The market launch of product innovations is the most visible output of a firm's
investment in innovation activities. To achieve this objective most efficiently,
firms strengthen their technological capabilities, acquire external knowledge
in a number of different ways, and optimize their innovation process. The
success of a firm's innovation strategy has two dimensions: First, the ability
of a firm to master the research and development process, leading to the market
introduction of a product innovation. Second, the ability to turn the market
introduction of a product innovation into commercial success.
While a firms technological abilities make a product innovation possible, this
product might face a lack of interest among potential customers after its mar-
ket introduction. The introduction of a product innovation under a brand
name might generate interest, adds credibility and reputation and has the
potential for the firm to better appropriate the returns from its innovations.
This paper investigates the role of brand use for the commercial success of
product innovations, using a representative sample of German firms. The
results show that firms can improve the odds of commercial success by pursuing
a branding strategy. The market introduction of a product innovation is shown
to be associated with 35% larger sales if the firm uses an established brand to
introduce the product innovation into the market.
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