Abstract
There is little question that new product innovation is a cornerstone to firm success. Particularly in technologically dynamic markets like personal computers, new products are central to long-term financial performance. However, exactly how new product introductions influence firm value is less clear. Based on data from firms in the personal computer industry, we study the effect of new product introductions on three key drivers of firm value: profit rate, profit rate persistence, and firm size as reflected in asset growth. We find that new product introductions influence profit rate and size, but not persistence. Interestingly, the effect of new product introductions on profit rate appears to stem from a reduction in selling and general administrative expenditure intensity rather than through an increase in gross operating return. Firm profitability apparently benefits from new product introduction because new products need less marketing support than older products.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
