Do Make or Buy Decisions Mediate the Relationship between Entry Strategy and Product Innovation? Evidence from the Fine Fragrance Industry

Research Interest
Abstract: In this study, we propose and test a model of how the make or buy of new product development mediates the relationship between the initial entry strategy of the firm (de novo firm vs. diversified firm) and product innovation. Our hypotheses are tested in the global fragrance industry over the 1889-2010 period. Results indicate that the relationship between entry strategy and the likelihood of launching an innovative product is fully mediated by whether a firm vertically integrates or outsources its development. De novo firms are more likely to internalize new product development and launch innovative products, whereas diversified firms are more likely to outsource new product development and less likely to launch innovative products. These findings demonstrate how firm-level entry strategies influence governance choices, which in turn places a boundary constraint on innovation.

Keywords: New product development, de novo firm, diversified firm, make or buy decision

Bio: Laura Poppo is the Edmund P. Learned Professor in Business at the University of Kansas. She received her PhD from the Wharton School, University of Pennsylvania and has been on the faculty of Washington University and Virginia Tech. She is known globally as a thought leader for her research in strategy, which has influenced scholars in many disciplines, including, economics, law, accounting, marketing, supply chain management, and strategic management, and has generated over 6000 goggle citations. Her research interests include: outsourcing, alliances, vertical integration, contracting, and trust, including the context of doing business in China. Her current research examines problem-solving, creativity, innovation, identity, and trust-repair.

Poppo’s research informs her primary teaching interests in strategic leadership which she has taught to undergraduates, graduate students, managers, and executives, including AIG, University of Kansas Medical Center, ABWA, Westar Energy, ProPharma Group, and Boys and Girls Club. Her approach to training is to use research validated decision logics to guide decision-making and problem-solving. In this way, strategy becomes a framework that makes hard decisions easier.

For more information go to: http://business.ku.edu/laura-poppo or https://scholar.google.com/citations?user=plP8j_sAAAAJ&hl=en