First Product Success: A Mediated Moderating Model of Resources, Founding Team Startup Experience, and Product‐Positioning Strategy

Abstract

The success of the first product is of paramount importance for the future development of the new venture. Developing and launching a first product in the Chinese market is even more challenging than in a well‐developed market economy because of weak enforcement of intellectual property laws, a general consumer distrust of new products developed by Chinese firms, and the immediate threat of copycat.This article develops a mediated moderating model to examine first product success in Chinese new ventures, in which product‐positioning strategy (conceptualized as the degree of product differentiation) mediates the impacts of marketing resources, technical resources, and founding team startup experience on product success (conceptualized as timing of product launch and product market and financial performance). Furthermore, we argue that founding team startup experience moderates the impact of marketing and technical resources on building strong product‐positioning strategy.We test our conceptual model using a sample of 909 new products developed by 909 Chinese new ventures in a two‐step selection model. The empirical results provide important insight for new ventures' first product development. Product differentiation does not mediate the impact of marketing resource on product success; but it fully mediates the impact of technical resources on timing of product launch and partially mediates the impact of technical resources on product performance. Marketing resources have significant direct positive effects on both product performance and timing of product launch. Surprisingly, the impacts of marketing resources on product differentiation and product performance are negatively, not positively, moderated by founding team experience. When the founding team has nine years or less startup experience, an increase in marketing resources leads to a significant increase in product differentiation; and when the founding team has more than nine years of startup experience, an increase in marketing resources will not lead to an increase in product differentiation. The impact of marketing resources on product performance is smaller for founding teams with more prior startup experience than those with less prior startup experience. The impacts of technical resources are not moderated by founding team startup experience. Technical resources positively affect product market and financial performance directly as well as through its positive impacts on product differentiation. However, technical resources can negatively affect timing of the product launch because developing a highly differentiated produce can potentially delay the launch of the product. Therefore, new ventures have to be mindful in managing the available resources to succeed in the first product development.