Should Firms Accelerate Product Development During Market Emergence?

Abstract

This study challenges the notion that speeding products to market is beneficial by examining conditions under which accelerating product development as a strategy can be suboptimal. I argue that the extent to which acceleration enhances market evaluation is contingent upon (a) whether the product aligns with or deviates from market convention, and (b) the average market intensity on product development; both contingencies should be especially salient for new entrants during market emergence. Using a uniquely detailed dataset on the EnergyStar program of LED lightbulbs from 2010 to 2017, I find that although incumbent firms benefit from frequent product adaptation, new entrants may suffer from adopting such a strategy. To avoid being discounted by market audience, new entrants should (a) decelerate when introducing unconventional products, and (b) resist the temptation to rush when peer pressure for speed is strong. By presenting an alternative view on the implication of product development frequency, this study enriches understanding on winning strategies for firms competing in nascent market.