The Impact of Complementary Agglomeration and Multi-unit Systems on New Product Introduction

Abstract

This study explores the relationship between organizational agglomeration and new product introduction. It proposes that product-complementary agglomeration increases the likelihood of new product introduction, but that the effect on new product introduction is non-linear. In addition, the influence of agglomeration on new product introduction is contingent on organizational form (i.e. multi-unit form or independent form). Using longitudinal data for the hospital industry in Taiwan from 1997 to 2002, we found that the relationship between product-complementary agglomeration and new product introduction is an upward trending hooked curve. As the degree of complementary agglomeration increases, the likelihood of introducing new products also increases, but the rate of increase diminishes with the degree of complementary agglomeration. In addition, we also found that the positive effect of product-complementary agglomeration on new product introduction is stronger for independent firms than for multi-unit firms.