An Investigation On The New Product Iterative Speed Strategy Based On Theory Of Absorptive Capacity

In the era of Internet,firm activities evolve to generate informational outputs rather than material ones with the decreasing cost and increasing efficiency of information interaction,thereby accelerating the development of the information technology industry.For example,the mobile application(app)industry has grown into an industry with significant economic value in the past decades.However,information technology firms experience difficulties in creating and delivering their product value because of the rapid changes in market demands and fierce market competition.Market competition is fierce because of low business entry threshold.Retaining customers with slim marketing budgets is difficult and leads to hardships in product survival and market success.How do the practitioners account for such situations?A large number of businesses attempt to decompose the innovation unit with full authorization and accelerate the learning process with rapid iteration.According to existing studies,this research summarized such business model as the iterative innovation model,that is,the enterprises learn from,response to,and embrace the changes in the external environment through a rapid and cyclic iterative innovation model to satisfy and create customer value.Particularly,"speed" is the key element of the innovation model because rapid iteration helps enterprise respond to customer demands rapidly."Satisfying customer demands and creating customer value" is the anchor point of the iterative innovation model.However,in practice,the impact of iteration speed on innovation effect is vague,and the clarifications on this question that is provided by previous studies are insufficient.According to the author,a complete product iteration cycle can be broken down into two phases.The first phase aims to capture and transform the external consumer demands into valuable products.The second phase aims to deliver the product value to the end users.Correspondingly,the iteration speed concludes two components.First,outside-in-speed,in which enterprises transform the external consumer knowledge into internal products.Second,inside-out-speed,in which enterprises deliver the product to users.Therefore,this work uses two studies to examine the strategic effect of iteration speed.Research one investigates the relationship between product iteration speed and product innovation performance in the value creation phase from the enterprise level.Research two explores the effect of the release timing pattern on consumer perception and satisfaction in the product value delivery phase from the consumer level.In the first research,we leveraged absorptive capacity theory to elucidate the mechanism.Within an enterprise,an articulation in product iteration is to learn and utilize knowledge from the external environment.This process depends on the enterprise’s capability to acquire,absorb,convert,and utilize external knowledge,that is,the absorptive capacity.By shortening the innovation cycle,the vender can obtain more valuable knowledge,while the transformation and utilization of knowledge are limited by the enterprise absorptive capacity.Therefore,we leveraged absorptive capacity theory to examine the hidden mechanism and relevant factors in product iteration.In the second research,we use consumer psychological and behavioral theory to examine the hidden mechanism in the value delivering phase.Based on perceived value theory,this research considers product iteration as a coding of composite events for consumers.Specifically,each iteration in the innovation process will bring consumers certain perceived benefits and perceived risk,which can be coded as gains and losses by the consumers.Mental account theory further discussed about the law of evaluation on the composite event(e.g.,successive events coded as gains and losses)and proposed the value optimization strategy by integrating and segregating composite events in their mental set.Therefore,this work further leverages mental account theory to investigate the hidden mechanism of release frequency strategy(e.g.,timing pattern)on consumer perception and satisfaction.This paper takes the mobile app industry as the research background.The mobile app industry has developed rapidly and has become a leading industry in the information product market with the development of Internet technology.Meanwhile,apps have been recently used by vendors as channel broadening and brand management tools.Additionally,with the advent of 5G technology,the downloads and content consumption are no longer restricted.All evidence shows that mobile apps will be a typical product form in the future market.Thus,investigations on iterative innovation strategy in the context of app industry provides worthy reference significance for the innovation and growth of other similar high-tech information industries.Benefitting from the openness of the mobile application platform,this work obtained the data sets of nearly a thousand apps that included each product’s update information from the initial version to the most recent version of the product.In particular,research one investigates the effects of iteration speed on product value creation(innovation performance)from the enterprise perspective.Result shows that the iteration speed resulted in an inverted u-shaped relation with the product innovation performance by controlling possible endogeneity with appropriate econometric model.When the iteration speed of an app increased to a certain threshold,iterative speed restrains the product innovation performance.In other words,keeping a moderate speed iteration is conducive to product value creation.Research two focused on the strategies at the phase of delivering the product value to customers.Particularly,we explore the release timing pattern on consumer satisfaction by combining empirical analysis and scenario laboratorial experiment.Findings show that the effect of product release frequency on consumer perception and satisfaction depends on the type of products.In particular,for hedonic product,implementing a segregated and high-frequency release pattern helps enhance the perceived benefit and satisfaction of consumers.For utilitarian products,adopting an integrated and low-frequency release pattern increases consumer satisfaction.This difference is mainly due to the users’ diverse coding and perception patterns for different types of products.We concluded the theoretical and managerial contributions and limitations in the last part of our dissertation.