New Product Development and Firm Value in Mobile Handset Production

The authors study the effect of new product introduction on firm value. Using a unique sample on mobile phone handset introduction by 16 major handset manufacturers over 10 years, they distinguish between imitative product introduction and truly innovative product introduction. They find that while most product introduction is imitative, both types of innovation increase firm value. However, truly innovative innovation is found to increase firm value by more than imitative introductions. The markets for wireless technologies are the origin of new products that can be applied throughout the economy and of which widespread adoption provides substantial growth opportunities.