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Office Equipment Market Analysis and Assessment

Table of Contents

  • Abstract

Chapter 1 – Introduction and Overview

  • 1.1  Introduction
  • 1.2  Definition
  • 1.3  Innovations, Competition and Survival
    • 1.3.1  Importance of Being Early
    • 1.3.2  Firm Characteristics
  • 1.4  Research Objectives
  • 1.5  Study’s  Rationale

Chapter 2 – Review of the Literature

  • 2.1  Introduction
  • 2.2  Industrial Contexts and Innovation
  • 2.3  Market Structure and Innovation
    • 2.3.1  First-Mover Advantage
  • 2.4  Fast Cycle Industries
  • 2.5  Economic Studies Linking Firm Attributes to Innovations
    • 2.5.1  Firm Size and Innovation
    • 2.4.2  Environmental Shifts and Innovations
    • 2.4.3  Cumulative Experience, Assets and Innovations
  • 2.5  Implications for Present Study

Chapter 3 – Theory and Hypothesis

  • 3.1  Introduction
  • 3.2  The role of Resources in Innovations
    • 3.2.1  Resource-based View, Related Diversification and Innovations
    • 3.2.2  The Nature of Innovations
  • 3.3  Hypotheses Development
    • 3.3.1  Inventive Assets
    • 3.3.2  Market Assets
    • 3.3.3  Manufacturing Assets
      •  Related Industry
      •  Prior Generation in the Focal Industry
    • 3.3.4  Inventive Assets and Related manufacturing Assets
  • 3.4  Summary

Chapter 4 – Research Methodology

  • 4.1  Introduction
  • 4.2  Research Background
    • 4.2.1  Research Hypotheses
    • 4.2.2  Research Questions
    • 4.2.3  Research Objectives
  • 4.3  Research Design and Research Methodology
  • 4.4 Research Purpose
    • 4.4.1  Exploratory
    • 4.4.2  Descriptive
    • 4.4.3  Explanatory
  • 4.5  Research Approach
    • 4.5.1  The Deductive versus the Inductive Approach?
    • 4.5.2  The Qualitative versus the Quantitative Approach
  • 4.6  Research Strategy
    • 4.6.1  Sample
      •  Innovative Factors
      •  Demand Factors
      •  Sample Size
  • 4.7  Credibility and Quality of Research Findings
    • 4.7.1  Reliability
    • 4.7.2  Validity
    • 4.7.3  Quality
  • 4.8  Summary

Chapter 5 – Results

  • 5.1  Introduction
  • 5.2  Xerox
    • 5.2.1  Selection
    • 5.2.2  Case Review
    • 5.2.3  Findings
  • 5.3  Overview of Firms Operating in the UK
    • 5.3.1  Copier Market
    • 5.3.2  Printer
    • 5.3.3   Facsimile

Chapter 6 – Discussion and Conclusion

  • 6.1   Introduction
  • 6.2   Discussion of Results
  • 6.3   Contributions
  • 6.4   Limitations
  • 6.5   Directions for Future Research
  • 7.0   References


The study is analyzing the state of the market in office equipment to assess whether or not it can withstand new entrants. Focusing on three technologies and types of equipment, copiers, printers and facsimile machines, the findings indicate that this is an innovation driven and innovation-based market. The assumption here is that the concept of first-mover advantage applies, in which new entrants are unlikely to succeed. Indeed, the technologies and resources available to the first movers and early entrants render this a closed market in the sense that it is unlikely to absorb new entrants. An implementation of the company’s resource-based view reinforces the belief.

Nevertheless, the dissertation notes that while there are few opportunities for new entrants in the relevant market they do exist. Simply stated, should the first-movers cease their ongoing drive towards innovation, new firms could enter, thus leaving a gap in the market.  They, however, can only do so if they have timed their innovations to coincide with the mentioned gap.

As the study concludes, the opportunities for new entrants are far and few between and, indeed, their chances for success are minimal at best, considering resource variances between them and the early entrants. The fact remains, however, that such opportunities exist with the key being innovation and product timing.

Office Equipment Market Analysis and Assessment

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Chapter 1 – Introduction and Overview

1.1  Introduction

To those outside the industry, the demand for office equipment seems extremely lucrative.  Indeed, as several market researchers have remarked, the profits which the printer, copier and facsimile machines’ market appears to promise seems to beckon new market players to enter this industrial and industry specific field (Herbig & Kramer, 1994; Elliot, 2005; Ruffo, Tuck and Hague, 2007). Notwithstanding the appearance and not the scale of the market, however, there is no room for new entrants, as this is a first-mover market in which the odds are stacked against new entrants. As noted by several market analysts and marketing scholars, innovation is the key to survival within this market and, due to that, the market status of its key players It is practically intouchable (Xerox, IBM, Ricoh, Canon, Kyocera-Mita and HP) (Clarke, 2000).

Proceeding for the above-stated, it is apparent that professional and academic opinion tends towards the contention that the office equipment market is not open to new players; that there is no room for new players within this market. This is not because the key players have a tight, quasi-monopolistic grip on the market, as some might assume. Instead, and as noted in the above, this is because this is a market of innovation and, hence, by definition, favours early movers.  In order to clarify this further, it is necessary to explore the nature of innovation.

Innovation, it is argued, is more than invention. In other words inventions do not necessarily lead to innovation (Rogers, 1983; Sahal, 1983). What does it take for an organisation to bring an innovation to market? Innovations call for organisational abilities and skills in conducting state-of-the-art research, manufacturing abilities that reduce these research ideas to practice, and marketing abilities that ensure the match between organisational outputs and customers. In addition, skills gained in related industries can enable firms in innovation introduction. How influential are each of these factors in innovation introduction timing? That is one of the question that this dissertation shall attempt to answer, insofar as it directly fortifies earlier contentions regarding this as not being a market which is receptive to new players.

In a number of industries early introduction of new products has become increasingly important. In some industries (e.g. copiers, printers, facsimile machines), being at the fore-front of the innovation race may be crucial to being competitive (Garud & Kumaraswamy, 1993). Even though early new product introduction is essential in these industries, not all firms are able to do so successfully and they have paid the price. For instance, Xerox, market share leader in copiers, was an early entrant and has been among the early innovators on a number of occasions. On the other hand, IBM (a technological powerhouse in mainframe computers) continues to pay the late entry price to this market.

Despite the growing importance of early new product introduction, there has been little empirical research into new product introduction timing. Every industry has its share of first or early movers and late movers or laggards in the new product introduction race. Yet, scholars have, by and large, not investigated factors that explain why some h sin an industry are earlier in introducing new products than their rivals. The focus of the few studies has been on new product development teams (Kessler & Chakrabarti, 1996; Brown & Eisenhardt, 1998; Lamikarna, 2002; Butje, 2005), innovativeness of firms (Scherer, 1980; Geroski, 1991; Butje, 2005), and innovation speed measured as the time taken from start to finish of an innovation-related project (Kessler & Chakrabarti, 1996; Lamikarna, 2002).

This study attempts to address this gap by investigating firm characteristics that influence innovation introduction time and, in so doing, establish that there is no place for new players, or late entrants in this market. More specifically, this dissertation hypothesises and tests the role of inventive assets, marketing assets, and manufacturing assets in new product entry timing in the plain paper copier, desktop printer and facsimile industries.

1.2  Definition

As it attempts the determination of whether or not the office equipment market withstands new entrants, the dissertation will focus on radical product innovations.  The rationale for doing so is predicated on the fact that the referenced market is an innovation-based and driven one, in which instance the answer to the question raised is found in the very nature of the market itself and its mentioned identity.  As a direct outcome of the stated focus, therefore, the terms ‘new product’, ‘innovation’, ‘product innovation’, and ‘ radical product innovation’, used interchangeably herein, refer to radical product innovations, i.e. new products embodying significant shifts in the underlying technology.

Innovations can be of four types: (1) improvements in products and services, (2) production process/operations improvements, (3) improvements in people-centred activities of organisations (e.g. creative decision-making, T-Groups, etc.), and (4) organisation structure related improvements (Knight, 1967; Knight & Wind, 1968).

Innovations can also be classified on the basis of their degree of newness. Some innovations are marginal improvements on existing products or processes, involving minor shifts in the underlying technology, often referred to as ‘incremental’ innovations (Abernathy & Utterback, 1978) or ‘routine’ innovations (Nord & Tucker, 1987). These improvements can be implemented with minor adaptations of existing technologies. For example, a personal computer based on the 33MHz 486 microprocessor is an incremental innovation when compared to the personal computers based on the 25MHz 486 microprocessor. On the other hand, some innovations can be dramatic departures from existing technologies, reflecting a break from the past (Tushman & Anderson, 1986). Such ‘radical’ innovations (Nord & Tucker, 1987) change the nature of the industry and often disrupt the status quo (Abernathy & Utterback, 1978). For example, the first computer based on microprocessors is considered a radical innovation when compared to mainframes and mini-computers.

1.3 Innovations, Competition and Survival

Very often, radical innovations disrupt the existing equilibrium in an industry. Along with the obvious displacement of existing products (e.g. colour TVs replaced black & white ones), innovations may render the existing competencies of older £inns obsolete, especially in the case of competence-destroying discontinuities (Tushrnan & Anderson, 1986; Lamikarna, 2002; Christensen, 2003; Kim & Mauborgne, 2005; Rochlin, 2005; Kahn, 2006; King, 2006). As a result, incumbent firms may become marginalized or drop out of the industry altogether if they are not able to muster the new set of resources and competencies needed for the new generation of products. In tandem with the possible demise/exit of incumbents who are not ready to meet the challenges posed by new products, new entrants into the industry that possess the necessary resources and competencies may come to dominate the industry. The net result is that in addition to improvements in product offerings, advances can also change the collection of competitors in a market and their relative rankings (Tushrnan & Anderson, 1986; Lamikarna, 2002; Christensen, 2003; Kim & Mauborgne, 2005; Rochlin, 2005; Kahn, 2006; King, 2006).

1.3.1 Importance of Being Early

Launch of an invention by itself is not enough for survival; this must be achieved early in order to stay profitable firms entering the next decade. Companies do not introduce new products in a vacuum. Their competitors are also attempting to innovate. The result is a need for early innovations in order to stay ahead of the competition.

Companies which are late in bringing technologies to market tend to fall behind their rivals, both in terms of technology and market share. By the time slower competitors arrive with products, their rivals have often moved to the next generation (Lynn, Morone, & Paulson, 1996; Rochlin, 2005; Kessler, 2005). This leaves the slower competitors in the unenviable position of trying to sell an earlier generation product with fewer and/or unappealing features to customers whose expectations have been raised by a newer generation. Customers in these industries usually demand a significant decrease in prices for such older generation goods. In fact, usually the customer base of such older generation products disappears before too long. Furthermore, organisations that are slow with new products also face the onerous task of accelerating development of products belonging to the follow-on generation if they do not want to be caught napping one more time (Howells, 2005; Butje, 2005).

Speeding introduction of innovations is particularly important in industries that are characterized by both high levels of technological opportunity (Geroski, 1991) and short product half-lives (Williams, 1992). Technological chance refers to the productivity of the scientific and technological basis of an industry (Geroski, 1991). In the context of product innovations, the fecundity of high technology opportunity industries can result in frequent introduction of new products and line extensions.

Such ‘fast cycle’ industries are characterized by frequent new product introductions and short product life-cycles (Howells, 2005; Butje, 2005; King, 2006). So businesses have a very short window to capture any market income. organizations looking to win a profitable market share in those sectors need to launch their goods early on. Even firms with apparently no clear incentives for early entry (e.g. the incumbents) could do so to avoid rivals being pre-empted.

1.3.2 Firm Characteristics

At the same time, companies rarely adopt innovations; some are quicker than others. Even when the business window is small and the need for early introduction of the product is apparent, some businesses lag behind others in the introduction of new products.

Prior research from economics on innovations has usually ignored firm characteristics of new product entry time (Brown & Eisenhardt, 1998). These economics-oriented studies (Porter & Cunningham, 2004) usually focused at the industry level of analysis on questions dealing with inter-sectoral variances in innovations. While these have been integral to a deeper understanding of the industrial and environmental contexts that support or inhibit innovations, they have usually ignored firm-level factors that influence innovations. Where the firm has been considered, its attributes were confined to the role of fm size and incumbency on innovativeness and new product entry time. Moreover, investigations in this line of research have produced inconclusive results. While firm-level studies from organisation theory have been more specific than industry-level studies from economics, they have usually not investigated firm characteristics of new product entry time. Considering the importance of innovation timing and firm characteristics of this phenomenon, this dissertation tries to address the gap in knowledge that exists by investigating firm characteristics that influence new product introduction timing.

In identifying the factors that determine the ability of firms to introduce new products early, the dissertation shall draw on the resource-based view of the firm to provide the underlying theoretical framework. One of the themes in this dissertation is that organisational differences with respect to innovation-related resources can influence the timing of new product introduction. Creation and implementation of technology requires the interplay of various resources. They draw upon a firm’s expertise and strengths in the different functional areas (e.g. marketing, technical), its managerial and financial resources, its prior experiences, and competencies. Firms that are well endowed with such resources will be at an advantage when it comes to early introduction of innovations compared to the firms that are not so well endowed. Furthermore, it is argued that these resources are accumulated over time and are not easily acquired in market transactions. Thus, firms that have developed such resources as a result of their past actions are likely to be earlier with new product introductions than others.  The stated characteristics, in themselves, provide ample explanation as to why the office equipment market is not one for new entrants.

1.4   Research Objectives

This dissertation seeks to answer the following questions:

  • What are the possibilities of a new company entering the office equipment market?
  • To what extent is the office equipment market an innovation-based one which is adverse to new entrants?
  • What factors determine the ability of some firms to introduce new products earlier than their rivals?

In answering the above question, this study draws on the resource-based view of the firm and, therefore, tests whether that theory helps explain why the possibilities of new entries into the office equipment market are slim and why the earlier entrants are able to introduce new products before their competitors.

1.5   Study’s Rationale

This study investigates how firm resources influence new product introduction timing in the plain paper copier, desktop printer and facsimile industries. In particular, this research investigates firm resources that influence the introduction of full colour copiers, laser printers, and laser facsimile machines. The primary reason for selecting these industries is that, as King (2006) maintains, they represent a significant and ever-growing share, of the office automation market.

Apart from the above mentioned, all three industries included in this study are representative of fast cycle industries. Therefore, the findings of this study have implications for other fast cycle industries (e.g . microcomputers, semiconductors). Such fast cycle industries make up a significant portion of the GDP in any modem economy. Furthermore, the importance of such industries is likely to increase substantially, given the developments that are taking place in the information technology industries.

The rest of the dissertation is organized as follows: Chapter 2 reviews the existing literature and research relevant for the study. Chapter 3 presents the theoretical arguments and research hypotheses. Research design and methodology issues are discussed in Chapter 4. Case studies are presented in Chapter 5. Finally, Chapter 6 discusses the theoretical, empirical and managerial implications of the dissertation’s findings, and, identifies limitations and future research directions.

Chapter 2 – Review of the Literature

2.1 Introduction

As noted, the market in question is innovation driven and based, with the stated effectively functioning to deter new players, on the one and constrain their potential for success, on the other.  Accordingly, this chapter reviews the relevant research on innovations and positions this study in that context. The first section discusses studies related to industrial contexts in which early new product entry is important. The next section reviews studies that have investigated firm attributes that influence new product entry timing. More specifically, it addresses the relationship between firm size and innovativeness, the relationship between incumbency and the ability to introduce innovations, and the relationship between firm experience and innovations in the context of environmental jolts. Finally, the third section argues that cumulative experience and accumulated assets play a role in determining innovative abilities of firms and thus, new product entry time.

2.2 Industrial Contexts and Innovation

The purpose of this section is to review the literature that discusses the industrial contexts in which innovation timing is important. To that end, three broad categories of studies are discussed: (1) studies investigating the relationship between market structure and innovations, (2) research on first mover advantage/disadvantage, and (3) literature that establishes the importance of early entry in ‘fast cycle’ industries.

Although there is important theoretical work from the economics field related to innovation races, they are not covered in this review as they do not have any direct implications for this study. That literature is primarily concerned with innovation races that have winner-take-all scenarios, which does not apply in the context of this investigation. Also, that line of research is sometimes concerned with welfare implications for the economy as a whole.

2.3 Market Structure and Innovation

Market structure refers to forces influencing the conduct of firms within an industry or market. It includes such features as the number and size distribution of sellers and buyers, the degree of physical or subjective differentiation of products, barriers to entry of new firms, the ratio of fixed to total costs for a typical firm, the degree to which firms are vertically integrated, cross-elasticity of demand for substitute products, and the rate of growth and variability over time of demand (Scherer, 1990). Market structure may influence innovations by way of competitive pressure brought to bear on firms through one or more of the underlying forces. Such pressure (or lack of it) may stimulate or retard new product entry as the case may be.

Economists argue both for and against the role of competitive pressure in inducing innovations. Empirical tests are so far inconclusive, however. In fact, the empirical studies suggest that innovativeness varies from industry to industry (without regard to the degree of competitive pressure) and from firm to firm.

Schurnpeter (1942) makes a case for monopoly power’s role in innovations because it provides enterprises the resources required to invest in research and development efforts. A monopolist’s rent provides the surplus necessary to conduct risky leading edge research. Since the gestation period for such research is usually long, monopolists should be in a better position to absorb the negative cash-flows inherent in long-term research.

Oligopoly may also provide sufficient rent to cover the costs of risky research (Galbraith, 1956). Although the rents earned in oligopolies may not be as high as under a monopoly, the potential rent is higher than under perfect competition.

However, arguments can be made that monopoly power can reduce innovations because of complacency. Thus, although firms in perfectly competitive industries are less endowed with the requisite material resources, competitive pressure forces them to seek innovations as a route to increased profitability.

A number of empirical studies have investigated the opposing arguments stated above. Typically, these investigations have used industry concentration (indicator for market power) as the independent variable and some proxy measure of innovation as the dependent variable. Proxies used for innovations include R&D/Sales ratios, measures of R&D input (e.g. research expenditure, number of R&D personnel, etc.), and measures of R&D output (e.g. patents, number of innovations).

Barring a few exceptions (Scherer, 1965, 1967; Shrieves, 1978; Lunn & Martin, 1986) the empirical studies show no support for the Schumpeterian position that monopoly power enhances innovations1. Even the minimal support that exists is qualified in most cases. For example, Lunn and Martin (1986) found that R&D/Sales ratios rose with line of business size. Market share and four-firm concentration ratio had positive effects on R&D effort, but only in industries with low technological opportunities. Similarly, Shrieves (1978) found that concentration had a negative effect on R&D performance for producers of non-specialized producer durable goods, materials, and consumer goods. The concentration effect was positive and significant for firms whose technologies were mainly in life sciences and chemistry, and negative but insignificant for those in electronics, aerospace, mechanical and electromechanical fields. He concluded that concentration played an ambiguous role in determining R&D performance, depending primarily on types of products and markets.

Empirical findings that question monopoly power’s positive role in innovations are numerous (Baldwin & Scott, 1987; Evans, 2002; Rochlin, 2005; Kahn, 2006; King, 2006). These investigations range from studies that reject monopoly/oligopoly power’s role in innovation (Mukhopadhyay, 1985; Mohr, Sengupta & Slater, 2004; European Institute for Technology and Innovation, 2005) to those that suggest an inverted-U relationship between monopoly power and innovations or the existence of a threshold level beyond which monopoly/oligopoly power is not conducive to innovations (Scott, 1984; Levin, Cohen, & Mowery, 1985;Kessler, 2005; Davila, Epstein & Shelton, 2005).

The inverted-U relationship is questionable in light of the qualified nature of the findings. Levin et al. (1985) found an inverted U-relationship between the rate at which new products and processes had been introduced in 130 manufacturing industries in the 1970s and industry four-firm concentration ratio. When they introduced variables measuring the relevance of diverse scientific fields to the industries’ R&D efforts, the extent to which extra-industry researchers contributed to industry technological progress, and the strength of innovation reward mechanisms (patents, secrecy, and lead time) they found that the inverted U-relationship did not hold up. Similarly, Flournoy (2004) found that the addition of industry dummy variables and firm specific dummy variables nullified the inverted-U relationship, indicating the importance of industry and firm specific effects. Thus, the inverted-U relationship does not hold up very well when variables measuring technological opportunity and other influences affecting innovations are introduced.

Hosni and Khalil (2004) confirmed that the role of technological potential found by Lunn and Martin (1986) in innovations was the positive correlation between focus and innovation (Measured by the number of major innovations) didn’t hold for technical prospects after correction. After the implementation of a technical incentive measure, concentration was negatively associated with innovation. In other words, concentration in high-tech rewards sectors, contrary to the Schumpeterian theory, was not conducive to developments.

The debate thus far discusses the market structure’s limited role in innovations. The role of market concentration in innovations is supported by very little empirical evidence. This is especially true, in high-tech opportunities industries. In addition, the studies point to the importance of factors at firm level in innovations.

2.3.1 First-Mover Advantage

Strategic Management scholars have paid considerable attention to the issue of whether being a first-mover in an industry confers an advantage in terms of market share. There are arguments made both for and against being a first mover in an industry. The following discussion elaborates both positions and reviews some of the empirical studies that have investigated this issue. Some industries lend themselves to first mover advantages. Lieberman and Montgomery (l988) describe three primary sources of first mover benefits: (1) technical leadership; (2) asset preemption; and (3) buyer switching costs.

Empirical studies have found that first movers were commercially more successful than later entrants in both industrial and consumer products. Studies in the consumer goods industries have usually focused on the first mover advantages of pioneering brands. In a study of introduction of seven different categories of cigarettes, Kerin, Varadarjan and Peterson (1992) found that pioneers had a distinct advantage in terns of market share. Similarly, in a study of 129 consumer brands across 34 product categories, Urban, Carter, Lee et al. (2000) found that market share was related to order of entry. In a study of 371 consumer goods businesses, using data drawn from the PIMS database, market pioneers were found to have higher market share than early followers, who, in turn, had higher shares of the market than late followers.

First mover advantages have also been found to exist in industrial markets. Using a sample of 40 industrial taken from the PIMS database, Lieberman and Montgomery (1998) found that first movers had a market share advantage. Similarly, in a study of 174 industrial products, Dillon, Calantone, and Wortlington (1979) found support for first mover advantage. In a study of 1209 mature industrial goods businesses drawn from the PIMS database, Robinson (1988) found that market pioneers had higher market shares than later entrants. These findings have been supported by other studies using the PIMS database (VanderWerf & Mahon, 1997; Makadok, 1998; Tyagi, 2000; Doh, 2000).

Often, first movers face drawbacks (Lieberman & Montgomery, 1998). Firstly, second movers or later entrants can sometimes benefit quickly from imitating first mover investments in product and process changes (Makadok, 1998). A second source of first-mover disadvantage is ambiguity solving. Typically it takes a while for a dominant design to emerge after the introduction of the pioneering product. In such cases, waiting companies would benefit as they can integrate all of the desirable features into their goods.

Although there is an implicit assumption in this line of inquiry that the order of entry (first, second, etc.) is important in determining performance, recent research has shown that rather it is the time of entry which determines the market share than the order of entry. Chen and Periera (1999) found in a study of 500 brands across 50 product categories that early followers were able to perform better than the pioneers. Ma (2004) found that longer lead-time (time between company entry) can explain the advantages of innovative companies in terms of market share. Denstadli, Lines and Gronhaug (2004) claimed and illustrated that the first mover advantage relied on the length of time the leader had in the market.

Similarly, in an empirical investigation of the plain paper copier industry, Bimbaum-More and Gilbert (1996) discuss the advantages of speed in product timing. They found that early entry time was related to increased market share. This empirical support for competitive advantage of early entry is consistent with the view that argues in favour of quick entry during windows of opportunity (Wonglimpiyarat, 2004).

As the above discussion shows, irrespective of whether first-mover advantages exist or second-mover advantages exist, early entry time appears to be a crucial source of competitive advantage. The following sub-section builds on this argument and establishes that early new product introduction is particularly important in ‘fast cycle’ industries.

2.4 Fast Cycle Industries

‘ Quick cycle ‘ industries include the regular introduction of new products by individual companies. These industries are characterized by high levels of technological opportunity and short life cycles for each product generation (Cahill, 1996; Gray, 2006). Technological opportunity refers to the fecundity of an industry’s scientific and technological base (Currie, 2004). Constant improvements result in frequent introduction of new products in the various subsystems. However, these new products usually improve, substitute or cannibalize existing products over existing ones.

Thus, the life cycle of each generation is short, resulting in a rapid drop in prices and demand soon after the introduction of a generation. In fast cycle industries, firms need to be among the first to enter the market with products belonging to a particular generation so that they are in the market at a time when prices and demand are attractive. Therefore, having launched products in one generation, businesses will plan to begin the next round of innovations. In other words, to compete effectively in these fast cycle industries, speed becomes a critical success factor (Davidson, 1990; Currie, 2004), and firms must possess the ability to continuously introduce new products as early as possible.

To sum up, early entry in the fast-cycle industries is critical, regardless of the level of market penetration and the presence of first / second mover advantage.  Monopoly / oligopoly power does not provide an adequate explanation of the environments conducive to innovation, particularly in high-tech industries opportunity.

2.5 Economic Studies Linking Firm Attributes to Innovations

A variety of economics studies have examined two firm characteristics and their relationship to firm innovativeness. Over the years the first attribute, size, received considerable attention. The review below will show that after decades of investigation, no consistent relationship has been established between firm size and innovation. The second attribute that has received considerable attention, but also with inconsistent results, is whether incumbents are more innovative than new entrants.

2.5.1 Firm Size and Innovation

There are reasons for and against the role that size plays in inventions. Scherer (1980) and Scherer and Ross (1990) state three main reasons for the involvement of big companies in innovation. The risks associated with innovations; economies of scale in research and development; and, the overall scale economies associated with large companies (e.g., cheaper cost of capital, lower costs to attract qualified personnel) point toward larger firms being better in the innovation game. Galbraith (1956) points out that product development does not represent cheap and simple inventions. It requires resources in the form of scientists, engineers and other material and financial resources; thus, providing large corporations an advantage. On the other hand, it is argued that large size inhibits innovations because of the following reasons: (a) difficulty in getting innovative ideas approved by top management because of involved in the screening and approval process; (b) organizational practices; and (c) compensation mechanisms in large organizations that support skilled workers transitioning to management positions (Scherer, 1980).

Empirical studies found some support for the role of large firms in innovation related activities. They showed hat large firms have a higher share of R&D than their share of manufacturing employment, but the R&D intensity levels drop off after reaching some threshold level (Scherer, 1980; Kamicn & Schwartz, 1982; Baldwin & Scott, 1987; Cohen & Levin, 1989). Thus, large size provides firms the means to expend resources in the research and development effort.

In terms of innovativeness, however, smaller firms seem to have done better. Jewkes et al. (1969) found that more than half of the 70 significant inventions of the twentieth century were pioneered by individuals who work independently on their own or in academic settings. Scherer (1965) reported that large firms did not have any exceptional advantage in number of patents granted and the percentage of patented inventions actually commercialized was higher for small firms than large firms. But these results were not found consistently. For example, Arora, Fosfuri and Gambardella (2001) found mixed results for the relation between the number of inventions and the size of the firm. Tidd (2000) found that 29% of the major innovations introduced in the U.K. during the period 1945-83 were made by firms with less than 200 employees, while firms with more than 50,000 employees accounted for 21% of the total.

Empirical investigations found that smaller firms were more efficient than large ones in the use of innovative resources. They incur lower costs in expenditure per patent and expenditure for similar product development efforts (Tidd, 2000). Empirical evidence points to small firms being more effective in producing creative production than big ones.  Small businesses were also designing new products more rapidly, creating prototypes, setting up production facilities and beginning sales (Porac & Ventresca, 2005; Howells, 2005).

From this review of the relationship between size and innovation, a number of observations can be made. First, smaller firms seem to be more efficient in their use of R&D resources and generating innovations, especially, in commercializing inventions. Besides being more effective in their creative activities, small businesses also have strong incentives to achieve development through innovation (Scherer & Ross, 1990; Tidd, 2000; Arora, Fosfuri and Gambardella, 2001; Porac & Ventresca, 2005; Howells, 2005). At the same time, it seems that large firms have the resources required for developing new products. It is difficult to conclude whether the material advantage of large firms outweighs the behavioral advantage of small firms, or vice versa, from the studies that have been done so far. Thus, firm size can influence innovations, although it is difficult to determine whether large size or small size will prove advantageous in introducing new products.

The exact nature of the relationship may vary, depending on the context. Are new entrants faster than incumbents in introducing innovations? Incumbents, especially monopolists, have material advantages that provide them with advantages over new entrants. The latter, on the other hand, have behavioural advantages that enable them to be faster with innovations.  How these respective advantages play out in terms of innovation timing is the primary focus of the following discussion.

New entrants possess behavioural advantages that give them an advantage over incumbents with respect to innovations. They are better positioned to exploit new technological market combinations because they are not constrained by present organisational routines or ‘techno/market regimes.’ As a consequence, although they are not always the first to generate innovations, new entrants will be more enthusiastic in adopting innovations generated elsewhere (King, 2006).

The above position, however, is somewhat at odds with the liability of newness argument that new firms are likely to face high mortality rates because they are not suitably adapted to their environment.

The problem is all the more acute when new firms seek to develop products that go beyond existing technology in order to make an entry (Schoonhoven, Eiseuhardt and Lyman, 1990). Some entrants might, in fact, never introduce the innovation with which they planned to enter an industry.

Incumbents have certain material advantages as opposed to the above behavioral advantages of entrants (Howells, 2005; King, 2006). For example, incumbents have access to financial and technical resources, distribution networks, marketing skills, etc. At the same time, it has been argued that an incumbent’s future technological activities are constrained by its activities and capabilities of the past (Wonglimpiyarat, 2005). Inertial forces (Cahill, 1996; Tidd, 2000) can make an incumbent become wedded to its present set of activities to such an extent that it becomes disadvantaged when it comes to introducing products belonging to the next generation.

To sum up, incumbency nor does it provide companies with an adequate explanation to launch new products early on. From the above discussion, it is not clear whether incumbents or new entrants are better positioned to introduce new products. There is a need for researchers to delve a level deeper into organisations to come up with explanations for early new product entry.

Perhaps, being an incumbent or entrant, by itself, does not provide a player with an advantage or disadvantage. What matters is the resource profile of the incumbent or entrant, as the case may be. For example, an entrant possessing innovation-related assets may be at an advantage with respect to new product introduction when compared with incumbents or other entrants that do not possess such assets. In addition to not being constrained by existing techno-market regimes, these diversifying entrants may not be as prone to failure as start-ups. Similarly, incumbents possessing innovation-related assets may be at an advantage compared to an entrant that does not possess such assets. Consistent with this argument, Arora, Fosfuri and Gambardella (2001) found that incumbents with specialized assets were better positioned in terms of introducing new products in the medical imaging industry.

2.4.2 Environmental Shifts and Innovations

In addition to technological opportunities and short product life cycles, environmental shifts or jolts can also serve as inducements to introduce new products. An individual firm’s response to such jolts can vary depending on the circumstances.

Two insights from the theory of the company make different assumptions about how organizations react to changes in the environment. The thesis on heat rigidity (Mohr, Sengupta and Slater, 2004) takes the view that firms unprepared to meet the requirements of the current ‘ techno-market ‘ system (Hosni and Khalil, 2004) will not be able to give an effective response. Cyert and March (1963) argued that companies are coopting environments and are less likely to be unprepared for changes in the market.

In brief, the threat-rigidity thesis argues that a threat to an entity’s vital interests leads to rigidity, which can be ill-adaptive because previous, well-learned responses are inappropriate when threats arise from environmental change (Mohr, Sengupta and Slater, 2004). In the context of new products displacing an earlier generation, such shifts would lead to an inability to adapt on the part of incumbents as they are tied to Systems aimed at a variety of older products.

However, the above argument overlooks the possibility that not all organisations from a previous techno-market regime need display maladaptive behavior in the face of technological change. Some incumbents are likely to have developed experience and skills related to the new product regime. Yes, these companies may be amongst the pioneers when it comes to adapting to the new environment or product regime. In fact, Mohr, Sengupta and Slater (2004) argued that alternatives sought by organisations, in response to an environmental shift, are likely to be guided by information already possessed by the organisation and/or those that are close to its past experience.

Contrary to the exogenous view of the environment in the threat rigidity perspective, Cyert and March (1963) see the environment as something that can be influenced by individual h s. This ‘enacted’ environment (Hosni and Khalil, 2004) is shaped and formed by individual organisations through trade associations, journals, etc.

Rather than organisations allowing themselves to be subjected to sudden unpredictable shifts in the environment, they are likely to manage and direct environmental change in line with their interests. According to this perspective, organisations ate not caught off guard when new products enter the market to the extent they seek a negotiated environment in matters related to the new regime.

Seeking a negotiated environment does not by itself provide a guarantee against mal-adaptation. Cyert and March (1963) argued that the training and experience of the participants in an organisation will affect the way the environment is viewed and communication about the environment is processed through the organisation. Thus, organisational experience in relevant areas will affect its ability to read environmental signals accurately and take corrective action. In the context of threats posed by new products, organisational experience in areas related to the new product will help it get prepared and take timely action in introducing its own products belonging to the new generation.

2.4.3 Cumulative Experience, Assets and Innovations

This section builds on the idea that a firm’s experience can play an important role in its ability to innovate. It is argued below that experience is cumulative and firm-specific. It provides pointers to the assets possessed by a firm, and therefore its ability to innovate. A firm’s accumulated experience and history can be important innovation antecedents. The learning by using hypothesis (Rosenberg, 1979) stresses the notion that it is through the accumulation of relevant experience in a given technology that improvements are generated. Increased use and application of the technology paves the way for refinements of its attributes and performance. Even major innovations can be viewed as emerging from the cumulative synthesis of minor inventions, each of which requires some insight (Kahn, 2006). In addition cumulative technological investments can also help improve an organisation’s ‘absorptive capacity’ (ability to absorb knowledge from the environment) and thereby respond to relevant developments taking place elsewhere (Rochlin, 2005). Besides technological assets, market-related assets too are cumulative in nature and help firms commercialize new products (Mitchell, 1989; Tidd, 2000).

In addition to its cumulative nature, a firm’s asset base is to a large extent, firm specific. They are not easily traded or bought in factor markets (Nelson, 1991). In other words, critical assets are sticky and have to be developed internally. Furthermore, they are subject to time decompression diseconomies, which mean that firms have to spend considerable time to develop such assets (Collis and Montgomery, 1997). In fact, Selznick (1957) argued that some of the most valuable assets are those that come about through a gradual, evolutionary process.

The cumulative and firm-specific nature of an organisation’s assets suggests that firms are likely to be constrained to introduce innovations in areas that are closely related to its existing range of activities (Mohr, Sengupta and Slater, 2004; Kahn, 2006). Even in cases where innovation is characterized by a considerable degree of chance, it is companies that have relevant assets in place that are able to capitalize on the opportunities that come their way (Sahal, 1983) and introduce innovations in a timely manner. Thus, the identification of these activities and different rivals’ proficiency with respect to each will, to a considerable extent, help predict which firms are better prepared to introduce innovations (King, 2006).

2.5 Implications for Present Study

A number of observations can be made based on the above detailed review of the relevant literature. In the first place, early new product entry is important in a number of industrial contexts, especially fast cycle ones, with that including the office technology sector. Second, rather than incumbency per se, the assets possessed by a firm might better explain firm innovativeness and early new product entry. Third, much of the research relating organisation design factors to new product development suffer serious drawbacks because of two reasons: (1) they do not focus on entry time, instead they use length of time spent in product development as their dependent variable; and (2) their sole focus is on organisation structure as antecedents to innovations. Finally, the discussion highlights the importance of firm experience and accumulated assets in helping firms innovate. The implication here is that, consequent to their not possessing the requisite experience, let alone first, or even early-follower, advantage, new players will not succeed in the office equipment market.  The next chapter builds on this theme and employs a resource-based view of the firm to develop the theory and the research hypotheses that are tested in this dissertation.

Chapter 3 – Theory and Hypothesis

3.1 Introduction

This chapter builds on the discussion in the previous one and provides the theoretical framework used in this dissertation. As discussed in the previous chapter, the accumulated experience of a firm can play a crucial role in its ability to innovate and is, thus, an apparently fundamental determinant of both the ability to compete and survive within the office equipment market.

The resource-based view of the firm provides a useful framework to study firms in terms of their constituent parts and history. The discussion begins by presenting a brief outline of the resource-based view of the firm and then goes on to describe the influential role played by resources in innovation generation. The last section builds on the previous ones and presents the hypotheses tested in this dissertation.

3.2 The role of Resources in Innovations

The resource-based perspective has long been central to the field of strategy (Conner, 1991). In fact, Wemerfelt (1984) argued that the concept of strategy (Andrews, 1971) is phrased in terms of the resource position (strengths and weaknesses) of the fm. Similarly, the notion of strategy being a fit between the competencies of a firm and external opportunities (Christensen, et al., 1987) includes a resource-based perspective (Comer, 1991). Furthermore, firm competencies in developing and deploying its capital of various forms have been shown to be connected with performance by leading scholars in the field (Barnard, 1938; Chandler, 1962, 1977; Rumelt, 1974; Selznick, 1957).

Originally, the resource-based theory of the firm viewed organisations as possessing unique bundles of resources, i.e. they are endowed with heterogeneous resources (Penrose, 1959; Pitelis, 2004; Gulati, 2007). Moreover, such heterogeneity in resources has been found to explain a high proportion of the variance in performance differences across firms (Rumelt, 1991; Gulati, 2007).

More recent work extends this view of organisations as bundles of resources to include capabilities as well. Capabilities refer to the abilities of firms to make use of their existing resources, both tangible and intangible (Collis & Montgomery, 1997; Harrison and Kessels, 2003). Firms can also be viewed as possessing assets that are tied semi-permanently to the firm (Wemerfeit, 1984). Examples include in-house knowledge of technology, manufacturing facilities, brand-names, etc. The assets possessed by a firm at any given point in time are indicative of both its resources and its capabilities. Enders (2004) argued that assets can be split into two groups: stocks and flows.

Stocks of assets are those that are possessed by a firm at a single point in time, while flows refer to additions that take place over time. The former are indicative of the underlying resources possessed by a firm, while the latter are indicative of a firm’s capabilities to develop and use its existing resource base. Thus, firm assets indicate both the underlying resources as well as its capability to use them.

Firms are idiosyncratic, in part, because their assets are inherently immobile and sticky.  Such immobility and stickiness makes these assets specific to the firm.  Furthermore, their development requires time-consuming irreversible investments that are usually costly (Foss, 1998). In other words, firm possess unique bundles of assets that are costly, accumulated over time, and are difficult to acquire in factor markets.

Just as firm resources and capabilities influence performance, assets possessed by a firm can also determine its performance relative to its rivals. This is especially true in the face of opportunities resulting from changes in the external environment. While the opportunity set generated by such changes is the same for every firm, the additional assets each must acquire from the factor market (a difficult and time consuming process) in order to capitalize on the opportunities will differ because the vector of assets each possesses is different (Collis & Montgomery, 1997; Harrison and Kessels, 2003).

Firm assets can play a crucial role in determining firm performance with respect to innovation timing. As noted above, it is the heterogeneity in assets that lead to performance differential among firms. Wernerfelt (1984) argued that products and resources are two sides of the same coin’. In other words, products are outputs of a firm that reflect the quality and amount of assets possessed by the firms. Therefore, it is reasonable to conclude that the assets possessed by companies will explain, among other things, the innovations introduced by firms. In fact, Penrose (1959) argued that it is only ‘qualified’ firms – firms whose internal resources (and capabilities) are such that they give them a special advantage, or, at least do not pose a serious obstacle –that will have an advantage in introducing innovations.

3.2.1 Resource-based View, Related Diversification and Innovations

Rumelt (1982) argued that the degree of relatedness among businesses of a firm depends on the nature of the core resources they share. Sharing idiosyncratic core factors would make businesses more similar to one another and they would be highly related. Unrelated businesses share non-specific core factors because they have to be dispersed over a variety of businesses. Thus, related diversified firms manage a set of businesses that are similar to one another and benefit from sharing core resources across businesses.

The direction of a firm’s diversification is determined by the nature of its available resources (Wade & Gravell, 2003). In fact, the idea that an enterprise’s firm-specific resources serve as the driving force for its diversification strategy has received a fair degree of empirical support in studies by econometricians (Wade and Gravell, 2003). Researchers in the strategic management field also found strong evidence suggesting that firm competencies and assets in advertising and R&D explain the direction of diversification undertaken by large firms (Collis and Montgomery, 1997; Wade & Gravell, 2003).

Besides determining the direction in which a firm diversifies, assets possessed by a firm can determine the ability of a firm to introduce innovations in a timely manner because it is much easier for a firm to diversify into destination industries that are close to the current activities (Pavitt, 1986; Collis & Montgomery, 1997; Harrison and Kessels, 2003). Compared to incumbents in such destination industries, firms that are already present in a related (origin) industry will be at an advantage in introducing innovations because they possess assets that are relevant for the innovation by virtue of their experience in the origin industry (Tassey, 1983; Meschi & Metais, 2006; King, 2006). Therefore, firms that are well-endowed with such related assets will be better positioned to introduce innovations earlier than rivals whose activities are confined to the focal industry or do not span related ones.

3.2.2 The Nature of Innovations

Innovations can be conceptualized as a new combination (Schumpeter, 1934) or recombination of existing parts, concepts, and materials (Bamett, 1953; Nelson & Winter, 1982). Rather than being a simple addition and subtraction exercise, such recombination must be qualitatively different (Barnett, 1953) in order to result in an innovation. In other words, there must be, to some extent, a re-invention that takes place. That is, existing concepts and materials must be modified in the process of developing an innovation (Kandampully & Duddy, 1999; Shepherd & Ahmed, 2000). Therefore, innovations necessitate varying degrees of invention and creativity depending on the level of newness.

Invention, by itself, does not lead to innovations, however. Following Sahal (1983) an ‘invention’ is the creation of a new device, while an ‘innovation’ is the commercial introduction and it is composed of one or more invention(s). Thus, the successful commercialization of inventions requires that they be introduced and combined with other relevant assets, such as marketing, competitive manufacturing, sales support, etc. (Teece, 1988; Ma, 2004). Shepherd & Ahmed (2000) pointed out that failed new product introduction attempts were usually characterized by lack of fm proficiency in marketing and manufacturing, and poor understanding of customer needs. Thus, successful innovations are the result of invention plus the use of supporting manufacturing and marketing assets.

3.3 Hypotheses Development

As the discussion in the previous sections point out, assets possessed by a firm play a role in an organisation’s ability to introduce innovations. Furthermore, some of these assets that have been developed in a related industry also influence an organisation’s ability to innovate in a focal industry. More specifically, as the following discussion points out, firm’s assets in a related industry will be related to new product entry time.

In this dissertation, successful innovations are viewed as the result of invention, manufacturing and marketing assets. While this might lead to some other functional areas being ignored (e.g. financial assets can lead to easier procurement of other innovation-related assets), it is not very limiting. Studies on technology and innovations underscore the primacy of the above functional areas in new product introductions. Nevertheless, restricting the study to these three areas might be a drawback. The potential limitation caused by this possible drawback is discussed in the final chapter.

3.3.1 Inventive Assets

Invention is a crucial starting point for innovation generation (Christensen, 1999). Also, innovations are not merely the result of one fundamental breakthrough (Sahal, 1983): it can take several individual inventions to generate an innovation. Firms that are proficient in generating streams of inventions related to a particular technology are one step ahead of their weaker rivals when it comes to developing new applications of that technology.

Nurturing such inventive ability in a technology is the result of sustained in-house investments in related inventive assets (Dougherty, 1992; Ozsomer, Calantone & Di Bonetto, 1997; Truman, 1998; Kandampully & Duddy, 1999). Development of such assets cannot be accelerated dramatically by allocating more material and personnel resources. Furthermore, as noted above, these assets are difficult to acquire from the market. Moreover, as Tidd (2000) argue, a firm’s ability to tap into external sources of knowledge and information is partly determined by its own absorptive capacity – technological expertise. Therefore, even firms that attempt to tap into outside sources to compensate for their Lack of inventive ability in relevant technologies will need some level of technological competence themselves to make use of externally generated know-how. Thus, firms that have invested in technologically relevant inventive assets over time are in a better position to generate innovations involving such technologies than their weaker rivals. They are in the enviable position of not having to start developing technology that takes time to develop, and cannot easily be procured horn the market. These arguments lead to the first hypothesis:

H1: Firms that possess more inventive assets will introduce new products earlier than firms that possess less inventive assets.

3.3.2 Market Assets

A product is not merely a piece of technological invention (Dougherty, 1992). A product operationalises   both market and technological issues into a single configuration. Studies have shown that failed product innovation attempts have been due to a lack of marketing abilities (Cooper, 1983). Thus, a firm must have relevant marketing assets to deliver a technology to the marketplace (Harrison and Kessels, 2003).

New products bring about considerable uncertainty because of the degree of newness of technology and the extent of newness of the market it targets. To the extent that a firm is familiar with the market an innovation is targeted for, it is in a better position to reduce the level of uncertainty and difficulty and delays it is likely to face in attempting to commercialize an innovation (Harrison and Kessels, 2003).

Marketing plays an important role in identifying customer needs and disposition towards the new product being developed. The earlier and more frequently this information is passed on to the fm, the less time is wasted in getting products ready for market launch. The more the marketing assets possessed by a firm, the faster it will be able to absorb demands placed by new products; hence, the faster the new product can be made available for sale.

In this dissertation, marketing assets are divided into two types; focal industry and related industry. Marketing assets in a focal industry relate to marketing assets possessed by a firm in the industry where an innovation is likely to be introduced or has been introduced. The more a fm possesses such assets in the focal industry the better it is able to tailor the product to suit the market because of its superior understanding of the focal market. Similarly, marketing assets in a related industry relate to a firm’s marketing ability in a related industry. Such related marketing assets provide organisations with knowledge and skills that have already been used in commercializing similar technologies in a related market. Once again, these assets should help such firms shape the products to fit the needs of the market. The more a firm possesses such assets in a related industry the better it is able to tailor the product to suit the market because of its superior understanding of market issues related to the new product. Thus, both types of marketing assets can help a firm introduce products early. The above arguments lead to the next set of hypotheses:

H2: Firms that possess more marketing assets in the focal industry will introduce new products earlier than firms that possess less marketing assets in the focal industry.

H3: Firms that possess more marketing assets in a related industry will  introduce new products earlier than f m s that possess less marketing assets in a related industry.

3.3.3 Manufacturing Assets

Apart from the role played by marketing assets and inventive assets, manufacturing assets play a crucial role in helping bring products to market. As discussed above, innovation is, largely, a recombination of concepts, materials and technologies that were previously in existence (Demers, 2002; Moore, 2004; Elliot, 2005). To the extent that an innovation is a recombination of existing concepts and materials, plants, equipment, personnel trained to use these assets can facilitate its introduction.

Although, manufacturing involves a whole range of activities including production of components, final assembly, and testing, in-house production of key components is critical to early new product introduction. Outsourcing key components can lead to disadvantages due to loss of core competency and competitive advantage (Demers, 2002; Moore, 2004; Elliot, 2005).  and from excessive dependence on suppliers (Porter, 1980). Loss of core competency in a particular technology will lead to firms not possessing the ability to readily incorporate that technology in different products. Similarly, excessive dependence on suppliers for key components usually ends up in new product development efforts being dictated by suppliers. When such suppliers compete directly with the buyer in the end market, or if they are among the few that sell these components to a number of buyers (usually the case when new products involve relatively new components), there is every likelihood that procurement of these components will hamper new product introduction. Thus, possession of manufacturing assets that are relevant for production of key components can enable firms to overcome a serious bottleneck in introducing new products that use these components.

The nature of this relationship between manufacturing assets and new product introduction time depends on the degree of relevance of these assets to the new product in question. Two types of manufacturing assets that have different influences on new product introduction time are manufacturing assets in a related industry and manufacturing assets in a prior generation of products.  Related Industry

Firms that have relevant manufacturing assets in a related industry, that can be used to manufacture key components, are better able to introduce innovations than firms that do not have these assets. Manufacturing experience in a related industry enhances a firm’s ability to introduce innovations incorporating similar technologies elsewhere. Such firms have, in place, systems and plants related to manufacturing key components necessary for the new product, and hence, such organisations will not have to go through the trouble of building these manufacturing assets from scratch in order to introduce a new product. As mentioned earlier, possession of these assets is advantageous compared to outsourcing key components. Therefore, firms that have a manufacturing presence in related industries are likely to be a step ahead of rivals that are not similarly active in related industries. As a result of its cumulative experience in related industries, related diversified firms will be better positioned with respect to related new product introduction than f m s that are not in related industries.

Experience in manufacturing and the facilities for the same combine to make it easier for related, albeit diversified firms to introduce innovations. These arguments lead to the next hypothesis:

H4: Firms that possess manufacturing assets in a related industry will introduce new products earlier than firms that do not possess such manufacturing asset.  Prior Generation in the Focal Industry

Just as manufacturing assets from related industries can be relevant for new product introduction, it is likely that manufacturing assets from a previous generation of products in the focal industry may be useful for the next generation. Whether such manufacturing assets relevant for production of products belonging to the previous generation will carry over to future projects depends on the extent of obsolescence brought about by the next generation.

Manufacturing assets are not always transferable across generations, depending on the shifts in technology the new generation entails. Sometimes a new generation involves knowledge and systems that bear no relationship to earlier generations – `competence destroying discontinuity.’  In such cases, manufacturing assets nurtured and developed in earlier generations by an incumbent become irrelevant for future generations. Furthermore, in such situations, incumbents are constrained by the assets and the associated routines of the earlier technological regime (Tidd, 2000). This leads to serious organisational rigidities (Hman & Freeman, 1984; Porac & Ventresca, 2005) that prevent adaptation to the new technological environment and thus, constrain new product development.

Not all new technologies are competence destroying, however. A new generation can, in some cases, build upon existing knowledge sets and systems – ‘competence enhancing discontinuity.’ In these cases capabilities can be transferred across generations by incumbents (Anderson & Tushman, 1986; Burgelman, Christensen & Wheelwright, 2003). From the above, it is reasonable to expect that in the case of competence enhancing discontinuities, a firm with relevant manufacturing assets from previous generations will be able to capitalize on it for future generations. Taken in conjunction with the reasoning presented in the previous paragraph, the above arguments lead to the following hypotheses.

H5a: In the case of competence-destroying discontinuities, firms that possess manufacturing assets from a prior generation in the focal industry will introduce new products later than firms that do not possess such manufacturing assets.

H5b: In the case of competence-enhancing discontinuities, firms that possess manufacturing assets from a prior generation in the focal industry will introduce new products earlier than firms that do not possess such manufacturing assets.

3.3.4 Inventive Assets and Related manufacturing Assets

Although related manufacturing assets can facilitate early new product entry, their effect can be substituted by the inventive assets possessed by a firm, or vice versa. The effect of inventive assets may not be as relevant for firms that have related manufacturing assets because such assets reduce the need for reinvention. Similarly, inventive assets can compensate for the non-possession of related manufacturing assets since innovation involves a significant element of recombination or reinvention. These arguments lead to the next set of hypotheses:

H6a: The relationship between inventive assets and early new product introduction entry will be weaker for firms that have manufacturing assets in a related industry.

H6b: The more the inventive assets possessed by a firm, the weaker the relationship between manufacturing assets in a related industry and early new product introduction.

Just as manufacturing assets and inventive assets can substitute for each other, they can also reinforce each other, leading to a set of predictions that are opposite to those stated above. Rosenberg (1979) makes a case for innovations being the result of numerous minor improvements that are cumulative. For example, minor improvements made in the laboratory can have an extraordinary effect on the manufacturing ability of an organisation. Similarly, it is possible that invention generation units of firms (e.g. laboratories) that have manufacturing assets are able to be even more productive because they can build on some of the developments and improvements made in the manufacturing units. This leads to the following hypotheses that compete with hypotheses 6a and 6b.

H6c: The relationship between inventive assets and early new product introduction entry will be stronger for firms that have manufacturing assets in a related industry.

H6d: The more the inventive assets possessed by a firm, the stronger the relationship between manufacturing assets in a related industry and early new product introduction.

3.4 Summary

To summarize, the hypothesis presented in this chapter are presented below. The next chapter discusses the research methodology.

HI: Firms that possess more inventive assets will introduce new products earlier than firms that possess less inventive assets.

H2: Firms that possess more marketing assets in the focal industry will introduce new products earlier than firms that possess less marketing assets in the focal industry.

H3: Firms that possess more marketing assets in a related industry will introduce new products earlier than firms that possess less marketing assets in a related industry.

H4: Firms that possess manufacturing assets in a related industry will introduce new products earlier than f m s that do not possess such manufacturing asset.

H5a: In the case of competence-destroying discontinuities, firms that possess manufacturing assets from a prior generation in the focal industry will introduce new products later than firms that do not possess such manufacturing assets.

H5b: In the case of competence-enhancing discontinuities, firms that possess manufacturing assets from a prior generation in the focal industry will introduce new products earlier than firms that do not possess such manufacturing assets.

H6a: The relationship between inventive assets and early new product introduction entry will be weaker for firms that have manufacturing assets in a related industry.

H6b: The more the inventive assets possessed by a firm, the weaker the relationship between manufacturing assets in a related industry and early new product introduction.

H6c: The relationship between inventive assets and early new product introduction entry will be stronger for firms that have manufacturing assets in a related industry.

H6d: The more the inventive assets possessed by a firm, the stronger the relationship between manufacturing assets in a related industry and early new product introduction.

Chapter 4 – Research Methodology

4.1 Introduction

This chapter aims to provide an overview of the methodological approaches and research design selected for application to a study on the possibility of new form entry and success in the office equipment market.

4.2 Research Background

4.2.1 Research Hypotheses

As presented in the preceding chapter, the dissertation’s primary hypothesis is as follows:

The office equipment market, specifically the copier, printer and facsimile industries, has no place for late entrants/new comers.

The above stated hypothesis gives rise to a host of secondary ones, all of which shall be explored as part of the effort to test the dissertation’s primary hypothesis.  As stated in the previous chapter, the dissertation’s secondary hypotheses are:

HI: Firms that possess more inventive assets will introduce new products earlier than firms that possess less inventive assets.

H2: Firms that possess more marketing assets in the focal industry will introduce new products earlier than firms that possess less marketing assets in the focal industry.

H3: Firms that possess more marketing assets in a related industry will introduce new products earlier than firms that possess less marketing assets in a related industry.

H4: Firms that possess manufacturing assets in a related industry will introduce new products earlier than f m s that do not possess such manufacturing asset.

H5a: In the case of competence-destroying discontinuities, firms that possess manufacturing assets from a prior generation in the focal industry will introduce new products later than firms that do not possess such manufacturing assets.

H5b: In the case of competence-enhancing discontinuities, firms that possess manufacturing assets from a prior generation in the focal industry will introduce new products earlier than firms that do not possess such manufacturing assets.

H6a: The relationship between inventive assets and early new product introduction entry will be weaker for firms that have manufacturing assets in a related industry.

H6b: The more the inventive assets possessed by a firm, the weaker the relationship between manufacturing assets in a related industry and early new product introduction.

H6c: The relationship between inventive assets and early new product introduction entry will be stronger for firms that have manufacturing assets in a related industry.

H6d: The more the inventive assets possessed by a firm, the stronger the relationship between manufacturing assets in a related industry and early new product introduction.

4.2.2 Research Questions
  • What are the possibilities of a new company entering the office equipment market?
  • To what extent is the office equipment market an innovation-based one which is adverse to new entrants?
  • What factors determine the ability of some firms to introduce new products earlier than their rivals?
4.2.3 Research Objectives
  1. To study the literature on the office equipment market, with particular focus on the copier, printer and facsimile industries.
  2. To determine new entrants’ potential for success in the office equipment market.
  3. The identification of the determinants of success in the office equipment market.
  4. To correlate between the market’s characteristic as an innovative one and the first-mover advantage theory.
  5. To outline the factors which determine innovativeness and correlate it first-mover versus new entrant characteristics.
  6. To test the primary and secondary hypotheses through a case study, Xerox .
4.3 Research Design and Research Methodology

A research methodology references the procedural rules for the evaluation of research claims and the validation of the knowledge gathered, while research design functions as the research blueprint (Creswell, 2003).  As Sekaran (2003) further clarifies, a research methodology may be defined as academia’s established regulatory framework for the collection and evaluation of existent knowledge for the purpose of arriving at, and validating, new knowledge.  Cooper and Schindler (1998) maintain that the determination of the research methodology is one of the more important challenges which that confronts the researcher.  In essence, the research activity is a resource consumptive one, and must maintain its purposeful or functional activity through the justification of resource expenditure.  In other words, given that research is ultimately defined as constructive, the resources that it utilizes must fulfil explicit purposes and withstand critical scrutiny.  Research methodology occupies a position of unique importance.  A methodology does not simply frame a study but it identifies the research tools and strategies (i.e. resources) that will be employed, and relates their use to specified research aims.  As Sekaran (2003) suggests, its importance emanates from the fact that it defines the activity of a specified research, its procedural methods, strategies, for progress measurement and criteria for research success.

Within the context of the research methodology, each research poses a set of unique questions and articulates a specified group of objectives.  The research design functions to articulate the strategies and tools by and through which empirical data will be collected and analyzed.  It additionally serves to connect the research questions to the data and articulate the means by which the research hypothesis shall be tested and the research objectives satisfied (Punch, 2000).  In order to satisfy the stated, the research design has to proceed in response to four interrelated research problems.  These are (1) the articulation and selection of the research questions; (2) the identification of the relevant data; (3) determination of data collection focus; and (4) the selection of the method by which the data will be analyzed and verified (Punch, 2000).

Although research methodology and research design are distinct academic constructs, Punch (2000) maintains the former to be more holistic than the latter and, in fact, inclusive of it.

4.4 Research Purpose

Research scholars have identified three main purposes to the research activity.  These are the exploratory, the descriptive and the explanatory purposes (Saunders et al., 2000).  Patton (1990) identifies a fourth purpose which he defines as the prescriptive objective.  Proceeding from Jackson’s (1994) contention that the researcher should identify the purpose(s) by correlating the research questions to the research objectives, this is precisely the strategy that the current research shall adopt.

4.4.1 Exploratory

Exploratory research unfolds through focus group interviews, structured or semi-structured interviews with experts and a search of the relevant literature (Saunders et al., 2000).  Its primary purpose is the exploration of a complex research problem or phenomenon, with the objective being the clarification of the identified complexities and the exposition of the underlying nature of the selected phenomenon.  In other words, and as Robson (2002) explains, exploratory research investigates a specified problem/phenomenon for the purpose of shedding new light upon it and, consequently, uncovering new knowledge.

The first and second research questions directly tie in with, and compliment one another.  They additionally correlate to research objectives 1-6 and are fundamentally explorative in nature.

4.4.2 Descriptive

Punch (2000) explains the purpose of the descriptive research as the collection, organisation and summarisation of information about the research problem and issues identified therein.  Similar to the descriptive research, it renders complicated phenomenon and issues more understandable.  Dane’s (1990) definition of the descriptive research and its purposes coincides with the stated.  Descriptive research entails the thorough examination of the research problem, for the specified purpose of describing the phenomenon, as in defining, measuring and clarifying it (Dane, 1990). Jackson (1994) contends that all research is partly descriptive in nature.  The descriptive aspect of a research is, simply stated, the (1) who, (2) what, (3) when, (4) where, (5) why, and (6) how of the study.

Proceeding from the above and bearing in mind that the first research question is partly descriptive in nature; the research shall adopt a descriptive purpose in parts. To answer the research question, and test the proposed hypotheses, it is necessary to ask (1) “What are the characteristics of the office equipment market?”  (2) “What are the characteristics of successful office equipment manufacturing firms?” (3) “What are the advantages of first-movers in the market in question?” (4) and “What are the factors which constraint new entrants’ potential for success?” These questions, immediately correlate to the research objectives, are integral to the testing of the hypotheses and are essential for the answering of the research questions.  More importantly, these questions are descriptive in nature, shall be answered, in part, through the literature review and, in others, through the discussion and, as such, impose a descriptive purpose upon the research.

4.4.3 Explanatory

Miles and Huberman (1994) define the function of explanatory research as the clarification of relationship between variables and the componential elements of the research problem.  Explanatory research, in other words, functions to highlight the complex interrelationships existent within, and around, a particular phenomenon and contained within the research problem (Miles and Huberman, 1994).  Expounding upon this, Punch (2000) asserts that explanatory, or causal research, elucidates upon the nature of the problem under investigation and explains the basis for the proposed solution.  It is an explanation of the complex web of interrelated variables identified and follows directly from a clearly stated central research hypothesis and research question.

While both research questions have an undeniably descriptive component to them, they possess a fundamentally explorative intent.  Responding to these questions necessitates the clarification of the variable relating to organisational characteristics to those associated with particular management models.  The research questions can only be satisfactorily answered, and the requirements of the research objectives only be adequately satisfied if the relationship between market structure and firm characteristics explained.  Accordingly, the research shall further adopt an explanatory purpose.

4.5 Research Approach

The selection of the research approach is, according to Creswell (2003) a critically important decision.  The research approach does not simply inform the research design but it gives the researcher the opportunity to critically consider how each of the various approaches may contribute to, or limit, his study, allow him/her to satisfy the articulated objectives and design an approach which best satisfies the research’s requirements (Creswell, 2003).

The research approach, as explained by Hair et al. (2003) embraces the quantitative versus the qualitative and the deductive versus the inductive.  Each set of approaches is commonly perceived of as referring to polar opposites (Hair et al., 2003).  Jackson (1994) takes issue with this perception and contends that a researcher should not limit himself to a particular approach but, instead should use a variety of approaches, if and when required by his study.

4.5.1 The Deductive versus the Inductive Approach?

Marcoulides (1998) defines the deductive approach as a testing of theories.  The researcher proceeds with a set of theories and conceptual precepts in mind and formulates the study’s hypotheses on their basis.  Following from that, the research proceeds to test the proposed hypotheses.  The inductive approach, on the other hand, follows from the collected empirical data and proceeds to formulae concepts and theories in accordance with that data (Marcoulides, 1998).  While not disputing the value of the inductive approach, the research opted for the deductive approach, or the `top-down,’ as opposed to the `bottom-up’ method.

Figure 4. 1: Deductive and Inductive Thinking

Office Equipment Market Analysis and Assessment

4.5.2 The Qualitative versus the Quantitative Approach

The quantitative tools for data analysis generally borrow from the physical sciences, in that they are structured in such a way so as to guarantee (as far as possible), objectivity, generalizability and reliability (Creswell, 2003).  Here the researcher is viewed as external to the research and results are expected to be constant if the study is replicated, regardless of the identity of the researcher.  Accordingly, the matrix of quantitative research techniques is inclusive of random and unbiased selection of respondents.  It is primarily used for the production of generalizable data for such purposes as evaluation of outcomes, tending towards the near total decentralization of human behaviour.  It is such decentralization that raises criticisms amongst those who tend to exhibit preference for qualitative tools, arguing that these offer insight into perceptions and interactions (Creswell, 2003). Accordingly, whereas questionnaires are leading tools for the first, qualitative methods include interviews, observations and focus groups, are designed to explicate the underlying meaning/cause behind selected phenomenon.  In other words, while qualitative tools analyze the reasons behind a particular phenomenon, quantitative tools analyze the phenomenon itself, independent of human perceptions of reasons why (Creswell, 2003).

As touched upon in the above, qualitative analysis usually precedes from qualitative research techniques employing, for example, interviews.  The content analysis tool is primarily employed for thematic summarization of interview data and is very useful in reducing a large volume of interview data into manageable themes, reflecting upon group attitudes and perceptions of certain aspects of the organisation.  The second tool, force field analysis, is employed for analysis of data pertaining to organisational change.  Primarily deriving from Lewin’s change model, it categorizes data into pro and anti-change forces.  As such, it offers the researcher an insight into the factors that work towards the maintenance of the status quo and those that aid change (Creswell, 2003).   Accordingly, one may surmise that specific conditions demand employment of qualitative analysis tools, with those being the availability of qualitative data and the desire to analyze the underlying attitudes and perceptions regarding organisational structure and change, as expressed by the relevant stakeholders.  In other words, the human behavioural factor is central here.

In comparison, quantitative tools are used for the production of statistical data which proceeds from the availability of quantitative data, essentially decontextualizing the human factor.  The first of these tools, means, standard deviations and frequency distribution is a cost-efficient method of reducing close-ended questionnaire data into straightforward statistics, representing the average and variability of responses, with the frequency distribution functioning as the graphical representation of the number of times particular responses were given.  This tool reduces data to comprehensible, manageable and (ideally) objective numerical or graphical representations (Creswell, 2003). The second tool, scatter gram and correlation coefficients, goes a step beyond the first in the sense that it draws conclusions on the relationship between the variables.  The last tool, difference tests, measures one sample group against a baseline for purpose of examining the differences between specific variables over a time frame (Creswell, 2003).  From this we can surmise that the conditions necessitating the use of quantitative tools includes presence of quantifiable research data and the goal of reducing that data into straightforward statistical representations of basic facts regarding aspects in the inputs, outputs or design components in any of the organisation, group and individual levels.

The differences between the quantitative and qualitative approached are tabulated in the following:

Table 4. 1: Distinction Between Quantitative and Qualitative Methods

Quantitative Research Qualitative Research
Objective is to test hypotheses that the researcher generates. Objective is to discover and encapsulate meanings once the researcher becomes immersed in the data.
Concepts are in the form of distinct variables Concepts tend to be in the form of themes, motifs, generalisations, and taxonomies. However, the objective is still to generate concepts.
Measures are systematically created before data collection and are standardised as far as possible; e.g. measures of job satisfaction. Measures are more specific and may be specific to the individual setting or researcher; e.g. a specific scheme of values.
Data are in the form of numbers from precise measurement. Data are in the form of words from documents, observations, and transcripts. However, quantification is still used in qualitative research.
Theory is largely causal and is deductive. Theory can be causal or non-causal and is often inductive.
Procedures are standard and replication is assumed. Research procedures are particular and replication is difficult.
Analysis proceeds by using statistics, tables, or charts and discussing how they relate to hypotheses. Analysis proceeds by extracting themes or generalisations from evidence and organising data to present a coherent, consistent picture. These generalisations can then be used to generate hypotheses.


The dissertation, conceding to the value of both approaches shall utilise both qualitative and quantitative data analysis strategies.

4.6 Research Strategy

Robson (2002) identifies three research strategies, or plans for responding to the research question.  These are the experimental, the survey and the case study strategies.  A researcher may select one, or even all three of these strategies, depending on the requirements of the research itself and the nature of the study.  Naturally, and as Yin (1989) concurs, scientific researches exploit the experimental strategy while the social sciences tend towards the survey and the case study strategies. The current research shall adopt the conceptual model approach, as discussed and defined by Yin (1989).

4.6.1 Sample

The primary research question this dissertation seeks to answer is the following: can the office equipment market absorb new entrants. This study seeks to answer this research question in the desk-top printer, facsimile, and plain paper copier industries. Information about these industries was gathered through published sources, including books, magazines, industry reports, and conference proceedings.  Innovative Factors

The events of interest in all three industries relate to the possibility of new entrants successfully operating in these markets.  As contended, innovativeness is the predicator of entry and the determinant of success. Within the context of the stated, the word ‘introduction’ is used in the sense of produced and made available for sale. Put differently. a firm must have produced the laser print engine, assembled the product, and sold it under its own labe1 to be counted as one that has introduced a new product. In the plain paper copier industry, the event investigated is the first time a colour copier was introduced by a firm. In the desktop printer industry, introduction of a laser printer for the first time by a firm is the critical event under scrutiny. Similarly, in the facsimile industry, the introduction of the laser facsimile machine is the critical event in question.  Demand Factors

In addition to firm characteristics, potential demand (or lack of it) for a product can also influence innovation timing. However, the three industries selected for this study and the innovations chosen in each of the three industries preclude the possibility of such confounding problems. All three industries are ‘fast cycle industries that necessitate early new product introduction. Moreover, there would be significant demand for the new products in all three industries. Sample Size

The firms included in the study were those that offered products for sale in their respective industries in the UK market over the past fifteen years. A firm entered the hazard set (risk set) when it became a participant in the relevant industry. In other words, any firm that sold a past or current generation product under its own label, whether it manufactured the product or not, was included in the risk set for that industry. The list of firms was obtained from a number of published sources.

Apart from the above stated, outlining the selection of firms on the basis of their market affiliation and period of activity, Xerox was further selected as a case study.

4.7 Credibility and Quality of Research Findings

Ultimately, the data collected is used to inform the research findings.  If the data is not verifiable, the implication is that the findings are potentially suspect.  Accordingly, it is incumbent upon the researcher to validate his/her findings (Sekaran, 2003).   Beyond that, Miles and Huberman (1984) contend that it is equally important for the researcher to evaluate the quality of his/her data prior to its exploitation.

4.7.1 Reliability

A study is reliable only if another researcher, using the same procedure and studying the same phenomenon, arrives at similar, or comparable, findings (Sekaran, 2003).  Accordingly, it is important that the researcher maintains a comprehensive protocol of his study, in case others may be interested in checking its reliability (Sekaran, 2003).

To enhance the reliability of the current research, the cited advice shall be considered and meticulously applied.

4.7.2 Validity

Saunders et al. (2000) contends that a research is valid only if it actually studies what it set out to study and only if the findings are verifiable.  There are three methods for establishing validity.  As Saunders et al. (2000) explains, construct validity entails the establishment of accurate operational measurements for the research’s core concept.  This is done by establishing a chain of evidence throughout the data collection process; by verifying key information through the use of multiple sources of information; and by presented informants with a draft of the study for review.  Besides establishing construct validity, social science researches need also establish external validity by testing the applicability of the findings to external case studies (Yin, 1989).

While conceding to the importance of external validation methods, they are beyond the scope of the current research.  Consequently, the research shall seek the verification of its findings through construct validation.

4.7.3 Quality

Considering that the primary data gathered and subjected to qualitative analysis will be extensively used to inform research and produce conclusions, Miles and Huberman (1994) insist that it is incumbent upon the researcher to review the quality of his/her qualitative data prior to its actual utilisation.

First of all, when engaged in data gathering and later qualitative analysis, the researcher need exercise complete objectivity.  He/she must distance himself/herself from the research and not influence respondents towards answers which are consistent with the research hypotheses and must not subject the data to a qualitative analysis process which would deliberately influence the production of results which validate the hypotheses.  The researcher must be both objective and honest to ensure the quality of both the data and its analysis (Miles and Huberman, 1994).

Secondly, the researcher need exercise transparency regarding the data gathering and analyses stages.  As asserted by Miles and Huberman (1994), researchers can only fulfil the criteria for transparency by making his/her interview notes available and by clarifying the qualitative data analysis process used and making the analysis notes and procedures available.  These notes should clearly explain the qualitative analysis procedure used and how the researcher arrived at his/her findings.  Availability implies transparency and allows readers/other researchers to judge the integrity of the analysis and procedure themselves.  As emphasised by Miles and Huberman (1994) the exercise of transparency helps ensure the quality of the data and its subsequent interpretation.

Thirdly, quality also hinges upon the fluidity of the interpretation and whether or not it is clearly presented and related to the rest of the argument.  Quality qualitative data analysis and interpretation should be clearly and coherently presented and need fit into the totality of the argument (Miles and Huberman, 1994).

Finally, the researcher has sought the clear, comprehensive and coherent presentation of data analysis in Chapter 6.  The data analysis is relevant to the dissertation as a whole and flows with the general argument.

In brief, recognising the importance of the quality requirement, as explained by Miles and Huberman (1994), the researcher has applied the methodology suggested by them for the guarantee of both the quality of the data gathered and the quality of the interpretation.

4.8 Summary

As may have been deduced from the above, the research will adopt a mixed methodological approach.  Selection, as the research purpose sought to argue, was primarily determined by the very nature of the research hypotheses, questions and objectives.  Furthermore, the researcher determined the imperatives of such in-depth analysis as would allow the identification of behavioural trends and patterns while, at the same time, enabling the exposition of the root causes of the stated.  There is no claim here that there are no limitations to this approach and the researcher concedes to the value of quantitative analysis. However, given the parameters of the research’s scope, concomitant with time and resource constraints, it was decided that the defined methodological approach would best satisfy the articulated objectives and respond to the research questions.

From within the matrix of the stated methodological approach, the next chapter shall present, discuss and analyse the dissertation’s findings.

Chapter 5 – Results

5.1 Introduction

This chapter comprised of two distinct parts. The first shall present one of the office equipment market leaders, Xerox, and discuss its recent market failures. The case shall be presented from a qualitative perspective. The second shall quantitatively analyse a number of secondary case studies for determination of the factors determining success in the market in question and whether there is space for new entrants or not.

5.2 Xerox

5.2.1 Selection

Xerox was selected for inclusion following a review of the literature on office equipment market leaders for one simple reason. Within the copier industry, Xerox is popularly identified as the industry’s model, its leading innovator and, formerly, immune to competition. During the past decade, however Xerox appeared to rest on its laurels and, in so doing, opened the way for new entrants. The importance of the aforementioned, and the reason why Xerox was selected, lies in the fact that it appears to invalidate the dissertations primary hypothesis. It is, however, impossible to determine whether or not it does prior to a review of the facts.

5.2.2 Case Review

Good marketing relies on the effective system of competition that a company hires. Xerox Corporation was a rapidly evolving organization that worked within a constantly changing world during the 1990s. Xerox Corporation’s example illustrates how competitive strategies can cause market shares to fail and lose. It should be noted that competition in the 1990s was a direct outcome of the globalization processes, economic integration, and removal of barriers to business on the global scale. Such factors increased competition, which strengthened the need for new technological advances and new ways of competing. “In the 1980s, Xerox Corporation’s revenue share of the copier business declined from 90 percent to 43 percent as a result of increased competition from Ricoh, Sharp, and Canon in Japan and in the USA, Kodak and IBM “(Contemporary Trends in Human Resources Administration, n.s.). Competition industry can be characterized as follows: “Xerox compete in the Xerox high volume copier service market” (Xerox Corporation). Creative Copier services. 2004).

Competition theory has generally been developed, represented and examined by gurus like M. Porter, C.K. Prahalad and G. Hamel, R.M. Hodgetts, H. Mitzberg, R. D’Aveni.  We explain that competition should not always be a formal process, in order to be effective. Studies of the planning practices of actual organisations suggest that the real value of competition may be more in the future orientation of the planning process itself than in any resulting written strategic plan. Xerox Corporation’s loss proves the fact that rivalry isn’t always a “free” way to achieve a strong market position.

Michael Porter suggests that a company is most concerned about the strength of competition within its industry. “The combined power of these forces,” he argues, “determines the industry’s ultimate profit potential, where profit potential is measured in terms of long-term return on capital invested” (Porter, 1980).  The stronger each of these powers, the more constraints are imposed on businesses in their ability to raise prices and gain greater profits. According to the case study, the share price of Xerox had fallen below $4 from a high of $64 a year ago, beginning from the year 2000. In fact, the copying and printing companies worldwide took portions of their market share “(Case Study: Xerox Corporation, n.d.). This failure was caused by a failure resulting in intense competition and management strategy aimed at overcoming the “temporal” decline.

Xerox Corporation’s strong market position resulted in “less preoccupation with … competition” (Kato, n.d.). Xerox Corporation presents globalization and international integration with enticing opportunities and challenges to reconfigure itself. New horizons have allowed Xerox Corporation to increase its global sales, assuming that those delivering a global service and achieving global success through regional policy would be in the strongest position in competition (Xerox Corporation, 2005). Xerox Corporation has, however, paid less attention to such important issues as technological change and creativity.

In his book “Competitive Advantage” Porter identifies five forces that drive competition within an industry:

  1. The threat of entry by new competitors.
  2. The intensity of rivalry among existing competitors.
  3. Pressure from substitute products.
  4. The bargaining power of buyers.
  5. The bargaining power of suppliers (Porter, 1985).

It is important, because it is likely to reduce profits, that a strong force can be seen as a threat. A weak power, on the other hand, can be seen as an advantage, because it can allow the business to gain more income. In the short term, those forces act as constraints on the activities of a company. In the long run, however, it may be possible for a company to change the strength of one or more of its forces by choosing a strategy forces to the company’s advantage. The company states that: “In the early 1990s, we developed a comprehensive process for the return of end-of-life products from customers, establishing a program for remanufacturing and reuse of parts that is fully functional supports our Waste-Free initiatives. 90% of all Xerox product models introduced in 2004 have been developed with a view to remanufacturing “(Xerox Equipment Remanufacture & Parts Reuse, 2005). But this phenomenon occurred only after the loss of the competition. Xerox Corporation’s great dominance, which can be considered a “monopoly,” has become its management weakness incapable of understanding and forecasting environmental changes.

The consequence of the above is that Xerox Corporation went “with the wind” and past success in favor of new product development addressing customer needs. Xerox Corporation has historically struggled to consistently develop to bring new products to market and provide good customer services. … Xerox lagged behind their competitors, because the competitors developed new and even better copier technology with new technology (without infringing on Xerox’s patents), and provide customers with faster delivery and better service) (Case Study: Xerox Corporation, n.d.).

This situation vividly describes the concept of Porter who stated that if the players in an industry produce differentiated products customers are brand loyal, then potential new entrants will encounter resistance in trying to enter the industry. A substitute can be seen as something that satisfies the same needs as the industry’s service. The magnitude of the hazard from a given substitution will depend on the two factors that follow. Near substitutes whose performance is comparable to the service provided by the industry and whose price is equivalent may pose a grave threat to an industry. The more indirect the substitute, the less likely will the price and performance be comparable (Hodgetts, 1986).

Buyers will be more willing to change suppliers from one industry if switching costs are low or if a competitor in another industry offers a product or service with a lower price or improved performance. That is also closely linked to the degree to which consumers remain loyal to the brand. The more loyal customers are to one supplier’s products (for what­ever reason) then the threat from substitutes will be accordingly reduced (Porter, 1985). Xerox Corporation was not able to sustain competitive position and followed requirement dictated by its competitors.

On the other hand, brand loyalty (which Xerox had) was also important factor in increasing the costs for customers of switching the products of new competitors. Existing competitors were already obtaining substantial economies of scale, this have them an advantage over new competitors who are not able to match their lower unit costs of production. Porter states that new competitors may find it difficult to gain access to delivering service, which will make it difficult to provide their service to customers or obtain the inputs required or find markets for their outputs (Porter, 1980). Nevertheless, competitors of Xerox Corporation (for instance Canon) were able to substitute Xerox products and services. “The main competition for Xerox copiers came not from established rivals like IBM and Kodak, but from new Japanese firms like Canon and Kodak Sevin, who had nibbled away its monopoly starting from the lower end” (Shukla, 1994).

The view of competitive strategy formulation accepted by Xerox shows the human tendency to continue on a particular course of action until something went wrong. This fact can be explained by the fact that being a market leader Xerox Corporation had tended to follow a particular strategic orientation for decades before it was forced to make a significant change in direction. As Mintzberg suggested, the various strategic management methods can be considered complementary, reflecting two different forms of research, all of which need to be taken into account improv­ing the quality of strategic thinking and analysis”. (Mintzberg, 1987).

Competition cased failure for Xerox Corporation, because it did not see that the nature of competition had been changed by new competitors, especially Canon and Sevin. The problem was that (as it was mentioned above) Xerox Corporation considered to be a monopolists which established rules of competition, and its competitors, IBM and Kodak, just tried to manoeuvre.  A Japanese-based company Canon brought new vision and competitive management approaches. The main advantage was that Xerox did not achieve technological innovation and efficiency. Also, Xerox competitors reduced manufacturing costs through continuous optimization of production, and “conscious buyers abandoned high-priced Xerox for low-priced Cannon and Ricoh” (Case Study: Xerox Corporation, n.d.). In this case, rivalry kept the industry dynamic and created continual pressure to improve and innovate. Rivalry forces competitors of Xerox to develop new prod­ucts, improve existing ones, lower costs and prices, develop new technologies, and improve quality and service. For instance, Canon was the first company developed the full-color copiers.

For Xerox, competition took place on a price and a non-price basis, which caused dramatic lost of market shares. Price competition involved competitors trying to undercut prices, and able to reduce their costs of production. Non-price competition took form of branding, advertising, promotion, additional services to customers and product innovation (Prahalad & Hamel, 1990). For Xerox competitive rivalry was fierce, and it failed to meet new requirements.

Evidence generally supports Porter’s argument that a business that fails to achieve a standardized strategy will be stuck in the middle, without any competitive advantage. But there are some companies that attempt to achieve both a lower cost and a differentiation position. The ground transport company is one of possible firm who is able to achieve both of these generic strategies.

Proposing that the sustained competitive advantage of a company is determined primarily by its resource endowments, Cravens proposes a five-step, resource-based strategy analysis approach to:

  • Identify and classify the firm’s resources in terms of strengths and weak­nesses.
  • Combine the firm’s strengths into specific capabilities. These are core competencies: the things that a corporation can do exceedingly well.
  • Appraise the profit potential of these resources and competencies in terms of their potential for sustainable competitive advantage and the abil­ity to harvest the profits resulting from the use of these resources and capa­bilities.
  • Select the strategy that best exploits the firm’s resources and competencies relative to external opportunities.
  • Identify resource gaps and invest in upgrading weaknesses (Cravens 1982).

Analysis of Xerox performance allows to one to assert that it failed to meet all these steps being aware of firm market position. It was found that: “The rivalry is in the following three segments for the Multifunction Peripherals (MFP): 1) the Personnel segment: HP has the largest market share; 2) work group side: the competition is among Xerox, Canon, Ricoh and Panasonic; 3) the production segment: Xerox once ruled, Canon has jumped ahead by claiming 49% of the market, Xerox only holds 45%” (Case Study: Xerox Corporation, n.d.).

D’Aveni suggests that competition consists of a set of “dynamic strate­gic interactions in four arenas: cost-quality, timing and know-how, entry barriers, and deep pockets. Each of these arenas is “continuously destroyed and recreated by the dynamic manoeuvring of hypercompetitive firms” (D’Aveni, 1994). Xerox was unable to anticipate changing conditions and was not prepared to react to the tactics that its rivals had introduced.

It is worth noting that Xerox has followed some competitive strategies to maintain its position. For example, “Consumer acceptance of reused / recycled parts throughout the 1990s was a major challenge for Xerox’s system” (Xerox Equipment Remanufacture, 2005), but it wasn’t enough to compete too much on the global scale.

The significant factor that created a loss in competition is that Xerox’s rivals sold through distributors rather than paying direct sales costs. Competitors established an after sale service departments as an obligatory requirement of their policy, instead of national service network proposed by Xerox Corporation.

Another important factor of Xerox Corporation failure is product substitution, which was caused by new computer technology. Many companies did not need expensive Xerox equipment which was substituted by PCs.  Digital revolution had the company “over the barrel”. Xerox Corporation had not been ready to propose low-cost products to compete with its direct competitors and computer technology, which altered industry struc­ture and objectives and demanded certain types of new products.

It is evident that innovativeness is requisite for the maintenance of market shares in the office equipment market. No past success is guaranteed to sustain strong position in future. The failure to compete depicts that even if a company obtains competitive position and follows competitive strategies in some cases, it could not sustain the strategy. Each of the competitive strategies has its risks. On the one hand, for Xerox Corporation cost leadership was reduced by competitors, and by technology changes. On the other hand, differentiation was also imitated by competitors.

5.2.3 Findings

The case study, as reviewed and presenting in the preceding, allows for the arrival at a number of findings which directly relate to the validity of the dissertation’s hypotheses.  These findings are:

  • First-movers have a competitive edge but need to sustain it through continued innovativeness and competition.
  • First-movers have the firm resources required for the maintenance of market shares but the aforementioned needs to be supported through strong and efficient management and marketing.
  • In the absence of competitiveness and continued innovativeness, first-movers leave a gap in the market which can be filled through innovative new entrants.
  • If first-movers do not sustain their innovativeness, the market can absorb new entrants.

Insofar as the research’s central, or primary, hypothesis is concerned, this means that there can be a place for new entrants in the office equipment market should first-movers cease their efforts at continued innovation.

5.3 Overview of Firms Operating in the UK

Data on the office equipment industry was collected and statistically analysed.  The results and discussion presented in this part of the chapter cover the period from 1985-2005.  Analysis was carried out through a statistical software package, SAS.

5.3.1 Copier Market

Table 5.1 presents the results for the plain paper copier industry. In Model 1, the control variable, size, was entered. The results show that size was not significant in explaining new product entry time. Models 2 through 5 test the effect of entering each of the hypothesized covariates simultaneously with the control variable, size in the model. The results show significant support for the hypothesized relationships in the case of advertising marketing assets in the focal industry (p<0.0 l), inventive  assets (p<0.0 l), and manufacturing assets a prior generation (p<0.0 l), variables, but these relationships weaken or disappear when the covariates are all entered simultaneously in model 9. the results in model 9 (all variables entered simultaneously) not only shows support for the overall model (change in chi-squared equals 30.409, p<0.00l), but also shows some support for hypothesis 1 (p<0.0 l), indicating that inventive assets are relevant for early introduction of fill colour copiers. However, the coefficients corresponding to both advertising marketing assets and manufacturing assets in a prior generation became insignificant in model 9 largely because of their correlations with each other and with inventive assets.

The above support for hypothesis 1, that inventive assets in relevant technologies leads to early new product entry, was particularly significantly considering the fact that inventive assets, advertising marketing assets in the focal industry and manufacturing assets in a prior generation were correlated with each other. As models 7 and 8 demonstrate, when partial models were estimated after dropping one of these variables at a time, support for hypothesis 1 (p<0.10) remained significant in the presence of both advertising marketing assets in the focal industry and manufacturing assets in a prior generation. Also, the changes in chi-squared for model 7 (30.397, p<0.01) and for model 8 (30.392, p<0.001) compared to model 1 lend further support for hypothesis 1. Although in model 6, advertising marketing assets in the focal industry turned out to be significant, it is questionable in view of the fact that the change in chi-squared for the model over model l(12.278, p<0.01) was low compared to similar measures for models 7 through 9. Thus, hypothesis 1 was supported, indicating that inventive assets in relevant technologies led to early new product entry in the plain paper copier industry.

Table 5.1: Copier Market Results of the Proportional Hazards Regression

Office Equipment Market Analysis and Assessment

Table 5.1: (Cont’d)

Office Equipment Market Analysis and Assessment

5.3.2 Printer

The results for the desktop printer industry are presented in Table 5.2.  In model 1, the control variable size was entered.  The results indicate the larger the organisation, the earlier the introduction of innovative products, specifically, the laser printer.  The result, however, was not robust because it did not hold when other variables were entered along with size in subsequent models.

Models 2 through 6 tested the effects of each of the variables in the presence of the control variable, size. Hypotheses 1, 3 and 4 were supported by the results. Model 4 shows that inventive assets were  significant (p<0.01) in early new product entry, supporting the first hypothesis. Similarly, model 3 shows that advertising marketing assets in a related industry was significant (p<0.01), supporting hypothesis 3, that marketing assets (in a related industry) lead to early new product entry. Also, model 5 shows that manufacturing assets in a related industry was significant (p<0.01) in early new product entry, indicating support for hypothesis 4.

However, some results weakened or disappeared when the covariates were tested together in model 10. Inventive assets appeared less significant (p=0.1049) in model 10, indicating less support for hypothesis 1, that inventive assets in relevant technologies lead to early new product entry. Advertising marketing assets in a related industry lost its significance, indicating that these assets did not lead to early new product entry, contrary to hypothesis 3. There was strong support for hypothesis 4, which indicated that firms in possession of manufacturing assets in a related industry (plain paper copier) introduced laser printers earlier than those that did not possess these assets. However, taking into consideration the high correlation between inventive assets, advertising marketing assets in a related industry, and manufacturing assets in a related industry, a closer inspection of the results was warranted.

Models 7 through 9 are partial ones estimated by dropping only one of the above three correlated variables at a time from model 10. As model 9 shows, inventive assets (p<0.01) were clearly more significant in explaining early entry than advertising marketing assets in a related industry (not significant). Inventive assets (p<0.05) were also significant in explaining early entry along with manufacturing assets in a related industry (p<0.01) as indicated in model 7. Moreover, the chi-square for model 7 (chi-square = 49.620, p<0.001) was almost identical to the main effects model (chi-square = 49.904, p<0.001), indicating that the drop in significance of the inventive assets variable in model 10 may have been due to the high inter-correlations between the independent variables. Furthermore, the relative stability of the coefficients of inventive assets across models 4,7,9, and 10 demonstrated support for the role of these assets in early new product entry (hypothesis 1).

In order to examine support for hypothesis 6, that inventive assets and manufacturing assets in a related industry may substitute for or complement each other in their roles with respect to early new product entry, model 11 was tested by adding an interaction term (inventive assets and manufacturing assets in a related industry) to the variables included in model 10. The significant, negative coefficient (p<0.05) indicates that the importance of inventive assets in explaining early entry was diminished in the case of firms that had manufacturing assets in a related industry (plain paper copier) and vice versa. When juxtaposed with the significant results supporting hypothesis 1 (inventive assets in related technologies lead to early new product entry) and hypothesis 4 (manufacturing assets in a related industry lead to early new product entry), this result provided support for hypotheses 6a and 6b (inventive assets and manufacturing assets in a related industry may substitute for each other in their roles with respect to early new product entry). Thus, inventive assets can substitute for manufacturing assets in a related industry or vice versa in early introduction of laser printers.

Table 5.2: Printer Market Results of the Proportional Hazards Regression

Table 5.1: Cont’d

5.3.3 Facsimile

Table 5.3 presents the proportional hazards regression results for the facsimile industry. In model 1, the control variable, size, was entered. The results did not indicate any role for fm size in new product entry time. Models 2 through 7 test the effect of entering each of the hypothesized covariates in conjunction with the control variable, size. Similarly, model 5 shows that inventive assets led to early introduction of laser facsimile machines, indicating support for hypothesis 1 (firms that possess more inventive assets in related technologies will introduce new products earlier than those that possess less of these assets). In model 3, advertising marketing assets in the focal industry was significant in early introduction of laser facsimile machines, demonstrating support for hypothesis 2 (firms that possess more marketing assets in the focal industry will introduce new products earlier than firms that possess less of these assets). Model 6 shows that manufacturing assets in a related industry (desktop printer) was significant for early introduction of laser facsimile machines, indicating support for hypothesis 4, that firms that possess manufacturing assets in a related industry will introduce new products earlier than firms that do not possess these assets.

Model 7 indicates that manufacturing assets in the thermal facsimile generation led to early introduction of laser facsimile machines, contrary to the prediction in hypothesis 5b, that firms which possess manufacturing assets in a prior generation will introduce led to delayed new product entry in the case of competence-destroying discontinuities.

As in the case of the plain paper copier and desktop printer industries, some of these relationships weaken or disappear when the covariates were entered at the same time. In model 8, the main effects were tested simultaneously. The results indicate strong support for hypothesis 4 (p<0.0 I), that manufacturing assets in a related industry will be lead to early new product entry. None of the other effects are significant, except manufacturing assets in a prior generation, which was significant in the opposite direction, indicating that firms with manufacturing assets for thermal facsimile machines were able to introduce laser facsimile machines earlier than firms that did not possess these assets.

In order to test hypothesis 6, the model consisting of the main effects and the interaction effect between inventive assets and manufacturing assets in a related industry was estimated in model 9. The interaction effect was not significant, indicating that inventive assets and manufacturing assets in a related industry were not substitutes for each other in explaining early entry time in the facsimile industry.

Table 5.3 summarizes the results of the study, presenting the hypotheses and the degree of support obtained for each of them. Inventive assets led to early new product entry in the plain paper copier and desktop printer industries, indicating support for hypothesis 1 in both these industries, but not in the facsimile industry.

Marketing assets, both in the focal industry and in a related industry, did not lead to  early new product entry, indicating no support for the second and third hypotheses. Manufacturing assets in a related industry were important in early new product entry time in the desktop printer and facsimile industries. No such test was possible in the plain paper copier industry as electrophotography technology originated in that industry. Manufacturing assets in an earlier generation did not lead to delayed new product entry in the case of competence-destroying discontinuities, indicating no  support for hypothesis 5a. Nor did these assets lead to early new product entry in the case of competence-enhancing assets, indicating no support for hypothesis 5b.

Finally, manufacturing assets in a related industry and inventive assets were substitutes for each other in their roles with respect to early new product entry in the desktop printer industry, indicating support for hypothesis 6a and 6b.

Table 5.3: Facsimile Market Results of the Proportional Hazards Regression

Table 5.3: Cont’d

Chapter 6 – Discussion and Conclusion

6.1 Introduction

The purpose of this chapter is threefold. First, it discusses the findings outlined in the previous chapter. Second, it identifies the contribution of this dissertation. Finally, the chapter also suggests new research directions that will help extend the findings in this study.

6.2 Discussion of Results

The results indicate that that there is no immediate response to the dissertation’s central hypothesis. On the one hand, should first-movers maintain innovativeness, than there is no room for new players. On the other hand, should they fail to innovate, than the market can withstand new entrants.  In other words, the answer to the central hypothesis differs in accordance with the status, or circumstance of the primary players. To further complicate matters, responses to the central hypothesis further vary in accordance with the particular office equipment sector referred to, as in whether it is the copier, printer or facsimile industry. The aforementioned was determined through the testing of the secondary hypotheses and is predicated on the results outlined in the preceding chapter.

The results show support for the role of technological assets (inventive and manufacturing) in new firm entry timing. The relative importance of each of these assets varies across the three industries included in the study (plain paper copier, desktop printer and facsimile). Nevertheless, there is overwhelming support for the role played by technological assets in the determination of whether or not the market can absorb new entrants.

In the copier industry, inventive assets were significant for introducing full colour copiers. Even though the knowledge base underlying full colour copiers built on the knowledge generated in producing earlier generations (single, dual, tri-, and quad colour) copiers, and thus were competence-enhancing innovations, prior manufacturing experience did not play a role in the introduction of these machines. One possible explanation could be that the earlier generation products themselves were introduced as a result of the inventive assets possessed and developed by organisations over time. This explanation seems all the more plausible in view of the fact that manufacturing experience in a previous generation and inventive assets were highly correlated. Given the robust result in support of inventive assets, it seems that inventive assets play a crucial role in new product introduction in the plain paper copier industry.  The implication here is new players’ access to this market is ultimately determined by the state of their technological assets and considering the rarity of their assets being capable of competing with those at the disposal of early players/first movers, it is unlikely that the copier industry can absorb new entrants.

In the printer industry, both inventive assets and manufacturing assets from a related (plain paper copier) industry played significant roles in early new product entry. Furthermore, these assets seem to be substitutes for each other. Even though the innovation in this industry was a competence-destroying one, in the sense that laser printing technology had nothing in common with dot-matrix printing technology, incumbents with manufacturing assets in the previous generation were not at a disadvantage when it came to introducing laser printers, contrary to hypothesis 5a. A possible explanation might be that, irrespective of whether an organisation is an incumbent or new entrant, proficiency in the new technology is what determines its preparedness to introduce products in a timely manner.  In direct relation to the central hypothesis, this means that new players can enter the market only if they are in a position to introduce new products in a timely manner.

The facsimile industry results, similar to the plain paper copier and desktop printer ones, show the importance of technological assets in new product introduction timing. However, unlike the previous two industries, inventive assets played no role whatsoever in the introduction of laser facsimile machines. Manufacturing assets (experience in manufacturing laser printers) played a dominant role in the introduction of laser facsimile machines. An interesting result is the apparent importance of manufacturing assets from the thermal facsimile generation in enabling firms to introduce laser facsimile machines early, contrary to hypothesis 5a. This result is especially notable because it contradicts predictions made in previous literature, which reported that assets from an earlier generation do not retain any value in subsequent ones in the case of competence-destroying innovations (Tushman & Anderson, 1986).  As far as this market is concerned, therefore, the response to the central hypothesis is that new players may enter only if their manufacturing assets allow the to.

This intriguing result, that manufacturing assets from an earlier generation retain value for the next generation, indicates that technologies and the technological knowledge base underlying products might be compartmentalized. For example, in the facsimile industry the transmission and scanning modules of the facsimile machines stayed virtually the same for both the thermal and the laser facsimile machines. Therefore, manufacturing experience in the thermal facsimile era may have enabled firms to introduce laser facsimile machines earlier as they did not have to work on the transmission and scanning modules. Thus, some components of technology might retain value over different generations, while others do not. In the former situation, firm assets in earlier generations can work in a firm’s favour in introducing new products. Furthermore, these assets might interact with other innovation-related assets in new product introduction timing.

Surprisingly, the hypothesis related to competence-destroying innovations (5a) was not significant. In other words, assets from a prior generation in the focal industry did not delay new product introduction in the competence-destroying case. A possible explanation might be that although products and their attributes might have nothing in common from one generation to the next, firms might have developed the competence for the next generation in a related industry. Thus, competence-destroying discontinuities may render the skills and assets base from previous generations redundant (Tushman & Anderson, 1986) in the case of single business firms, but not in the case of diversified firms.  This leads to the supposition that the market may very well withstand new entrants.

Apart from these results which give a better understanding of innovation related assets in each of the three industries, the proportional hazards regression also provides useful insights that seem to apply across all three industries. First, market related assets were not relevant in the introduction of new products in any of the three industries. One possible explanation could be the limitations posed by the measures used to operationalise market related assets: advertising expenses and possession of distribution channels. Also, the advertising data for the plain paper copier and facsimile industries were aggregates of expenditures by firms in both these industries. Therefore, the accuracy of the advertising expenditure measure in the case of both these industries may be questionable. A more plausible explanation, however, might be that since the innovations in at  three industries involve technologies that were quite complex and required considerable investment, marketing assets might have a relatively unimportant role to play in new product introduction early on in the life cycle. Similar to the PC industry, as the product matures, marketing may become more critical in later years of the product life cycle.

A second pattern in the results pertains to the diminishing importance of inventive assets as one moves from the plain paper copier industry, through the desktop printer industry, to the facsimile industry. This is in sharp contrast to the increasing importance of manufacturing assets in related industries as one traverses the same sequence of these industries. Inventive assets were the only significant variable in the plain paper copier industry which contributed to the early introduction of new products. Its role in the introduction of laser printers was low compared to the manufacturing assets in related industries (plain paper copier). Lastly, innovative assets were insignificant for the implementation of laser facsimiles, while manufacturing assets made a significant contribution in a related industry.

A possible explanation is that the plain paper copier industry can be seen as the arena for nurturing electrophotographic technology and providing cutting edge developments in this area. Thus, an inventive asset in the electrophotography area is crucial for introduction of state-of-the-art products in that industry. As one moves to the desktop printer industry, a substantial body of knowledge was transferred by participants in the plain paper copier industry. However, such technology had to be modified in order to develop the laser engine, especially in areas related to the use of a laser beam device for writing images on the photoconductive drum. Thus, there was some recombination of knowledge; in other words, some re-invention. By the time the electrophotographic technology was transferred to the facsimile industry, improvements and modifications to original knowledge base had already been carried out in the desktop printer industry. Thus, firms that had manufactured and introduced laser printers were at a distinct advantage in early introduction of laser facsimile machines as they could transfer the laser engines from the desktop printer industry.

6.3 Contributions

The primary objective of the study was the determination of whether or not the office equipment market can withstand new entrants.  In order to determine the aforementioned, a number of secondary hypotheses were tested.  All of the stated significantly contributed to the value of the value of the dissertation and its findings.

The results also provide further evidence on the limited role played by firm size in innovations. Across all three industries, size did not affect new product introduction timing. While it is tempting to conclude that size has no role to play in innovation timing, a more plausible argument is that this study did not capture the different roles played by the material advantage of large firms and the behavioural advantage of small firms. Perhaps, the use of a measure such as firm size confounds both these issues. In fact, future research should try to split firm size into its constituent parts and test the effect of these variables on innovations.  Doing so will allow a more accurate determination of whether or not new players can enter the defined markets and capture a sufficient share.

This dissertation also contributes to research dealing with the role of incumbency in innovation timing, by pointing out that relevant (manufacturing) assets is crucial to early new product entry. Extant literature has emphasized the role played by incumbents/new entrants on new product introduction. However, as argued in chapter 2 and demonstrated by the results in this study, rather than considering whether incumbents or new entrants are earlier with new products, the assets possessed by firms provide a better explanation of early new product entry.  To this extent, the research has allowed for a more accurate understanding of the determinants of success in this market and, in so doing, allow one to conclude that new entrants can succeed only if they possess the relevant manufacturing assets.

This dissertation employed the resource-based view of the firm in deriving the hypotheses that were tested here. Although this theory has been around for a while, strategy scholars were drawn to it after the seminal piece by Wernerfelt (1984). Since then, a number of researchers have built and clarified some of the concepts in this area (Barney, 1996). Nevertheless, not much has been done by way of empirical investigations that employ this theory. In testing the influence of inventive, manufacturing and marketing assets on new product introduction timing and new market entrants, this dissertation carried out an operationalisation of the construct, firm resources.

6.4 Limitations

Detailed studies of one industry or a group of related industries provide limited generalizability. Although the findings in this study can have implications for other ‘fast cycle’ industries, it is not clear whether they are applicable in consumer product industries or the service sector, such as banking, health care, etc. Innovations in a number of consumer products industries centre around marketing and packaging. In general, they may not involve costly investments in technology and manufacturing, and introductions may be easily imitated by rivals. Timely new product introduction in such industries may not require technological investments that have been built up over time.

The overwhelming support for the role of technological assets in early new product introduction may also be explained by the fact that all three industries studied here are oligopolies. The four-firm concentration ratios vary from 51 % to 91 %. In such industries, the market-share leaders have the material resources to undertake projects that have long gestation periods and require significant investments in leading edge research. Or, in some cases, such dominant players (e.g. Canon) may have manufacturing assets in related industries that they leverage across industries to introduce new products. However, it must be noted that it was not just the dominant firms that were early in new product introduction. For example, fringe players, such as Okidata, also introduced new products relatively early in the facsimile and desktop printer industry. Perhaps, the presence of the materially endowed large firms may have created an environment that stimulated others to step up their own research and development efforts and/or leverage their manufacturing assets across industries.

In the service sector, the cultural norms and values of the social setting (Kahn, 2006) may play a dominant role in innovations. For example, firms in the banking sector that plans to introduce innovations incorporating on-line services will need to pay particular attention to organisational factors, such as employee attitudes, organisational climate, etc. These social and cultural issues may be the dominant influences on new product introduction in such industries.

Finally, the scope of this study was confined to the role of marketing, inventive and manufacturing assets in determining whether or not new players can enter this particular market. Organisational processes and structure may play important roles in innovation timing. For example, studies addressing the role of decision-making processes, linkages between divisions, new product team structure, etc. can provide a fuller understanding of the stated.

6.5 Directions for Future Research

For a start, research should be conducted to see if the results of this study can be applied to other industrial contexts. Much work remains to be done in the area of new product introduction. Although this study has identified a set of factors important for new entrants and correlates it to new product timing, it is not clear if these results are generalizable to other industrial contexts or environments. For example, in industries that do not require high levels of technological sophistication (e.g. some consumer products industries), it is possible that marketing assets might play a crucial role.

Second, studies should be conducted to determine the circumstances under which assets from an earlier generation proves useful in new product introduction and hence, allow for the emergence of potentially successful new market players. As the example of the facsimile industry demonstrates, some modules of a product may remain unchanged for future generations of products, while others may change completely. In other word, a new product may be a combination of both competence-enhancing and competence-destroying discontinuities (Tushman & Anderson, 1986). The relative importance of both these discontinuities and a firm’s expertise in the different modules may influence its ability to introduce new products.

Research should also be conducted to investigate the impact of the resources (used in this study) on performance variables other than new product introduction timing. For example, it is possible that marketing, inventive, and manufacturing assets might impact other performance measures such as market share, number of product models, breadth of market coverage, and profitability. By providing further tests of the resource-based view of the firm, such research will make a significant contribution to the body of knowledge existing in that area.

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