Innovation's Effect on Firms Value and Risk: Insights from Consumer Packaged Goods  

Oleh:

Sorescu, Alina B. ; Spanjol, Jelena

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Journal of Marketing (EBSCO) vol. 72 no. 2 (Mar. 2008), page 114-132.
Topik: Innovation; Shareholder Value; Firm Risk; Marketing Strategy; Marketing-Finance Interface

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ94.13 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

What is the relationship between innovation and firm value? Does the type of innovation make a difference? To answer these questions, the authors examine how breakthrough and incremental innovations affect three different facets of firm performance: normal profits, economic rents, and total firm risk. They argue that each of these metrics is of independent interest to shareholders and managers and that examining one without the others result in an incomplete picture of the true financial value of innnovation. Using data on more than 20000 new products from consumer packaged goods industries, the authors find that breakthrough innovation is associated with increases in both normal profits and economic rents and that, on average, each breakthrough innovation in the sample is associated with an increase in firm value of $4.2 million. Breakthrough innovation is also associated with increases in the risk of the innovationg firm, but this higher risk is offset by above-normal stock returns. In contrast, incremental innovation is asssociated with increases in normal profits only and has no impact on economic rents or firm risk.

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