Abstract

Innovation speed is one of the most important decisions which entrepreneurs must make. However, existing literature contains conflicting results on how innovation speed affects firm performance. Past research has found that faster innovation speed reduces development costs, improves product quality, receives faster market feedback, reaps “pioneering” advantages, achieves higher average profit and market share. Other scholars argue that faster innovation speed provides fewer product benefits, costs more, compromises product quality, and increases emphasis on low- profit trivial innovations. In this study we attempt to examine when innovation speed is good and when it is bad for new ventures. The explicit assumption of this research is that the relationship between innovation speed and performance is contingent on the type of market the firm served.

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