J PROD INNOV MANAG 89
19X7:4:X9- IOX
0000
Firm Size and Product Innovation
John E. Ettlie and Albert H. Rubenstein
The linkage between firm size and product inno-
vation has frequently been discussed by both re-
searchers and other writers. John Ettlie and Al-
bert Rubenstein report the results of a study
which, by distinguishing between the incorpora-
tion of radical and incremental technology, at-
tempts to resolve some of the controversy sur-
rounding this issue. In particular, the authors
hypothesize that up to a certain point, large firms
with greater resources are more likely to com-
mercialize radically new products successfully.
Findings generally support this theory but re$ne-
ments to the model are now possible. For exam-
ple,jrms with 1000 employees or less need not be
excluded from radical product introduction if
they resolve critical funding and research prob-
lems. This size-radicalness distribution is shaped
like a fish hook or a claw. That is, up to about
1000 employees, there is no signi$cant relation-
ship between number of employees and radical-
ness of a new product. Between 1200 and 11,000
employees there is u sign$cant, direct relation-
ship. Finally, very large organizations (in excess
of about 45,000 employees) are unlikely to intro-
duce radically new products. Larger firms were
significantly more likely to adopt ambitious new
processing technologies in order to introduce
these new products. Also, new product success
was signi!cantly predicted by the absence of
funding problems in introducing the innovation
and the degree to which the new product was a
radical departure from existing practice.
Address correspondence to John E. Ettlie, School of Business
Administration, University of Michigan, Ann Arbor, Ml 48109.
rc) 1987 Elsevier Science Publishing Co., Inc.
52 Vanderbilt Ave.. New York, NY 10017
Introduction
A persistent controversy in the organizational re-
search literature has been the role of firm size in
the product innovation process. In particular, the
causal position, relative importance, and mea-
surement of organizational size as it relates spe-
cifically to various types of innovation among and
in organizations is becoming a widely debated
and frequently researched issue. While most
studies and conjectures have assumed size to be a
determinant of innovation at the firm level, size
may, in fact, be an intervening variable or result
of the innovativeness as well. It is rather easy to
find examples of both large and small firms that
have grown as the result of being successful inno-
vators. In addition, a number of large firms, like
Procter & Gamble, thought to be secure product
innovators, have recently fallen prey to stiff com-
petitors [.5].
The relative importance of size as a predictor
of organizational innovativeness and the direc-
tion and nature of the causal influence of size on
innovativeness is not a topic of widespread agree-
ment in the research literature. Some studies
have found smaller firms to be more innovative
[27, 151, while others [22, 2, 191 have found orga-
nizational size to be directly related to innova-
tion. That is, they have found that larger organi-
zations are more likely to be innovative in
product, process, and new materials. Even
Rothwell [27] qualifies his results by saying that
when large capital investment is required to be
innovative, it is not the small and medium-sized
firms that are innovative.
From all of these results, one could conclude
that it is the type of innovation that moderates the
0737.6782187LS3.50
 J PROD INNOV MANAG J. E. ETTLIE AND A. H. RUBENSTEIN
IYX7:4:XY- IOX

Foundation report [26] found that among the ma-

BIOGRAPHICAL SKETCHES jor problem areas faced by small high-technology
John E. Ettlie is the Dwector of the Office of Manufacturing Research, firms believed to be engaged in R&D, “The lack
School of Busmess Admmistrtmn, University of Michigan. Ann Ar-
of adequate funds appears to be an underlying
bor. Michigan. He earned his Ph.D. in InduQrial Engineering at

Northwestern University in lY75. Since then he has held several re-

factor in most, if not all, of the problem areas.
search, consulting, and university positions and has published over40 For example, small firms with sufficient funds
articles on the management of technological change. His recent re- could offer more competitive salaries and benefits
search activities include the direction of a longitudinal study on the
. . . ” [26, p. 31. The absence of slack resources
deployment strategies for advanced manufacturing technologies in do-

me\tic plants funded by the National Science Foundation. can act as an entry barrier into many established
Albert H. Rubenstein earned his B.S. from Lehigh University and hi\ industries. Therefore, it is not surprising that
M.S. and Ph.D. from Columbia Umversity. all in industrial engineer-
small firms are often the leaders in start-up indus-
mg. He was on the Industrial Engineering staff at Columbia from

IYSO-lY53 and on the faculty of the School of Industrial Management

tries [ 151, and that when entry is unrestricted in
at the Massachusetts Institute of Technology from 1953-1959. Since established industries, newcomers to this estab-
1959. he ha\ been Professor of Industrial Engineering and Manage-
lished industry are most often the innovators be-
ment Sciences at Northwestern University. where he established and
heads the Organization Theory area and the Program of Research on
came of their lack of sunk cost investment in es-
the Management of Research and Development. He is also Director of tablished technologies [ 161.
the Master of Engineering Management program at Northwestern and
Depending on context, organizational size may
was recently named Walter P. Murphy Professor and Director of the
Center of Information Technology.
represent any number of key organizational char-
acteristics in the innovative process [9]. For ex-
The authors would like to thank the three anonymou\ reviewer\ and ample, Teece [31] has proposed that firm reputa-
Mr. Erneato Reza for comments that led to changes in this manu- tion, often related to size, is the real variable of
script.
interest. Further, Ettlie, et al. [II], found that
radical new packaging technology (process inno-
vation) was significantly correlated with new
product introduction. It seems that most of these
characteristics point to the resource constraints
size-innovativeness relationship. For radical in- hypothesis for innovating. That is, substantial
novations, which may require additional funds slack resources in time, money, and people are
for technical work, capital investment for plant required for radical new product commercializa-
and equipment, marketing, promotion, and other tion.
necessities, large size may be a key enabling con- One also has to allow for the distinct possibility
dition because of access to resources. An alterna- that increasing size of an organization contributes
tive argument has equal merit: large size discour- to product innovativeness in only a marginal fash-
ages innovation because of sluggish response to ion after a certain growth point has been reached.
environmental changes, sunk costs in past pro- Later organizations may have more organiza-
cessing technologies, resistance to change among tional problems to overcome in innovating in
key decision makers, etc. We propose that one spite of increased access to resources. For exam-
way to sort out this apparent contradiction is to ple, larger firms have often grown to their size
focus on the type of product innovation offered. because of success with a technology that may
That is, the more radical the innovation in the now be mature. Large firms are often thought to
product, the more the discretionary resources re- be slower to respond, have longer communica-
quired. tion channels, and resist change out of shear com-
Although the most likely size correlate that plexity. Teece [31] argues that small firms tend to
makes a difference in the innovation process is be more innovative but often fail while larger
available slack resources, including money, peo- firms are less innovative but tend to survive be-
ple, and facilities [17, 10, 211, there are theoreti- cause they have more generalized assets that are
cal reasons to suspect that organizational size can less dependent upon a particular innovation.
be both an advantage and a disadvantage to orga- A related aspect of the size and innovation is-
nizational innovativeness. Small firms, in particu- sue is highlighted by findings showing that small
lar, have to overcome the disadvantage of inade- organizations are relatively more innovative in
quate slack resources. A recent National Science proportion to their size. This is the so-called “in-
FIRM SIZE AND PRODUCT INNOVATION
novation efficiency” issue. For example, one re-
cent study found that “small firms produce 2.5
times as many innovations as large firms, relative
to the number of people employed,” [ 13, p ii]. In
an earlier study, it was found that during a 21-
year period, 47.3% of the innovating organiza-
tions had fewer than 1000 employees and 52.6%
of the firms had more than 1000 employees. This
suggests that during the 21-year period, small and
medium-sized firms kept pace with the innovative
activities of large firms.” [14, p. 511. However,
both of these studies reported that large organiza-
tions were more frequently the sources of sign&
cant innovations.
In an extensive evaluation of significant inno-
vations in the United Kingdom since 1945, Pavitt
[25] recently reported percentages considerably
below the Gellman [14] numbers. Small firms (up
to 1000 employees) accounted for only 20% of
over 2000 significant, successful commercial in-
troductions of new or improved products, pro-
cesses, and materials over the period 1945-1980
in 30 manufacturing sectors.
In summary, despite the relative importance of
organizational size in the literature, the effect of
differentiating innovations by radical vs. incre-
mental technology incorporation, when using
firm size to predict innovativeness, is not well
understood. The purpose of this study is to ex-
plore the implications of accounting for the differ-
ence in type of innovation has on this relationship
and new product success.
Propositions
This article argues that one of the major reasons
for inconsistencies in research findings on organi-
zational size and product innovation is that the
type of innovation has not been taken into ac-
count. In particular, the key to unravel some of
the confusion in these findings is whether the new
product represents a radical, innovative depar-
ture from existing practices or whether it is
merely an incremental new product. Radical in-
novations usually require more organizational re-
sources to commercialize up to a point at which
increasing size begins to contribute to innovative-
ness at a decreasing rate. That is, after some
threshold is reached, factors other than size take
over as important even to the point where ex-
J PROD 1NNOV MANAG 91
I’)x7:4:x%I0x
tremely large organizations may be at a disadvan-
tage with respect to radical new product offer-
ings.
Radical Products and Firm Size
It is hypothesized that radical new products usu-
ally require more resources to commercialize and
that larger organizations, up to a point, tend to
have easier access to the resources necessary to
accomplish this over the long run. Therefore, if
one were able to effectively distinguish between
radical and incremental technology incorporated
into new products, one could also predict that
larger as opposed to smaller organizations would
have the relative advantage of offering these new
products for sale.
The following proposition is offered for testing:
Proposition 1: Increasingly, larger organizations
are more likely to be able to commercialize radi-
cal new products up to a point at which increas-
ing size does not contribute to more radical prod-
uct innovation.
What does it really take to introduce a radically
new product? Hage [ 171 hypothesizes that radical
new products are rare and risky in the history of a
firm. Such radical products like the computer, the
commercial airplane, and others are clear exam-
ples. These products started new industries and
required significant investment to commercialize.
The markets for these product lines were ulti-
mately very significant, and precipitated follow-
on incremental technology improvements. But
not all new products, even those which a majority
of experts would agree are significant, have an
economic impact as substantial as these exam-
ples. There appears to be a tendency in the litera-
ture on radical innovation to either classify a case
on scientific grounds in terms of departure from
past practice or on economic grounds in terms of
wealth creation.
In addition, many significant new products ac-
tually incorporate any number of interrelated
technologies and innovative components, so this
issue often becomes very clouded and difficult
to resolve. In fact, Hage [17] implies that the
amount of change required in material (input),
processing (manufacturing), and product (output)
should comprise a total concept of degree of radi-
calness. We choose here, however, to separate
92 J PROD INNOV MANAG
lYx7:4:xY-Iox
the three types of technological innovation and
seek to test empirically the relationship between
product and processing innovation. It is highly
likely that one of the drains on resources during
commercialization is the process innovation re-
quired to reduce, at the outset of introduction,
the cost of the new product to within competitive
reach. Again, consistent with the resource depen-
dency theory of the innovation process, the fol-
lowing proposition is offered.
Proposition 2: Larger organizations, up to a
point, are more likely to change processing tech-
nology in order to offer a new product.
Rudicul Product Success
A dominant stream of research in the innovation
studies literature has been and continues to be the
prediction of new product success. Several stud-
ies [28, 27, 8, 201 have shown market factors,
including knowledge of customers’, needs to be
the most consistent, significant correlates of suc-
cess and failure. Recently, Shrivastava and
Souder [30] extended these results by finding that
combinations of certain variables were even more
significantly correlated with success and failure
of 114 R&D projects, which suggests that market
factors alone are not sufficient for success, or
broader management of the innovation process is
needed. In particular, they found that the combi-
nation of clarity of problem definition, clarity of
understanding of users’ requirements, and the
perceived level of fit between company and
project was the “most potent” [30, p. 121 corre-
late of project success.
This modified model of R&D project success is
very consistent with the differentiated model of
new product introduction, because a model seg-
regated by radical vs. incremental innovation
should be sensitive to differences in capabilities
to launch a new product and how successful these
needed products will be. This points to the heart
of the innovation research agenda: what makes a
new product an innovation or imitation of the
past? Also consistent with the theme of this paper
is a suggestion made by Mowery and Rosenberg
[23] that the reason market factors-so-called
“market pull” vs. “technology push” forces-
appear to predict new product success so well is
because most new products are not really innova-
J. E. ETTLIE AND A. H. RUBENSTEIN
tions at all, but extremely minor modifications of
existing technology. It is important to note that
the way in which success has been measured in
most of these studies leaves much to be desired
because of dependence on single indicators. This
has made it difficult to settle the controversy in
predicting new product success. For example,
did the new product just survive or was it a block-
buster in return on investment?
Past studies have used a variety of measures
of new product success including reports from
firm representatives on degree to which expecta-
tions have been met, actual returns on invest-
ments in the product development, whether or
not a research project actually lead to commer-
cialization, archival data on reported earnings of
a firm, and published reports of how a particular
product did in the market place. However, these
measures have been consistently challenged in
the literature, for example, by Mowery and Ro-
senberg [23], as being highly suspect in their va-
lidity.
There are several reasons for this challenge to
the validity of new product success measures.
First of all, both technical and commercial suc-
cess are important, but they are not always cap-
tured simultaneously. Second, measuring a con-
cept based on a respondent’s perception of
expectations can be very misleading unless these
predictions are anchored on comparable scales
like return on investment or financial criteria.
Third, but not last in any exhaustive sense, firms
often have a vested interest in not sharing clean
financial return data with nonmembers and no
one knows if there is systematic or random bias in
reports on new product returns.
Perhaps the most coherent set of arguments
advanced yet concerning firm size and commer-
cialization of new products appears in Freeman
[12, p. 1371. Data on patents, R&D efficiency,
and development leading to new production
strongly suggest that “small firms have an advan-
tage in the earlier stages of inventive work and
the less expensive but more radical innovations,
while large firms have an advantage in the latter
stages and in improvement and scaling up of early
breakthroughs.” In a focused study or commer-
cialization, as is the present, this strongly sug-
gests that larger firms will have the persistent ad-
vantage. It also suggests predictions about, and
perhaps even a more general theory about, the
FIRM SIZE AND PRODUCT INNOVATION
differential roles of smaller and larger firms for
innovating. This theory is beyond the scope of
this paper, but is revisited in the discussion later.
Another issue that is often raised concerning
new products is the extent to which break-
throughs originate from firms or operating units
of firms not formally participating in the market
of that industry [29, 161. This “innovation by in-
vasion” process has many documented examples
(e.g., mechanical vs. electronic calculators).
Therefore, we include all firms in our theory and
sample regardless of product introduction his-
tory.
Finally, there is a general wisdom in the new
product management culture that the more radi-
cal the concept incorporated into the offering, the
more the resistance to it. It follows that only a
sustained, consistent, and well-serviced effort
will be successful. Only the firm that is willing to
recover the investment in the long run, and can
withstand financial stress in the short run, will
likely prevail under these conditions. It is often
thought that radical new products have the poten-
tial to ultimately return a greater percentage of
their investment and even can be the beginning of
a new product line or industry. Yet many small
firms fail to survive their first product commer-
cialization and many medium-sized firms cannot
survive the management challenges of rapid ex-
pansion in a cyclical economy.
A final proposition is offered here for testing.
Proposition 3: A radical new product innovation
is more likely to be successful in the marketplace
as long as resource dependencies in offering the
new product can be resolved.
Method
The overall design of this study called for two
separate phases. The first phase was devoted to
focusing the study on a limited set of manufactur-
ing industries and then developing a nomination
process to generate a set of candidate innovations
that had been offered for sale primarily during the
years 1979-1982. Ideas and inventions not com-
mercialized are not innovations by definition. The
second phase of the study was focused on locat-
ing and obtaining data from the firms originating
these innovations primarily in the food (SIC 20),
J PROD INNOV MANAG 93
l987:4:89-Iox
paper (SIC 26), chemical (SIC 28), rubber (SIC
30), machinery (SIC 35), and electrical equipment
(SIC 36) industries.
Nomination of Cases
Two primary methods were used to nominate
cases for the study. The general strategy was to
include in the sample as many domestic award-
winning new products as possible-that is, inno-
vations that had been offered for sale and had
received some industry award. Awards given ex-
clusively to individuals were excluded because
the new product offered for sale by the firm was
taken as the unit of analysis in this study. In order
to locate award winning new product innova-
tions, as opposed to just new products that were
being introduced, a one-page survey question-
naire was mailed to professional and trade associ-
ations serving the targeted six major SIC code
groupings. The questionnaire inquired about
awards that the association either gave directly,
or that they were aware of in the industry. We
also asked a number of these and other experts if
they were aware of awards that were objectively
assigned to significant new products.
Although the response rate of the association
survey was acceptable (82 of 134 eligible case
questionnaires were mailed back for a return rate
of 61%), very little new award information on
jirms as opposed to individuals was obtained. We
were already aware of most of the awards sug-
gested, e.g., the IR 100 [used by 131, Vaaler
awards in chemical processing, and the Putnam
awards in food processing [used by 241. Some of
the awards were very restrictive or narrow in cri-
teria, were outside manufacturing industries
(e.g., software), or were given for reasons other
than for innovative new products. Our preference
was to concentrate on well-known awards in ma-
jor industry groupings that subsequent research
might replicate. We were particularly interested
in those awards assigned to firms for significant
new product contributions to the industry.
New products that had not won awards were
nominated by screening new product and tech-
nology news sections from trade publications
which approximately covered the SIC major
groupings. We also accessed other general pub-
lished sources available on new technology offer-
ings such as High Technology, Food Processing,
94 J PKOD INNOV MANAG
19x7:3:x9- IOX
and Production Engineering. A complete listing
of trade journals and awards that were used for
the years 1979-1982 is included in the Appendix.
Approximately 2500 telephone calls were made
to screen candidate cases for the original target
population of IO00 cases. Complete confidential-
ity was guaranteed throughout the study. Simi-
larly, both award and nonaward cases were
screened to obtain correct mailing addresses.
This screening had the added benefit of alerting
the potential respondent and originator organiza-
tions of the impending mailing which, in most
cases, seemed to create a positive expectation.
The positive feedback appeared to be especially
true when the primary originating person in the
firm was located in the case screening. Further,
the screening was very useful: approximately 100
award cases were eliminated from the population.
These firms had either never offered the products
mentioned in the awards “for sale,” could not be
located, refused participation in the survey, were
foreign owned, or were eliminated for a number
of other reasons. Eventually, the 1000 population
cases were generated with a total of 535 award
and 465 nonaward cases, predominately in the six
targeted SIC code groups. We did not exclude
award cases if they fell outside these groups, as
long as they were manufacturing, because we
wanted every opportunity to include radical new
products in the population.
Mail Survey Questionnaire for
Originating Firms
Sample. The collection of data consisted of
two mail survey waves using the originator ques-
tionnaires, mailing label compiled during tele-
phone screening, and a cover letter. A total of 532
questionnaires were returned. Of these, 53 re-
spondents refused participation and 73 said they
were ineligible, usually because the product had
not been launched yet. Therefore, the final re-
sponse rate was 406 returned questionnaires out
of 927 eligible cases (43%). Of the 406 returned
questionnaires, 380 were complete and 348 were
eligible (i.e., product launched, qualified respon-
dent), complete and satisfied all our requirements
(e.g., new award information was verifiable). A
random sample of 100 nonresponse firms was
called and 54 supplied the total number of people
J. E. ETTLIE AND A. H. RUBENSTEIN
employed. Of these, 31 (57.4%) were small (499
or fewer employees). These percentages. which
are almost identical with the ultimate sample dis-
tribution (53.6% small), indicated that nonre-
sponse was unrelated to firm size. For two of the
eight variables of focus below, ten additional
cases had to be eliminated because of missing or
inconsistent responses.
The 380 complete questionnaires that were
eventually reduced to 348 complete data cases
did include information on respondents. These
348 cases included 135 products in manufacturing
SICs outside the original target groups. This was
done purposefully to test the robustness of hy-
potheses with a more heterogeneous sample. As
mentioned earlier, all cases were screened on the
telephone before initial mailings. In this screen-
ing, an effort was made to locate the person most
knowledgeable about the new product in the or-
ganization. In many cases, the developer or in-
ventor was actually reached before the question-
naire was mailed. The distribution of returned
questionnaires was as follows:
1. A total of 129 respondents were marketing di-
rectors (70), or product managers (59), includ-
ing some market specialists, so about 33.9% of
the sample was represented by the marketing
function for the new product
2. The second largest category was top manage-
ment (general manager or above, including
president, vice president, chief operating offi-
cer, and chairman), and 112 (29.5%) of the
sample was in this category
3. Next was the technical function in the organi-
zation, with the directors of R&D and engi-
neering (28), and actual scientists and engi-
neers or their group managers (44), for a total
of 104 (27.4%) of the respondents
4. The last category of identified respondents in-
cluded 17 (4.5%) public relations directors and
communications personnel
5. A total of I8 respondents or 4.7% of the re-
turned, nearly completed questionnaires failed
to give a title.
Variables, indicators, A scale of
and scales.
three indicators was constructed to measure radi-
calness of the new product: these included award
status [ 13, 241, the degree to which the new prod-
uct offered for sale was new to the world, the
FIRM SIZE AND PRODUCT INNOVATION
United States, or the industry [3, 251, and the
degree to which the new product incorporated
technology that was a significant departure from
existing practice [9]. The latter study used the
Science Indicators definition of radical change to
study process change in the shoe industry. It de-
fines revolutionary innovation as one incorporat-
ing technology that is a significant departure from
existing technology at the time of its commerciali-
zation. Respondents answered in three catego-
ries:
1. No new knowledge contained in the machine
or process
2. The machine or process is an improvement of
existing technology
3. The machine or process is a major technologi-
cal advance [9, p. 4291.
,4 similar approach was used here (see Appen-
dix for detailed items.) These indicators are all
significantly intercorrelated and a resulting Cron-
bath alpha = 0.55 (n = 357) was obtained. In the
case the correlations between award status with
novelty (r = 0.27, p < 0.01) and award status with
incorporation of new technology (r = 0.26, p <
O.Ol), the results constitute a favorable, if some-
what, approximate indicator of convergent valid-
ity because two independent bases of inference
are being utilized and the measures of association
are significantly different than zero [6]. These two
independent measures are self-reports of repre-
sentatives of originating firms and expert opin-
ions of panels of experts. This gives increased
confidence in the reliability of this construct, the
relatively depressed Cronbach alpha notwith-
standing. The correlation between new technol-
ogy incorporation and novelty was r = 0.42 (p <
O.Ol), therefore making all three indicators signifi-
cantly intercorrelated.
As suggested by Kimberly and Evanisko [19],
firm size was measured by the natural log of num-
ber of year-round, full-time employees because
the correlates of size all increased substantially
with this transform, and the marginality hypothe-
sis in proposition one and two.
Accurate information on the absolute or rela-
tive cost to introduce the product was not avail-
able from the survey, so the R&D efficiency argu-
ment could not be evaluated. One item on the
questionnaire covered the need for significant
new process innovation in order to introduce the
J PROD INNOV MANAG 95
lYx7:4:xY-Iox
new product [17]. This question was coded 3 =
“significant new process,” 2 = “some modifica-
tion,” and 1 = “no process change.”
Cost and funding difficulties were included as
problem categories and were separate questions
on the questionnaire exploring a number of prob-
lem contingencies in the propositions. The per-
centage of development funding provided by divi-
sions in decentralized firms was included because
of the autonomy that these units might exercise.
Information sources were listed for check-off but
were differentiated by stages of the new product
introduction, specifically development, produc-
tion, and marketing.
An index to measure new product success was
constructed. A six-item scale emerged from the
principal components factor analysis and item-
analysis with a Cronbach alpha of 0.62. Success-
ful innovations achieved a satisfactory level of
technical performance, at budgeted cost, during a
required time period. They also achieved overall
commercial success, reasonable market share,
and a good return on investment. Based on the
corrected item-total correlations, the latter three
items, emphasizing commercial return, were bet-
ter representatives of the scale than the three
technical success items.
This overall scale of new product success was
broken down into technical success and commer-
cial success. The scale to measure technical suc-
cess included the first three items of the overall
scale measure: technical success defined by the
project specification, technical success at or very
near budgeted cost, and technical success
achieved during the required time period. The
Cronbach alpha for this technical success sub-
scale was 0.58. The commercial success subscale
included the last three items: overall commercial
success expectations met, market share expecta-
tions met, and return on investment for the new
product. The Cronbach alpha for the commercial
success subscale was 0.63. All relevant question-
naire items and scale development information
are included in the Appendix.
There are two methodological issues raised by
this procedure that need to be addressed in subse-
quent research. First, the extent to which award-
ing agents or agencies favor larger firms in their
selection process, all other things being equal,
needs to be carefully examined. We eliminated
the Fortune product awards (see Appendix) for
 96 J PRODINNOV MANAti J.E.ETTLIE ANDA.H.RUBENSTEIN
IYX7:4:XY-IOX

this reason, because only large firms were in-
cluded by Fortune. Other awards don’t seem to
be as limited to large firms, but if awards are used
to select cases, this issue needs to be raised. Sec-
ond, if only a restricted range of industries and
limited measure of radicalness and success are
available, the issue of restricted variance in these
scales may limit the degree to which we capture
innovation by invasion cases and true degree of
magnitude of these variables. We included as
many award cases within manufacturing as possi-
ble, but we could have expanded the sample out-
side manufacturing at the risk of introducing an
even more heterogeneous sample. Again, this is
an issue that needs to be weighed in this line of
research.
Results
Analysis
In order to test our three propositions on radical-
ness of new products, new processes, firm size,
and new product success, a combination of corre-
lation and step-wise regression was used. This
latter procedure was selected in order to evaluate
the stability of standardized regression coeffi-
cients and the amount of additional explained
variance with successive variable entry. Given
the large sample size, small multiple correlation
coefficients are typical, and the power of these
statistics can more carefully be examined with
these more focused procedures [7].
Radical Products and Firm Size
Table 1 presents the correlation matrix and de-
scriptive statistics showing results that are
needed to test the first proposition that larger
firms, up to a point, are more likely to introduce
radically new products. The findings support this
proposition.
These data show that increasing size will in-
crease the probability of radical product introduc-
tion only up to a point. An accepted method to
straighten an exponential curve is to use the log
transform [18, 191. The natural log of size has
been used in the correlation matrix (Table 1) and
the correlation between this transformed measure
of size and radicalness (r = 0.21, p < 0.01) is
almost double the nontransformed correlation be-
tween number of employees and radicalness (r =
0.11, p < 0.02), and the difference between these
two coefficients is statistically significant (t =
2.05, p < 0.025).
In order to get an overall picture of the nature
of the relationship between firm size, as mea-
sured by number of employees, a plot of these

Table 1. Correlation Matrix and Descriptive Statistics (n = 348)

Variables 1 2 3 4 5 6 7 8

1. Product success (.62)O

2. Radical product 0.146 (0.55)”
3. % division funding 0.01 0.02 0
4. Continuing cost problem -0.12’ 0.10 0.03 ()
5. Overbudget problem -0.18b 0.02 -0.01 0.26” ()
6. Log no. employees 0.03 0.21b 0.176 0.09 0.07 ()
7. New process intro.d -0.05 0.23” -0.01 0.176 0.10 0.13” (1
8. Internal information 0.06 0.05 0.08 0.03 0.01 0.11’ 0.07 ()

Mean 16.57’ 8.24f 49.02 0.12 0.07 6.4 1.89 0.47

SD” 3.41 2.16 46.82 0.32 0.25 3.1 0.80 0.50

0 Cronbach alpha reliability coefficient.

b p < 0.01 (two-tail).
( p < 0.05 (two-tail).
d” = 338.
c Excluding recoded missing data, scale X = 16.64, SD = 3.46, n = 295.
/Excluding recoded missing data, scale f = 8.31, SD = 2.15, n = 357.
8 SD: standard deviation.
FIRM SIZE AND PRODUCT INNOVATION J PROD INNOV MANAC; 97
I’)x7:4:x9-I0x

two variables appears in Figure 1. Even with the
rather limited range of scores for the radicalness
variable on the y axis, the pattern of this relation-
ship is potentially very helpful in understanding
the nature of the new product introduction pro-
cess. The pattern of degree of radicalness for new
products introduced by relatively small firms ap-
pears to be almost random. That is, there is an
absence of significant correlation between num-
ber of employees and radicalness of product up to
about 5000 employees. Then the correlation re-
mains relatively stable, with a bit of a dip up to
9000 or 10,000 employees. These restricted sam-
ple correlations are shown in the insert to Fig-
ure 1.
Smaller firms introduce relatively radical or in-
cremental new products in a rather unpredictable
fashion. Larger firms seem to be more selective in
introducing new products; they favor more radi-
cal offerings. It cannot be said that small firms do
not introduce radical products. They do just that
in a large number of cases. But larger firms-
especially those with more than 5000 employ-
ees-tend to introduce products that sustain their
size and require processing technology changes.
Large firms probably screen many of these prod-
ucts from their portfolios early. But the meaning
of large and small can now be made more clear
than the somewhat arbitrary 500 employee cutoff
often used for policy and government reporting
purposes.
To further explore the shape of this size-new
product radicalness relationship, segments of the
size continuum were separated and correlations
run for the intervals or categories of number of
employees for this sample. The results appear in
Table 2. Both four category and eight category
breakdowns of this overall bivariate distribution
are presented. The size effect appears to kick in
at coarse grain cut (four categories) between 400
and 11,000 employees, with r = 0.15 (p = 0.09,
n = 82) for number of employees with radical-
ness. For a finer grain cut (eight categories), r =
0.116 (p = 0.23, n = 44) for the 1208 to 11,000
category. This direct relationship disappears for
categories above 11,000 employees where other
factors apparently are more important. Above
45,000 employees, the correlation becomes nega-
tive again, but nonsignificant (r = -0.095, p =
0.27, n = 44).
The overall shape of the distribution is very
much like a thick-shank fish hook on its side or
claw which is schematically represented in Fig-
ure 2. The early portion of the distribution is the
thick-shank, and the hook for the very large firms
where radical new product scores drop off drasti-
cally (also see Figure 1). In between the two ex-
tremes, the effects of size are first felt, apparently
between about 1200 and 11,000 employees; then
size, as measured here, becomes less important
as a determinant of radicalness. A test for curvi-
linearity supports the general shape of an in-
verted “U” curve. The F = 9.9 (p < 0.01) for
a second-order regression test was statisti-
cally significant for the distribution as a whole
(n = 348) but not for the four categories taken
separately.
Although it becomes increasingly difficult to
attach meaning to the terms large and small for
the purposes of researching the innovation pro-
cess, these results seem to suggest that medium-
sized firms are quite possibly the most interesting
to study. Further, at some time during the growth
history of a firm, there appears to be a crucial
period when a premium might be placed on mak-
ing the additional sacrifice of allocation of re-

Table 2. Number of Employees and New Product Radicalness by Size Categories

Correlation coefficient Correlation coefficient

Size range four categories Size range eight categories

O-48 r = -0.15 (p = 0.08, n = 86) O-20 r = 0.118 (p = 0.21, n = 47)

so-350 r = -0.06 (p = 0.29, n = 87) 21-48 r = 0.002 (p = 0.495. n = 39)
400- 11,000 r = 0.15 (p = 0.09, n = 88) 50-120 r = 0.073 (p = .32, n = 45)
I1 ,ooo+ r = -0.03 (p = 0.39, n = 97) 125-350 r = -0.144 (p = 0.18, n = 42)
400- 1200 r = 0.115 (p = 0.23, n = 44)
1208-I I ,000 r = 0.116 (p = 0.23, n = 44)
11,200-44,000 r = 0.064 (p = 0.34, n = 43)

45,000+ r = 0.095 (p = 0.27, n = 44)

a’0000sh 0’0SLEEE
- 0’0
t
- 0’1
- 0-z
- 0’E S
S
- 0’il
3
- 0’S
N
1
?u - 0’9 tJ
* * - 0’L
3
I
* - 0’8 a
tl
* 0’6
8
** * 0’0
w! 0’11
0’ZI
FIRM SIZE AND PRODUCT INNOVATION
Figure 2. Schematic Relationship Between Firm Size and New Product Radicalness
sources-now perhaps more readily obtainable-
to radical product launch.
Although shown in Table 1 with fewer com-
plete data cases, the correlation between new
process requirement and log of number of em-
ployees is r = 0.13 (p < 0.01, n = 338). As would
be expected, new process introduction also is sig-
nificantly correlated with radical product, r = .23
(p < 0.01, n = 338) and continuing cost problems,
r = 0.17 (p < 0.01, n = 338). These data and
results provide support for the second proposi-
tion and show that larger firms are more likely to
have the needed resources to introduce process
changes in order to launch new products. Fur-
ther, it appears that the more radical the new
product, the more likely that a process change
will be required.
Radical Product Success
Proposition 3 states that radical new product in-
novations are more likely to be successful if re-
source dependency issues can be resolved by the
firm offering the new product for sale. The results
of testing this proposition are presented in Table
3 with a regression summary taking the new prod-
uct success scale as dependent. The correlation
matrix for this regression was presented earlier in
Table 1.
The first two significant predictors to enter the
regression for success were absence of over-
budget requests (beta = -0.16, p < O.Ol), and
J PROD INNOV MANAG 99
19X7:4:89-10x
radicalness (beta = 0.14, p < 0.01). Entering
third is the absence of continuing cost problems
(beta = -0.09, ns.). It should be recalled that
cost problems are coded so that a direct relation-
ship and positive sign coefficient shows the pres-
ence of the barrier, while a negative sign indicates
absence of the problem. Although the total pro-
portion of variance in new product success ac-
counted for by these three predictors is relatively
small (about 5%), all three stepwise regression
equations are statistically significant. Further, the
multiple R for the regression exceeds 0.25, well
beyond the chance level. The fourth predictor,
the number of employees (beta = 0.02), was ex-
cluded because the adjusted R2 began to decline
on the fourth step, although the regression equa-
tion with four predictors is also significant (F =
5.35, p < 0.01). This suggests that size may have
a direct effect on new product success as well as
its indirect influence through incorporation of
radicalness.
Separate regressions were run with the sub-
scale for technical success and subscale for com-
mercial success as dependent (three items each)
with comparable results. For the technical suc-
cess subscale, the first two predictors to enter
were absence of overbudget requests (beta =
-0.30) and then radicalness (beta = 0.06), with
the adjusted explained variance slightly higher
than before at 9%. For the commercial success
subscale, radicalness enters first (beta = 0.15)
and then absence of continuing cost problems
(beta = -0.10) with the adjusted explained vari-
IO0 J PROD INNOV MANAG
lYx7:4:xY-Iux
Table 3. New Product Success Multiple Regression Summary (n = 348)
Predictor entered”
is dependent
1. Overbudget request
(coded 1 = yes, 0 = no)
2. Radical product
3. Continuing cost (coded
1 = yes, 0 = no)
0 Next (4th) predictor to enter is Log # employees.
equation was significant (F = 5.35, p < 0.01).
h p < 0.01.
ante lower at 3%. As would be expected, we can
explain more of the variance in the technical per-
formance subscale than the commercial perfor-
mance subscale with these noncontextual predic-
tors that exclude competitor behavior.
Although the magnitudes of these explained
variance estimates are small, they are all statisti-
cally significant and are, therefore, assumed to be
due to nonchance factors. Furthermore, over
2000 new consumer products alone were intro-
duced into the United States in 1985 [4], and be-
ing able to explain even 5% of the variance in the
success of these new products is not a trivial
result. So these findings may represent the begin-
ning of a very practical line of work and consider-
ation.
In addition, the traditional arguments that large
firms remain very successful by continuing to
make fine adjustments in existing product lines is
breaking down. For example, Procter & Gamble
Company in its diaper wars with Kimberly-
Clark’s Huggies lost a significant portion of its
75% market share and has now regrouped with
the introduction of improved Pamper and Luv
brands. The company has spent $500 million to
modernize equipment [5, p. 361.
These results represent modest support for the
third proposition, and, based on these findings,
we concluded that successful new products in
this sample exhibit an absence of over-budget re-
quests and continuing cost problems, and they
incorporate significantly new technology. Over-
all, these results tend to shed new light on the
new product innovation literature which has not
adequately accounted for the radical vs. incre-
mental technology variable in the past.
J. E. ETTLIE AND A. H. RUBENSTEIN
Standardized regression
Cumulative coefficient (BETA)
Regression
equation F R? R2 1st Step 2nd Step 3rd Step
Il.2h 0.031 0.029 -.18” -0.18” -0.16h
9.23h 0.051 0.045 0.14h 0.14h
7.12h 0.058 0.050 -0.09
(beta = 0.02) and adjusted R? declines (to 0.047) on this step. although the regressing
Discussion
Findings of this study on new manufactured prod-
ucts show that, as firms grow from between 1,200
and 11,000 employees, they are significantly more
likely to introduce radically new products which,
in turn, are more likely to be successful than in-
cremental new products. For a restricted size
range, they apparently screen out many incre-
mental new products from market offerings.
Their radically new products receive industry
awards for their significance, incorporate scientif-
ically new technology, and are new to the world
market. However, firm size was not found to be
directly and significantly related to the success of
new products, and firms up to about 1,000 em-
ployees were found to introduce both radical and
incremental new products. This suggests that
larger firms have to obtain relatively larger re-
turns on new product offerings because they have
larger operations to support, and that smallev
jirms can he successful with radical new product
offerings if resource constraints are resolved. Fi-
nally, the largest of firms, say in excess of ap-
proximately 45,000 employees, were unlikely to
introduce radically new products.
These findings tend to support and extend the
Freeman [ 12, p. 1371 theory concerning differen-
tial advantages and disadvantages of firm size in
the new product introduction process. That is,
smaller firms tend to introduce products that in-
corporate both radical and incremental depar-
tures from the past. As firms grow up to a point
they tend to select the more radical new prod-
ucts. This is probably because of their capabilities
to solve resource problems-especially in adopt-
FIRM SIZE AND PRODUCT INNOVATION
ing new processing technologies required-and
abilities to screen new product ideas for winners.
Many new small firms are innovative but they fail
because they apparently cannot carry on after
one new product disaster. This frequently over-
looked, yet obvious, risk is a key aspect of the
innovation process. It may also be that small
firms that are truly innovative get our attention
and we ignore or discount these failures. People
who have been through this startup experience
often try again- win or lose-either on their own
or with another company, and ultimately come to
our attention in the success category.
There is another important hypothesis to ex-
plain why the small-medium sized subsample of
firms appears to exhibit randomness in the firm
size-new product radicalness relationship for
the l-1,000 employee range. That is, there is
quite possibly an imperfect relationship between
the cost to commercialize a new product and its
radicalness for innovating firms in the small to
medium size range. This allows for the possibility
that very clever new ideas in products need not
all require substantial resources to develop.
These ideas may have been the prototypes from
earlier failed firms, joint ventures, limited R&D
partnerships, a university-industry consortium,
and foreign investment ventures.
Three other ideas warrant future research.
First, size may be a proxy for reputation and cus-
tomer confidence [32]. Second, the age of a firm
may be a confounding factor with size (anony-
mous reviewer). Third, the backtracking in strat-
egy to earlier stages of development in the prod-
uct-process evolution of the productive segment
[ 1, 331 of more mature firms is probably in evi-
dence for many of the firms sampled here in the
1, IOO- 11,000 employee range. This suggests that
stage of development and firm size may not be
related as a simple function of environmental
changes.
The results of this study can only be logically
generalized to mature manufacturing firms. It is
these industries, however, that are most threat-
ened today in many domestic markets. Still, the
study should be replicated to include less mature
manufacturing and in nonmanufacturing indus-
tries, especially selected service sector firms un-
dergoing industry change like banking. It does
seem clear that in subsequent studies of the inno-
vation process, whether they involve material,
J PKOD INNOV MANAG 101
1%7:4:X%l(IX
process, or new product or service innovation, it
may be desirable to make a clear theoretical and
empirical distinction between radical and incre-
mental technology incorporation.
There is a serious question implied here of
whether small manufacturing firms will be able to
participate in the process innovation often
needed to commercial new products. We have
found that there was a statistically significant ten-
dency for larger firms to report substantial new
process requirements for new product launch.
The more radical these new products, the more
likely they will require a process change. This
further suggests that smaller firms may be at a
distinct disadvantage in their ability to mount rad-
ical new products if they require new plant and
equipment resources. The ways in which smaller
firms can overcome these difficulties when intro-
ducing new products need to be examined. A
recent example is the case of processing tech-
nologies needed to effectively commercialize bio-
technology ventures.
Logic and evidence suggest that small and
large firms differ. The most persistent notion vis-
a-vis product innovation is the agility and re-
sources trade-off. Yet, even while all organiza-
tions are resource constrained and all
organizations structure to meet goals, the product
innovation process is unique in this respect. The
attempt to implement and embody an idea that
few have had is challenging. Some might say this
is a necessary challenge for any organization to
take on at least at some point in its history in
order to survive and grow. Larger firms-which
might perhaps be called medium-sized firms-
apparently do evolve methods of screening out
less innovative new product ideas before they
are introduced. Perhaps this goes beyond
just methodology and extends to a culture for
screening.
Yet, the largest of firms also develop vested
interests in routinized technologies and have to
organize to continue the flow of disruptive new
ideas by formalizing the R&D function. Small
firms often survive their chaos to go on to this
level of problem solving. Regardless of size, firms
that successfully commercialize new products
will always be of interest because of their ability
to capitalize on an opportunity that was not
widely recognized. This type of rare event, and
the effectiveness of these changes, continue to
102 J PROD INNOVMANAG
lYX7:4:8Y-IOX
have practical significance and have yet to be ad-
equately captured in organization science.
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FIRM SIZE AND PRODUCT INNOVATION
Appendix A: Sources for Nomination of
New Products
There were eight primary awards that were used
tonominate this type of case for the study:
1. The IR 100, which covers all industrial R&D
2. The Vaaler awards in Chemical and Chemical
processing industries
3. The Putman awards in food processing and
food processing supply
4. Plastics World awards
5. Manufacturing Engineering awards
6. Food Technology achievement awards
7. Flexible Packaging Association awards
8. Production Engineering awards
Most of the target SIC major groupings were
well covered by these awards. Some of these
awards were given for innovations outside the
target SIC groupings but were also included.
Other new products were nominated by
screening new product and technology news sec-
tions of trade publications that approximately
covered these same SIC major groupings. We
also used some of the more general sources avail-
able on new technology offerings like High Tech-
nology. A listing of trade journals that were ulti-
mately used for the years 1979-1982 is given
below:
1. Food Processing (e.g., food processing
equipment and new products)
2. Production Engineering (e.g., industry-wide
review of new machinery, computers, instru-
mentation)
3. High Technology (e.g., electronics and com-
puter technology, instrumentation)
4. IEEE Spectrum (e.g., electronic and electri-
cal engineering technology)
5. Chemical Engineering (e.g., machinery, pro-
cesses related to chemical processing and en-
gineering)
6. Chemical Engineering Progress (e.g., ma-
chinery, processes related to chemical pro-
cessing and engineering)
J PROD INNOV MANAG 103
I%7:4:89-I0x
7. Newspapers (e.g., New York Times) (e.g.,
new machinery, instrumentation, and pro-
cesses industry-wide)
8. News Magazines (e.g., Newsweek) (e.g.,
new machinery, instrumentation, and pro-
cesses industry-wide)
9. Business Periodicals (e.g., Barrons) (e.g.,
new machinery, instrumentation, and pro-
cessing industry-wide)
10. Chemical Processing (e.g., machinery, pro-
cesses related to chemical processing and en-
gineering)
11. Scientijc Magazines (e.g., Science, Scien-
t$c American) (e.g., new instrumentation)
12. Direct Input from Experts
Examples of new product cases not included
in the study but representative of those sam-
pled:
1. Award Cases
a. Source of information: Chicago Tribune,
Sunday, October 9, 1983, page 6. Gaussme-
ter invented by Charles Castronovo, Zndus-
trial Research and Development Maga-
zine, IR 100.
b. Fortune Magazine, Products of the Year
(1982)) Jello-Pudding Pops, General Food
Corporation, 53,000 employees; Timex Sin-
clair 1000 computer, Timex Corporation,
21,000 employees; USA Today newspaper,
Garnett Company, 24,000 employees; Boe-
ing 767, Boeing Company, Inc., 110,000
employees.
2. New products, no known award
a. Ticaloid #480 Stabilizer for slow-separat-
ing Italian Salad, by TIC Gums, Inc., an-
nounced in Food Processing in the new in-
gredients section.
b. Refactometer, model MDR-7, from Ana-
con, announced in Food Processing,
March 1982.
C. Multistate, high-vacuum systems, by Croll-
Reynolds Company, Inc., in Chemical En-
gineering Processing, March 1980.
 104 J PROD INNOV MANAG J. E. ETTLIE AND A. H. RUBENSTEIN
19x7 :4:X% IO8

Appendix B: Factor and Item-Analysis

Information

Table Al. Radical New Product (n = 357)O

Principal components factors

(eigenvalues in parenthesis)

Factor 1 Factor 2 Factor 3

(1.64) (0.782) (582)

Award status .436 .243 .008

(Item 1)
Novelty .653 -.071 -.I03
(Item 13)
New technology ,646 - .092 ,099
(Item 16)

ClCronbach alpha = .55.

Table A2. New Product Success (n = 295)”

Principal components factors Corrected item-total

(eigenvalues in parenthesis) correlations

Factor I Factor 2 Factor 3 Six-item Tech Comm.

(2.26) (1.36) (0.87) scale scale scale

Tech success ,294 ,100 .096 ,245 .223

(Item 10a)
Tech budget ,434 ,552 .I37 ,306 514
(Item lob)
Tech time .526 ,575 -.171 ,360 ,537
(Item 1Oc)
Comm. success .725 -.379 .178 ,524 .603
(Item 1la)
Market share ,599 -.324 -.285 ,422 .478
(Item I lb)
ROI .603 -.168 .073 ,477 .506
(Item llc)

0 Cronbach alpha = .62, standardized item alpha = .66. For Technical Success scale only (three items), Cronbach alpha = .58, standard-
ized item alpha = .57. For Commercial Success scale only (three items), Cronbach alpha = .63, standardized item alpha = .73.
FIRM SIZE AND PRODUCT INNOVATION J PROD INNOV MANAG I05
19X7;4:W- IOX

Appendix C: A Study of Significant New

Products in U.S. Manufacturing, 1970-1982

Part 1 VERIFICATION OF PUBLISHED INFORMATION. (Please circle the number

corresponding to the appropriate responses or fill in information as needed).

1. According to published information, your firm first offered the following new
product for sale in 19 - : and won the following award

a) Is this information correct? Yes (skip to Q.2) ...........

No.....................
Don’t know . . . . . . . . . . . . . . .

b) If this information is incorrect or incomplete, please correct it here:

The new product was and offered for sale in 19_;

and won the following award .

2. At the time of the introduction of this new product, published sources indicated
that your organization (total enterprise) had the following number of full-time,
year-round employees:

Approximately employees.

a) Is this information correct? Yes (skip to Q.3) .

No...........

b) What was the correct number of full-time, year-round employees for your
organization (total enterprise) at the time the new product was offered
for sale?

Approximately employees.

Part 2 INFORMATION TO BE KEPT CONFIDENTLAL.

1. What percent of the total cost of bringing the new product to market (e.g., R&D,
capital investment, tooling, production and marketing) came from the
following sources?

% of total funding

Division, plant or funds from this location

Corporate or total firm funds
Joint venture with other firms
Government funds
External investment capital
Other (Please describe)
I Oh .I PKOD INNOV MANAG J. E. ETTLIE AND A. H. RUBENSTEIN
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2. a) Were any of the following problems encountered in obtaining adequate

funding for the development?

Expense vs. capital budget ...
Lag in funding ...........
Timing in funding .........
Obtaining total amount .....
Other (Please name
1 Debt service (high interest rate) ... 5
2 Initial cost .................. 6
3 Continuing cost .............. 7
4 Over-budget requests .......... 8
) .................... 9

b) Of these problems, what was the most significant funding barrier? Fill in the
number from Q.8a that corresponds to the answer.

Most significant problem:

3. a) Was the new product a technical success? (We define technical success as
achievement of technical performance required in the project specification.)

Yes ..................... 1
Too soon to tell ............ 2
No ..................... 3
Don’t know ............... 8

b) Was technical success achieved at or very near budgeted cost?

Yes .....................
Too soon to tell ............
No .....................
Don’t know ...............

c) Was technical success achieved during the required time period?

Yes .....................
Too soon to tell ............
No .....................
Don’t know ...............

4. a) Overall, was the new product a commercial success (met commercial success
expectations)?

Yes . . . . . . . . . . . . . _ . . . . . . .
Too soon to tell . . . . . . . . . . . .
No.....................
Don’t know . . . . . . . . . . . . . . .
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b) Was market share attained by the new product above, about the same as or
below expectations?

Market share above expectations . . . . 1

Market share about same as expectations . 2
Market share below expectations . . . . 3
Too soon to tell . . . . . . . . . . . . . . . 4
Don’t know . . . . . . . . -. . . . . . . . . 8

c) Which one of the following statements best describes the return on investment
(ROI) for the new product to date?

Below total costs . . . . . . . . . . . . 1

About equal to operating costs . . 2
About equal to total costs . . . . . . 3
Moderately above total costs . . . . 4
A good multiple of investment . . 5
Too soon to tell . . . . . . . . . . . . . 6
Don’t know . . . . . . . . . . . . . . . . 8

5. a) Which of the following statements best describes your new product?

(Circle only one.)

Our firm was first in the world to introduce the product

Our firm was first in the U.S. to introduce the product
Our firm was first in the industry to introduce the product
Our firm was second or third in our industry.to introduce the new product

6. a) At the time of introduction, did this new product incorporate technology that
was a significant break from past knowledge, technology, or practice in the
industry? (Circle only one.)

The most significant breakthrough in the industry for many years 1

A very significant break with the past, but not the most significant 2
It represents an improvement on past technology--not a breakthrough 3
The new product is a modest improvement on current practice 4
The product is similar to competitors offerings with some different features 5
The product is the same or almost the same as our competitors 6
Don’t know 8

7. a) To what extent were significant (new to the industry) processing technologies

necessary in order to produce the new product when it was introduced?

At least one significant new (to the industry) process technology 1

was required
Some process modifications were necessary, nothing major 2
No process changes required for introduction (skip to Q.19) 3
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b) Please describe the new process technology briefly, in general (non-proprietary)

terms, that was requried for the introduction of the new product
(e.g., vendor supplied).

8. From the following list of information sources, please indicate which were the most
important sources of information for the development, production, and marketing
of the new product. (Fill in the numbers next to the function, as appropriate.)

Information Source Important for:

(please fill in numbers)

1. Trade shows
2. Suppliers
3. Articles in trade publications
4. Competitors a) Development
5. Customers
6. Government, other than military b) Production
7. Military (U.S. Government)
8. In-house information c) Marketing
9. Trade associations, other than trade shows
10. Consultants
11. Licenser
12. Joint venture partner
13. Foreign source
14. Other (please name)