Understanding the trade-off between familiarity and newness in product innovation

• Published in: Industrial marketing management 2019-02, Vol.77, p.116-128
• Main Authors: Ozer, Muammer, Tang, Jacky W.
• Format: Article
• Language: English
• Subjects: Familiarity; Innovation; Market knowledge; Newness; Technological knowledge
• ISSN: 0019-8501; 1873-2062
• DOI: 10.1016/j.indmarman.2018.11.016

Studying the trade-off between developing new products that exploit a focal firm's familiar current knowledge resources and developing new products that explore knowledge resources that are new to the firm, we show that new products perform better when the new products are neither too familiar nor new to the firm, in contrast to the findings reported in prior research indicating that both types of new products are positively related to new product performance. The results were consistent for the familiarity and newness of both technological and market knowledge. In addition, the study revealed that while focal firms' inter-organizational network ties involving their supplier firms attenuated the potential negative impacts of technological familiarity and newness, their inter-organizational network ties involving their buyer firms lessened the potential negative impacts of the familiarity and newness of market knowledge that their new products required. •This study shows that new products perform better when the new products are neither too familiar nor new to the firm.•Focal firms' network ties with their suppliers attenuates any negative impacts of technological familiarity and newness.•Their network ties with their buyers lessens any negative impacts of market familiarity and newness.•The study contributes to a more detailed understanding of the trade-off between familairty and newness.•It inform managers about how to minimize the negative impacts of too much familiatry and newness.