Title
Investor reactions to new product development failures : the moderating role of product development stage Investor reactions to new product development failures : the moderating role of product development stage
Author
Faculty/Department
Faculty of Applied Economics
Publication type
article
Publication
Lubbock, Tex. ,
Subject
Psychology
Economics
Source (journal)
Journal of management / Southern Management Association [Lubbock, Tex.] - Lubbock, Tex., 1975, currens
Volume/pages
39(2013) :4 , p. 985-1015
ISSN
0149-2063
1557-1211
ISI
000318176900006
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Affiliation
University of Antwerp
Abstract
The authors develop a model of investor reactions to new product development (NPD) failures in high technology firms. They propose that a firms financial and managerial capabilities, and its strategic focus on R&D, influence investors perceptions of the firms market value after NPD failure and that these effects are contingent on the development stage of the failed product. Using data on 148 NPD failures of publicly traded biopharmaceutical firms and an event study methodology the authors find support for their hypotheses. They show that the relationships between a firms (a) financial capabilities, (b) managerial capabilities, and (c) strategic focus on R&D, respectively, and the decline of firm market value after NPD failure are more negative for products that fail in late development stages than for products that fail in early development stages. The authors results highlight the importance of a conjoint consideration of product-level and organizational-level effects in explaining investor reactions to NPD outcomes.
E-info
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