Performance Expectations of Small Firms Considering Radical Product Innovation.

F. Verhees, M.T.G. Meulenberg, J.M.E. Pennings

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

Performance expectations influence business decisions such as investment decisions and demand for supplies, particularly in small firms with limited strategic planning. Despite widespread use of performance expectations by firms and governments when making sales forecasts and economic outlooks, surprisingly little research exists about how small firms form performance expectations. This paper contributes to reduce this knowledge gap by analyzing performance expectations of small firm managers operating in markets with radical product innovations. This paper proposes a model and hypotheses, which explain performance expectations of small firm managers based on firms' current success, radical product innovation, and variables that indicate firms' ability to respond to customer needs for radical product innovation. Data from 200 decision-makers in a real decision-making context support the model. The results show that performance expectations in small firms are only to a limited extent a naive extrapolation of current success: radical product innovation and small firm's ability to respond to customer needs for radical product innovation influence performance expectations. 

Original languageEnglish
Pages (from-to)772-777
Number of pages6
JournalJournal of Business Research
Volume63
Issue number7
DOIs
Publication statusPublished - Jul 2010

Keywords

  • Performance expectations
  • Small firms
  • Radical product innovation
  • Market orientation
  • Entrepreneurial orientation
  • MARKET ORIENTATION
  • BUSINESS PERFORMANCE
  • EARNINGS
  • ENTREPRENEURSHIP
  • UNDERREACTION
  • PROFITABILITY
  • ANTECEDENTS
  • INFORMATION
  • PROCLIVITY
  • INVESTMENT

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