Firm's product innovation strategy and product sales in convergent product markets

Abstract

Although product convergence became the prevailing paradigm, our understanding is limited because of the small number of studies. We examine how a firm's resource base and recombinant capability affect market performance for convergent products using mobile phone market data for the United States. We find that a firm's resource base explains why a firm whose resource base is related to the base product (mobile phone) achieves better market performance for the convergent product (camera phone) than a firm whose resource base is for the additional product (camera). Moreover, recombinant capability-defined as the ability to combine resources and capabilities previously distinct-is a significant factor that enables firms whose performance previously lagged to catch up to that of the leaders in the convergent product market.