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Firm innovation and the ratchet effect among consumer packaged goods firms

Publication ,  Journal Article
Moorman, C; Wies, S; Mizik, N; Spencer, FJ
Published in: Marketing Science
November 1, 2012

We consider how public firms influence their stock market valuations by timing the introduction of innovative new products. Our focus is on innovation ratchet strategy-firms timing the introduction of innovations in order to demonstrate an improvement in the number of introductions over time. We document that public firms use an innovation ratchet strategy more often than do private firms and that the stock market rewards public firms for doing so. These rewards from the stock market, however, come at the expense of performance in product markets. Specifically, because firms using an innovation ratchet strategy delay some product introductions, they have significantly lower sales growth in the year they ratchet. Finally, we identify firm and market characteristics that influence the likelihood that a public firm will engage in an innovation ratchet strategy. © 2012 INFORMS.

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Published In

Marketing Science

DOI

EISSN

1526-548X

ISSN

0732-2399

Publication Date

November 1, 2012

Volume

31

Issue

6

Start / End Page

934 / 951

Related Subject Headings

  • Marketing
  • 3506 Marketing
  • 1505 Marketing
 

Citation

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Moorman, C., Wies, S., Mizik, N., & Spencer, F. J. (2012). Firm innovation and the ratchet effect among consumer packaged goods firms. Marketing Science, 31(6), 934–951. https://doi.org/10.1287/mksc.1120.0737
Moorman, C., S. Wies, N. Mizik, and F. J. Spencer. “Firm innovation and the ratchet effect among consumer packaged goods firms.” Marketing Science 31, no. 6 (November 1, 2012): 934–51. https://doi.org/10.1287/mksc.1120.0737.
Moorman C, Wies S, Mizik N, Spencer FJ. Firm innovation and the ratchet effect among consumer packaged goods firms. Marketing Science. 2012 Nov 1;31(6):934–51.
Moorman, C., et al. “Firm innovation and the ratchet effect among consumer packaged goods firms.” Marketing Science, vol. 31, no. 6, Nov. 2012, pp. 934–51. Scopus, doi:10.1287/mksc.1120.0737.
Moorman C, Wies S, Mizik N, Spencer FJ. Firm innovation and the ratchet effect among consumer packaged goods firms. Marketing Science. 2012 Nov 1;31(6):934–951.

Published In

Marketing Science

DOI

EISSN

1526-548X

ISSN

0732-2399

Publication Date

November 1, 2012

Volume

31

Issue

6

Start / End Page

934 / 951

Related Subject Headings

  • Marketing
  • 3506 Marketing
  • 1505 Marketing