1. Manjunath Padigar & Ljubomir Pupovac & Ashish Sinha & Rajendra Srivastava, 2022. "The effect of marketing department power on investor responses to announcements of AI-embedded new product innovations," Journal of the Academy of Marketing Science, Springer, vol. 50(6), pages 1277-1298, November.
    2. Aticus Peterson & Andy Wu, 2021. "Entrepreneurial learning and strategic foresight," Strategic Management Journal, Wiley Blackwell, vol. 42(13), pages 2357-2388, December.
    3. Ronald Klingebiel & Peter Esser, 2020. "Stage-Gate Escalation," Strategy Science, INFORMS, vol. 5(4), pages 311-329, December.
    4. Menezes, Mozart B.C. & Ruiz-Hernández, Diego & Chen, Yen-Tsang, 2021. "On the validity and practical relevance of a measure for structural complexity," International Journal of Production Economics, Elsevier, vol. 240(C).
    5. Tang Wang & Vikas A. Aggarwal & Brian Wu, 2020. "Capability interactions and adaptation to demand‐side change," Strategic Management Journal, Wiley Blackwell, vol. 41(9), pages 1595-1627, September.
    6. Su, Taoyong & Hou, Wanrong & Levitas, Edward & Wu, Sibin, 2021. "Product Complexity and Strategic Alliance on Drug Approval," American Business Review, Pompea College of Business, University of New Haven, vol. 24(1), pages 36-53, May.

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