The role of business expectations for new product introductions : a panel analysis for the German food industry

Abstract

Theory suggests that business expectations are crucial for investment in research and development (R&D) as well as for process and product innovations. However, there are controversial theoretical predictions about the causal linkage between business expectations and new product introductions. In addition, most empirical studies have neglected so far business expectations as an important determinant of new product introductions due to absence of data. To address this shortcoming, it is investigated in this study whether business expectations do affect new product introductions and whether the net impact is positive or negative. The empirical analysis is based on panel data from 14 branches of the German food industry for six years (1993-1998). Our findings suggest that a strong pressure exists in stagnating or declining food industries to respond to unfavourable expectations by new product introductions. In addition, we identify the influence of market structure and industry-specific variables as significant for new product introductions.