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Does Cheaper, Faster, or Better Imply Sooner in the Timing of Innovation Decisions?

Author

Listed:
  • Steven A. Lippman

    (Graduate School of Management, UCLA, Los Angeles, California 90024)

  • Kevin F. McCardle

    (Fuqua School of Business, Duke University, Durham, North Carolina 27706)

Abstract

A common myth/conception, based upon the notion of increasing returns to scale in R&D activity, is that large firms account for a disproportionate share of innovations. In this paper we consider three types of informational returns to scale (cheaper, faster, and better) and examine the impact of each on the timing of the firm's innovation decision. Contrary to popular conception, the decision is made later when information is cheaper, and the change in timing is unsignable in the case of faster arrival of information. Only more accurate (better) information leads to earlier decisions.

Suggested Citation

  • Steven A. Lippman & Kevin F. McCardle, 1987. "Does Cheaper, Faster, or Better Imply Sooner in the Timing of Innovation Decisions?," Management Science, INFORMS, vol. 33(8), pages 1058-1064, August.
    • Handle: RePEc:inm:ormnsc:v:33:y:1987:i:8:p:1058-1064
    DOI: 10.1287/mnsc.33.8.1058
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    Citations

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    Cited by:

    1. A. Heirman & B. Clarysse, 2004. "Do Intangible Assets and Pre-founding R&D Efforts Matter for Innovation Speed in Start-Ups?," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 04/238, Ghent University, Faculty of Economics and Business Administration.
    2. Scott M. Gilpatric & Youping Li, 2016. "Endogenous Price Leadership and the Strategic Acquisition of Information," Southern Economic Journal, John Wiley & Sons, vol. 82(3), pages 859-873, January.
    3. Li, Yongquan & Zhu, Kaijie, 2009. "Information acquisition in new product introduction," European Journal of Operational Research, Elsevier, vol. 198(2), pages 618-625, October.
    4. N. Bora Keskin & John R. Birge, 2019. "Dynamic Selling Mechanisms for Product Differentiation and Learning," Operations Research, INFORMS, vol. 67(4), pages 1069-1089, July.
    5. Glen M. Schmidt & Evan L. Porteus, 2000. "Sustaining Technology Leadership Can Require Both Cost Competence and Innovative Competence," Manufacturing & Service Operations Management, INFORMS, vol. 2(1), pages 1-18, March.
    6. Palanisamy Ganesan & Manohar Sridhar, 2016. "Service Innovation and Customer Performance of Telecommunication Service Provider: A Study on Mediation Effect of Corporate Reputation," Corporate Reputation Review, Palgrave Macmillan, vol. 19(1), pages 77-101, February.
    7. James E. Smith & Canan Ulu, 2017. "Risk Aversion, Information Acquisition, and Technology Adoption," Operations Research, INFORMS, vol. 65(4), pages 1011-1028, August.
    8. Carina Burs & Thomas Gries, 2022. "Decision-making under Imperfect Information with Bayesian Learning or Heuristic Rules," Working Papers CIE 149, Paderborn University, CIE Center for International Economics.
    9. Canan Ulu & James E. Smith, 2009. "Uncertainty, Information Acquisition, and Technology Adoption," Operations Research, INFORMS, vol. 57(3), pages 740-752, June.
    10. M. Sridhar & Ajay Mehta, 2018. "The Moderating and Mediating Role of Corporate Reputation in the Link Between Service Innovation and Cross-Buying Intention," Corporate Reputation Review, Palgrave Macmillan, vol. 21(2), pages 50-70, June.
    11. James E. Smith & Kevin F. McCardle, 2002. "Structural Properties of Stochastic Dynamic Programs," Operations Research, INFORMS, vol. 50(5), pages 796-809, October.
    12. Lefebvre, Louis A. & Lefebvre, Élisabeth, 1992. "Efforts innovateurs et positionnement concurrentiel des PME manufacturières," L'Actualité Economique, Société Canadienne de Science Economique, vol. 68(3), pages 453-476, septembre.
    13. James E. Smith & Canan Ulu, 2012. "Technology Adoption with Uncertain Future Costs and Quality," Operations Research, INFORMS, vol. 60(2), pages 262-274, April.

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