Innovation Imprinting: Why Some Firms Beat the Post-IPO Innovation Slump

Journal Article (Journal Article)

Growth and innovation are primary arguments for firms that aim to go public and access resources from the stock market. So it is ironic that going public is, for a majority of firms, associated with a pronounced slump in breakthrough innovation. This article proposes an actionable, marketing-related explanation for why some firms that go public manage to beat the post–initial public offering (IPO) innovation slump: innovation imprinting. The authors argue and demonstrate that firms that engage in innovation imprinting before going public attract a segment of concordant investors whose risk preferences are more supportive of breakthrough innovation than investors at large. These investors, in turn, reward the firms’ continued introduction of breakthrough innovations after they have gone public. By analyzing the innovation patterns of 207 firms in the consumer packaged goods sector before and after an IPO, the authors observe that one-third of firms are able to maintain or beat their pre-IPO levels of breakthrough innovations after going public. By studying their actions, the investors they attract, and their financial performance and survival rates, the authors provide empirical evidence for the importance of innovation imprinting and concordant investors in helping firms beat the post-IPO innovation slump.

Full Text

Duke Authors

Cited Authors

  • Wies, S; Moorman, C; Chandy, RK

Published Date

  • March 1, 2023

Published In

Volume / Issue

  • 87 / 2

Start / End Page

  • 232 - 252

Electronic International Standard Serial Number (EISSN)

  • 1547-7185

International Standard Serial Number (ISSN)

  • 0022-2429

Digital Object Identifier (DOI)

  • 10.1177/00222429221114317

Citation Source

  • Scopus