The Effects of Product Line Length on Firm Performance

Abstract

What products to offer represents one of the most important strategic choices a firm has to make in order to survive in competitive environments. Decisions about the length and breadth of a firm's product line are difficult but vital to its success. Despite this, the performance effects of product line length are a topic of continuing discussion in the academia. There are also multiple ways to define both product line length and breadth, further hindering the analysis and comparison of the results. This study defines both product line length and breadth, and distinguishes them as separate dimensions of a firm's product portfolio. Additionally, the relationship between product line length and firm performance is analyzed through customer evaluations. The study is set in the digital camera industry, focusing on the new product introductions into the compact product category during 2000–2014. Our results offer indication that there exists an inverted U-shaped relationship between product line length and firm performance.